OTTAWA – A new report from the Public Interest Advocacy Centre (PIAC) says Canadians find it difficult to change their telecommunications providers.
“Consumers are reluctant to try out competitive communications services, despite feeling they can and should,” said John Lawford, executive director and general counsel at PIAC, in last week’s press release. “There are clearly behavioural barriers as well as market barriers to exercising choice in these markets,” he added.
The report says significant barriers to switching in the Canadian retail communications services market were reported by respondents. The retail communications services markets studied include: home Internet access services, home (wired) telephone, mobile phone (including telephone and data services), and paid television services (broadcast distribution, excluding “over-the-top” services).
The report cites considerable contractual switching costs – the most important being lengthy contracts with early termination fees for some services; charges for required equipment; and pricing structures such as “bundled” packages of several telecommunications and broadcasting services that inhibit choice of any particular service in isolation, reads the release.
Also, “human behavioural cognitive biases inhibit consumers’ decision-making in complex communications markets. These ‘heuristics and biases’ inhibit them from disturbing their status quo by switching, or cause them to make poor choices if they do switch,” says the report.
“These behavioral factors exist independently of the structural factors, but can interact with and indeed amplify the effect of contractual switching costs. Further, the communications companies appear to be well-aware of these consumer ‘behavioural economics’ biases and to design their offerings with these in mind, to increase profit, but to the detriment of consumer welfare.”
It’s worth noting here that the carriers themselves publicly report churn statistics for wireless communications and last year saw more than 3.3 million Canadians switch their wireless providers (according to recent submissions to the CRTC). The companies do not provide such churn statistics for wireline services but, to cite one example of customers leaving, Bell Canada lost 66,779 wireline customers in the first quarter of 2019.
https://www.newswire.ca/news-releases/bce-reports-first-quarter-2019-results-854013662.html
The report made X recommendations:
- The CRTC should place an eventual ban on multi-year contract lock-ins for all communications services to enable customers would to be eventually on month-to-month contracts.
- Communications service providers eventually not be permitted to link the sale of service plans to the provision of devices in contracts (with a three-year phase-out of device linking).
- The CRTC should establish technical standards for enabling devices such as set-top boxes and related equipment so they are interoperable on all providers’ networks. This could also help in the long run to create a vibrant third-party market for the sale of such equipment and possibly lower service prices.
- The CRTC should ensure that consumers have easy and widespread access to an online rate comparison and calculating mechanism, providing up-to-date information on the features and costs of all communication services in Canada, including bundles that can be easily understood. These services should be accredited by the CRTC to fairly function and produce reliable results.
To view the full, click here.
The Public Interest Advocacy Centre received funding from Innovation, Science and Economic Development Canada’s Contributions Program for Non-profit Consumer and Voluntary Organizations to produce this report.
