Consumers may eventually face price creep but Canada’s big three wireless carriers won’t be able to easily retreat from the deals they’ve been offering, says an analyst.
“If nothing else, even the spectre of Verizon coming here was enough to change pricing in the Canadian market,” telecom analyst Iain Grant said Tuesday.
Shares in Rogers, Bell and Telus surged on news that U.S. giant Verizon said it’s no longer interested in entering Canada’s wireless market.
“I don’t even think that even our incumbents in Canada would have the temerity to start increasing prices right now,” said Grant, managing director of the SeaBoard Group.
Grant noted that the big three carriers now allow households to choose the amount of data they want to use for Internet access and share a monthly data plan, an option Verizon, AT&T and Sprint have been offering for more than year.
“Thanks Verizon. Even just clearing your throat got us better prices for data sharing.”
He said prices for cellphone plans may go up in the coming months.
Verizon isn’t known in the United States for “aggressive pricing” and likely would have focused on business customers if it had chosen to enter Canada’s wireless market.
The cost of roaming onto other networks also may have been more competitive if Verizon had decided to come to Canada, said Grant, adding the CRTC will be looking into the costs of roaming for cellphone customers.
Stock in Telus (TSX:T) soared 7.5 per cent, or $2.43, to $34.75 in noon trading on the Toronto Stock Exchange.
Rogers (TSX:RCI.B) bounced up 7.4 per cent, or $3.06, to $44.65.
BCE (TSX:BCE) was up four per cent, or $1.74, to $44.93.
Rogers, Telus and Bell say they’ve had a cumulative loss of $14.7 billion on the capital markets since the news broke in recent months that Verizon was considering heading north.
But with Verizon no longer interested, it leaves the federal Conservatives with no obvious source of serious competition to the existing big three players. The government has said it’s committed to four wireless carriers in every region of Canada.
Verizon CEO Lowell McAdam said on the weekend that speculation that his company might try to compete in Canada was “way overblown.” His remarks came after Verizon announced it was spending US$130 billion to buy out a big stake held in the company by U.K.-based Vodafone.