Massive media coverage recently revealed that Canada has the world’s most expensive wireless and mobile data plans (fun fact: it costs $17 CAD to stream an hour of Netflix, whereas in Italy this costs only $0.56). Plans can run as high as $55 for 4GB to $60 for 6 GB, significantly more expensive than comparable plans in other countries. On average, a Canadian plan will be 138% more expensive than a comparable British plan, and 156% more expensive than a comparable French plan.

In early 2020, the Canadian government began an initiative to reduce the cost of mobile plans by 25%. A 4 GB plan now costs $41.25, and a 6 GB plan is $45. But why are Canadian plans still so expensive compared with plans in the US, Italy, UK, and Australia? What are the root causes, and what are potential alternatives? 

Are Cell Phone Plans Actually More Expensive in Canada?

In short, yes, plans are more expensive in Canada. Statistics show that Canadians spend 15% to 40% more for data than Americans, spending an average of $50 per month for 2 GB, while Americans spend $40 for the same amount.

But it’s not just data prices that are high; basic talk and text are also quite costly. A plan that combines talk, text, and data might be double the cost of a comparable US. plan. As a result, the average Canadian uses less than 2 GB of data monthly in an attempt to keep costs low, but even 2 GB plans are overpriced. Most unlimited plans offered by major companies such as Bell and SaskTel start at $80.

Factoring in costs for streaming services such as Netflix can skyrocket monthly usage to over 20 GB, resulting in bills that are 35% higher than in the US. While efforts have been made since 2019 to lower such costs in Canada, streaming services remain considerably expensive. 

While Canadians do enjoy better service than consumers in countries with cheaper plans, their enjoyment comes at a comparably steep price.

The Average Cell Phone Bill In Canada Vs Other Countries 

Data Usage	Avg Monthly in Canada	Avg Monthly in the US	Avg Monthly in Germany	Avg Monthly in Italy
No data	$30	$25	€4.99 (1 GB)	N/A
2–5 GB	$52	$37	€7.99	€5
8–10 GB	$64	$55	€39.99	€10
20+ GB	$92	$68	€29.99	€30

Note that these prices were pulled as some of the best deals offered by a variety of regional providers. As you can see, Canada’s monthly costs top the charts across the board. Italy offers some of the cheapest plans available. In fact, it costs only a penny to refresh your Twitter feed there, compared with $0.15 in Canada.

Why Are Canadian Cell Phone Plans So Expensive? 

Before we dive into specific causes, there’s a relatively simple answer to this question. In 2017, the National Postreported that national carriers charged high prices simply because they could, as is the case in most capitalist economies. Businesses often charge whatever they know their consumers will pay for a product or service. 

That said, high plan prices are not universal across Canada. Provinces charge different prices for comparable plans. Saskatchewan, Manitoba, and Quebec all enjoy lower plan prices because there is no strong fourth carrier. In this same vein, Freedom Mobile is the fourth largest provider in Canada, but they do not offer comprehensive coverage in Alberta, Ontario, and British Columbia, influencing pricing in these provinces. 

Now, let’s look at some specific factors that influence plan costs in Canada.

Low Population Density

Because Canada is such a large country with a low population density—one of the lowest in the world, with four people per kilometer—consumers with cell phone plans are being forced to pay higher prices for coverage to compensate for this sparsity. However, low population density does not explain why Bell, one of Canada’s biggest carriers, provides coverage for less than a third of the nation while their prices reflect much greater coverage. 

Large Investments

Since 1987, major telecom companies in Canada have poured $70 billion into infrastructure, innovation, spectrum acquisition, and licensing fees. This staggering amount partly accounts for Canada’s expensive cell phone plans. While this might seem to level the playing field, it’s worth noting that Australia has invested more than $70 billion in the past ten years, and they offer faster network speeds and lower prices. 

Limited competition

Another potential factor driving cell phone plan costs is limited competition in Canada, so carriers don’t have to lower their prices. Rogers is the biggest carrier in Canada, followed by Bell, Telus, and Freedom Mobile. There are few options for Canadians apart from these providers, and new carriers would have to invest in their own nationwide cell towers to compete with these established companies. 

High Barrier To Entry

Speaking of new carriers, the bar has been set for market entry—and it’s a high one.  

Large LTE networks in Canada account for 20% to 30% of the country’s geographic area, and about 94% of Canadians use these networks. To compete with these statistics, a new carrier would need massive funds to join the game. Building new towers, investing in hardware, and installing new antennae would require great expense. Moreover, a new company would lose even more by charging competitive prices to compete with established networks. The bottom line—it’s not worth a new carrier’s time or money to throw their hat in the ring. 

A Glimmer of Hope for Cell Phone Plans in Canada

As previously mentioned, the Canadian government has been working to reduce the cost of cell phone plans and data for consumers.  

Over the next two years, all major Canadian carriers (ie, Telus, Bell, and Rogers, or the “Big Three”) are expected to make their plans more affordable. For plans offering 2 to 6 GB of data, the Big Three are expected to reduce their prices by 25%.

If this price reduction is realized, cell phone plans in Canada will remain expensive, but they will be closer in price to plans in South Korea and the US, according to The Markup. 

Although it may not seem like it, Canadians also have the option to shop around for better plans from other carriers, though their coverage may be limited. One such option includes using an MVNO.

What Is an MVNO? 

MVNO stands for Mobile Virtual Network Operator. These companies have their own sales and customer support divisions, but they purchase service from bigger providers at wholesale to then sell to consumers. MVNOs are great because they

• increase pressure on major providers by offering more affordable prices,
• provide an incentive for innovation,
• improve customer service across the board to keep up with the competition, and
• provide an alternative for consumers who can’t afford the Big Three’s plans

A few popular MVNOs in Canada are Fido, Koodo, and Virgin Mobile. However, all of these companies are owned and operated by the Big Three. The same is true of prepaid services from Chatr, Public Mobile, and Lucky Mobile.

While Bell, Telus, and Rogers might technically own these MVNO brands, MVNOs remain more affordable options that are worth considering.

Conclusion and Recommendation

In summary, cell phone plans in Canada are so expensive because they can be, but that’s only one reason. Other factors include low population density and the major investments of the Big Three. Limiting competition and alternatives for consumers makes it easy for big carriers to charge whatever they want, and major barriers are making it difficult for new carriers to enter the market and offer affordable, competitive prices.  

Compared with other countries’ plans, Canadian data plans are very pricey, but consumers do have the option of using an MVNO brand as a cheaper alternative. You should shop around before selecting a costly plan that you might not use to the fullest, and consider an MVNO as one way to save some money.