Newspaper article The Canadian Press

Industry Critics Cast Doubt on Telecoms' Claim Low Loonie Connected to Price Hike

Newspaper article The Canadian Press

Industry Critics Cast Doubt on Telecoms' Claim Low Loonie Connected to Price Hike

Article excerpt

Telecoms' price hike, low loonie connection doubted


TORONTO - People hunting for new cellphone plans can expect to pay a little more each month if they sign up with one of Canada's biggest three wireless providers -- Telus, Rogers and Bell recently announced price hikes while pointing an accusatory finger at the low Canadian dollar.

But some industry watchers are skeptical, noting the big telecoms tend to have methods to protect themselves from foreign currency fluctuations.

"If the exchange rate is such a big deal, how come we didn't see lower prices when the dollar went up?" said David Christopher, a spokesman with the OpenMedia advocacy group.

New customers signing monthly contracts with Bell, Rogers or Telus now pay $5 more. Each company also lowered savings by between $10 and $15 for customers who already own a device.

Telus raised prices partly because it has to pay more for network components thanks to the weaker loonie, said Emily Harner, a company spokeswoman. She also pointed to the need to spend millions of dollars annually to keep up with customer demand for wireless data.

The other two companies have echoed concerns over the economy. For months, the loonie has been trading below 80 cents US, and has been hovering around 70 cents in the past few weeks.

The companies could have raised prices to make up for the extra cost of doing business. They pay for nearly all of their infrastructure costs in either U.S. dollars or the euro, said Iain Grant, the managing director of SeaBoard Research, a technology research and strategy consulting company.

But some believe consumers are being hoodwinked into believing the loonie is responsible for higher cellphone plans and suggest, in fact, it's a desire for higher profits.

"It's a little suspicious that these big, sophisticated, publicly traded companies that are in the business of, you know, managing their risk and maximizing profit are blaming something that they likely foresaw on a price increase, across the board, in a relatively short amount of time," said Geoff White, external counsel to the Public Interest Advocacy Centre. …

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