Taking Advantage of Expensive Canadian Rate Plans

June 21, 2018 by

Everyone knows that Canadian rate plans are among the worst on the planet.

Or at least, every Canadian should know.

Some, however, are blissfully unaware of their situation in comparison to countries like the U.S. and the U.K.—whose plans frequently offer UNLIMITED data—at only a fraction of the price that some Canadians are paying for even 10 GB.

When it comes to cell phones, things work differently in Canada than most other countries. Most plans rely on you paying a “subsidy,” a business model that takes a chunk off of the phone's actual price and divides it into 24 monthly payments, hence the two year contracts; the parts of this chunk are then added to your data and service fees. No, you aren't paying only $399 for a new phone like the sharp-tongued Telus representative wants you to think. You're actually paying closer or often even more than the full value of the phone.

Meanwhile, nearly all plans in the U.S. are based on bringing your own device and offer alarmingly cheap prices. They used to have the same model as us, but that was done away once competition got fierce, and competition always leads to lower prices. Except in Canada, where the market is dominated by Bell, Telus and Rogers, and there's little competition.

Consider the Sprint Unlimited Data plan, for example, which offers unlimited data (throttled after 23 GB), talk & text, and a complimentary subscription to Hulu. Meanwhile, $60 in Canada nets you a measly 6 GB (even after a 3 GB bonus) from Koodo with only 500 minutes of Canada-wide calling.

Canadian providers are constantly using jargon and complex formulas to hide the fact that we’re paying much more. They do this by advertising the upfront cost of the phone as a lower amount (sometimes even 0$), and again hide the real cost within your monthly payments. And as we all know, for most Canadians, math is hard. The average consumer doesn't really calculate or realize what they're paying if isn't a lump sum. After all, it is two whole years down the line. "Who cares?" is often their mentality.

Let's delve a little deeper:

  • A monthly plan of Canada-wide unlimited text and calling along with 1 GB of data costs $45 if you bring your own phone; across 24 months that would equate to $1080.
  • A monthly plan of Canada-wide unlimited text and calling along with 1 GB of data costs $55 with an iPhone X; across 24 months that would equate to $1320, plus an additional $599 which equals a whopping total of $1919 (This plan is cheaper than the Premium Plus option, which has a cheaper upfront cost of $399, but you pay $10 more per each month. Since it’s only $200 cheaper than the $599 Premium Smartphone option, you’d be paying an extra $40 for the last four months across the two-year contract at $240 in total, which is equivalent to a 20% interest charge. At this point you would be better off taking a loan).

If we subtract $1919 from $1080, that provides us with the final value of the phone, which is $839 in total.

This seems considerably cheaper than the iPhone X’s upfront cost of $1349 by $510, yet bear in mind that you’d be locked into the phone for two years without any way of modifying your contract or phone—unless you pay fees on top of the rest of your contract—which would make things more expensive than before. Also, typically phones are locked to your carrier until you pay a fee of $50 to unlock it after your contract expires. Most importantly of all, Bell is actually overcharging for their rate plans and their phones to begin with.

The same deal for 1 GB and unlimited calling and texting in Canada costs only $35 a month at Koodo, with a free bonus GB of data to boot. Koodo’s plan would cost only $840 across 24 months, which makes it much cheaper if you bring your own device. The same iPhone X is available for just $1080 instead of $1349 on Koodo’s Tab Large plan, where you pay $600 upfront and the remaining $480 onto your tab as $20 payments across 24 months. Not only is this deal much cheaper, but Koodo’s plans much chunkier in data as well.

So this leaves the question of why people use the big three service providers, in spite of the fact that they’re a lot pricier. Simply put, the extra costs yield better customer service; Bell, Telus and Rogers have 24-hour customer service and tons of stores across the country that you can visit for quick servicing. Meanwhile, discount providers like Koodo are actually either owned or partnered with the big three, but often only offer self-service and don’t tend to package plans together. The ability to share data across devices and with family members through Bell, Rogers, and Telus, or to bundle it with internet and cable plans might be appealing for larger families as opposed to individuals. Also, people are just lazy in general. Many are blissfully unaware, untrusting, or don’t bother to research or commit to smaller service providers and instead just go with the flow. On average, expect to pay closer to $40 for only 1 or 2 GB of data with calling and texting in Canada.

In the U.S., you can score unlimited calling, texting and data between $40 and $60, or even cheaper when there are exclusive offers; for example, you can get Virgin Mobile’s Inner Circle plan for just $50. Meanwhile, unlimited data plans don’t exist in Canada, and you can expect to pay exuberant prices for even 10 GB or 20 GB using most service providers. This is because the big three are in control of the market and there’s little competition, or rather, because they know that Canadians will pay their overinflated prices and they haven’t any reason to change things.

There are, however, some ways to get the full data experience at an affordable price—but only if you live in an urban area. Freedom Mobile is an extremely viable option for those of us who want big data at low costs. Their Everywhere Canada plans offer unlimited Canada AND U.S. calling, along with data options starting at 8 GB for only $50 a month. If you’re not a keen caller, you can relinquish your minutes for 5 GB more with their Big Gig plans instead. Bring your own phone, get all of the advantages and with no contract.

Yet with all great things come some drawbacks. Freedom’s cheap plans are made possible by restricting you to a certain radius, like the city of Vancouver. If you leave your home network, you’ll either be charged extra, or lose a lot of functionalities. Most of the plans include away data and talk time, but only at a tiny fraction of your total data, and often at reduced speeds. For example, the Everywhere Canada 50 plan’s 8 GB of data and unlimited talk becomes 2400 minutes of talk and only 250 MB of data if you take a trip to Kelowna for a weekend.

There are some hidden bonuses that come with Freedom Mobile. You gain access to unlimited data in some sense, because there are no charges even if you go over your allotted data usage. Instead, you can still use data to your liking (albeit at painfully reduced speeds of 2G). Oh well, still enough to check your Facebook or Twitter!

They also frequently have promotions, including 13 GB of data for $50 in the past and a permanent 15% off coupon last month. Freedom Mobile is likely the only Canadian service provider that can be even remotely compared to U.S. providers, but it really depends on your lifestyle and how much travelling you’d be doing. It’s not exactly efficient to lose all of your perks and data when you set foot even a few kilometers outside of your city.

All of this in consideration, Canadian plans aren’t exactly the friendliest; to make things worse, this is especially true when you’re from the west coast. Plans stagger throughout the country and are cheaper in Manitoba, Quebec and Saskatchewan, but more expensive in British Columbia, Alberta, Ontario and the Atlantic provinces. Not exactly the most ideal scenario if you’re living in the city.

Such are the fragilities of being Canadian. Yet by now you should be aware about the value of doing your research and how much savings you could have by taking advantage of a minor service provider over the big three. Consider switching if you're still on the slowpoke wagon and shilling them your money.

Posted in: Bell, Freedom Mobile, Industry News, Industry Trends, Koodo Mobile, Rogers, TELUS, US Industry News, Virgin Mobile US