Saskatchewan's famously low telecom bills could soon be rising

File photo of a SaskTel building (CBC)
File photo of a SaskTel building (CBC)

Home to some of the lowest wireless prices in the country, Saskatchewan could soon see that changing: the provincial government recently passed legislation that would allow it sell a portion of the province’s Crown corporations, including SaskTel.

Bill 40 allows the partial sale of a Crown without requiring a vote of support from the people of the province. Up to 49 per cent of each Crown could be sold to private shareholders without technically being “privatized.” According to Premier Brad Wall, such a sale does not mean privatization since the majority of the shares would remain with taxpayers.

SaskTel provides mobile wireless, broadband internet, and landline telephone services. The legislation to sell a chunk of it is a betrayal to the people of the province, according to NDP SaskTel critic Warren McCall, who says Wall made a campaign promise not to privatize Crown corporations.

“He swore up and down wouldn’t be selling SaskTel,” McCall tells Yahoo Canada. “He changed his mind…and came back with this trick of redefining privatization. By their definition it’s not privatization, it’s partnership. It’s certainly imaginative.

“Our hope is that people will see this clearly and call the government to account on it,” he adds. “If you’re going to sell the house, you have to ask the people in the house. They’re trying to sell 49 percent of the house without asking the owners.”

McCall says that advantages of having SaskTel as a Crown corporation are multifold: dividends go back into public coffers, and it provides great service.

“We’ve got a dispersed population and we’ve got fairly good high speed internet options and cellular phone coverage across vast swatch of the province; but for SaskTel having a social mandate that would not be the case,” he says. “Bell, Telus, and Rogers would be good along Highway 1, in Regina and Saskatoon, and some smaller communities, but the rest of the province would suffer poor quality service, and I think prices would go up.”

Mixed effect

Gerry Wall, founder and president of Ottawa-based Wall Communications Inc., which provides telecommunications- and media-related economic research and policy analysis of telecommunications, among other services, says the effect of privatization on Saskatchewan consumers will likely be mixed.

As background, he explains that in the mobile wireless realm, SaskTel prices most of its service baskets at very low levels compared to national average prices. For example, the national average price for a BYOD smartphone service is about $95, while via SaskTel it is about $70. However, prices in Saskatchewan for most mobile services across the board—including Rogers’ and Bell’s–are lower than the national average.  The only province that has lower prices is Manitoba. Rogers and Bell actually have lower prices than SaskTel in Saskatchewan, although their prices for similar services in other provinces are often much higher.

“So we can surmise that SaskTel’s relatively aggressive mobile wireless pricing is being matched or bettered in Saskatchewan by its competitors,” Wall says.

He says that, in looking at the experience of MTS (which was taken over by Bell last year), the prices in Manitoba have stayed relatively stable. “To this point, the privatization of MTS has not led to noticeable price jumps,” Wall says. “So using the MTS example as an indicator, there may not be any immediate price change after privatization.

“But I would argue that it is still early days and the market will eventually begin to move up the prices in Manitoba to match, or come closer to, the price levels in other provinces,” he adds. “And I believe the same to be generally true for SaskTel. If SaskTel is privatized, there will be no immediate jump in prices for customers, but gradually–over a period of, say, of two to four years–prices will rise.”

When it comes to broadband Internet, Wall says SaskTel’s prices compare much less favorably to those in other provinces for higher level baskets.  For example, a 100 Mbps device is about $105 from SaskTel, while the national average price for that service is about $90.

“If you accept the argument that market forces will tend to move prices towards the national average, then privatization should lead to lower prices for higher end broadband internet services in Saskatchewan over time,” Wall says. “Again, these adjustments can take some time, even years, to play out.  They are unlikely to be instantaneous.”

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