The CRTC’s release of the 2017 Communications Monitoring Report ushered in the usual conflicting reports on the state of communications services in Canada. I found the most compelling take to be Tefficient’s data charts that show Canadian wireless companies generating revenue per GB that is the highest in the developed economy world (literally off-the-chart) alongside mobile data usage growth rates that are among the slowest on record. The Canadian Wireless Telecommunications Association described the growth rate as “impressive”, but when just about everyone has faster growth rates, it is readily apparent that high wireless costs in Canada have a negative impact on usage.

Digging further into the data, the CRTC provides insight into an oft-overlooked source of revenue for the carriers: overage charges, which represent an ongoing source of frustration for many consumers. While many carriers have unlimited broadband plans, unlimited wireless plans are rare, leaving subscribers to carefully monitor their data usage. Based on the CRTC data, however, many find themselves exceeding their monthly cap fairly regularly as data overage charges constitute 6 per cent of total retail wireless revenues:

In 2016, of companies that reported data overage charges, approximately 6.0% of their total retail mobile revenues were reported to be directly from revenues collected from subscribers who exceeded allowable monthly data limits; the revenues excluded charges for flex-type plans, domestic and international roaming, and text messaging services.

Given that retail wireless revenues exceeded $23 billion, annual overage charges in Canada easily exceed a billion dollars per year. By comparison, wireless long distance revenues generated $547 million and roaming revenues hit $960 million. In other words, Canadian wireless carriers make more money from overage charges than from either long distance fees or roaming costs. In fact, with total data revenues at $11.9 billion, about 1 of every 10 dollars earned from data stems from overage charges. The revenues from overage charges are not limited to wireless services either. The report also notes that Canadian households paid $100 million in broadband Internet overage charges or roughly 1 per cent of residential Internet service provider revenues.

Not only are overage charges a significant source of revenue, but several carriers recently increased them by as much as 40 per cent. For example, this summer Rogers boosted its overage charge on wireless data by 40 per cent and Bell raised it by the same amount over a two year period. Given that a 2016 CRTC survey found that nearly half of consumers pay overage charges, the increases alone are likely to result in hundreds of millions in additional consumer costs.

With a combined total of nearly $1.5 billion in consumer overage charges from retail wireless and broadband services, the costs have a significant impact on affordability. Communications companies have introduced tools to monitor usage and the CRTC wireless code mandates express consent when consumers exceed $50 in data overage charges in a single billing cycle, yet the record suggests that more is needed.

The most obvious solution would be the availability of unlimited wireless data plans, which are commonly found elsewhere. Companies such as Bell and Rogers claim that unlimited plans are not feasible, but the reality is that with limited competition and more than a billion dollars per year in revenue from overage charges, there is little incentive for the companies to tinker with the current system. Absent a more competitive wireless marketplace, Canada seems destined to continue to have some of the slowest usage growth rates as consumers conserve their data use and grapple with plans that result in 1 of every 10 dollars being spent on data going to overage fees.