Wednesday, September 2, 2009

Canadian Government Develops Cellphone Cost Calculator

Trying to choose a cellphone plan is very confusing. The many plans available have different features, and it takes a determined consumer to gather enough information to evaluate all of them. Worse still is that you can’t rely on one smart person to figure it all out because the best plan depends on how much you use your cellphone and what features you use.

The Canadian government rides to the rescue. Industry Canada developed a calculator to figure out which plan would work best for you. This is a great idea; the government doing something fairly inexpensive to help many Canadians.

Unfortunately, as Michael Geist reports, wireless company lobbyists convinced Tony Clement to kill the calculator (the web page with this article has disappeared since the time of writing). The official reason doesn’t matter because the real reason is obvious enough. Wireless companies make more money from confused consumers than they do from educated consumers.

Cellphone plans are confusing because the wireless industry wants them that way. Fortunately, there are a number of new players competing in the cellphone market offering cheaper service, particularly for infrequent users of cellphones. The next time you have to choose a new plan, you’ll have to do the work yourself; the government won’t be there to help.

9 comments:

  1. Strange, governments don't usually cave to lobbyists.

    It was a good idea to come up with the calculator, and maybe someone more independent will pursue it further. Consumers would be even more disappointed to see what they pay compared to other nations for cell phone service.

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  2. Will the government also come out with a calculator to help me shop for groceries, what kind of computer to buy or what ply of toilet paper is best for me?

    This is exactly the kind of thing the government shouldn't be doing. I'm sure a simple google search will help you find a website that helps you compare plans.

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  3. I spent more time buying my last cell than my last house!

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  4. "With public dollars having funded the mothballed project, the government should now consider releasing the calculator's source code and enable other groups to pick up where the OCA left off."

    -- Amen to that. Taxpayers paid for the project, so the least the government can do is to put the code in the public domain.

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  5. Gene and CC: I'm not sure who would have the incentive to pursue this further without one of the wireless players paying for it (and thus guaranteeing biased results). If as CC says, the code is placed in the public domain, there is hope that some group would get interested and develop something useful.

    nmm66: I have no problem with the government coming out with calculators for other consumer items as long as the cost of the calculator is low compared to the value it produces for Canadians. I think cellphones are an area where consumers need help. Driving consumers to the best value/cost producer is a good thing. My attempts at a simple Google search for useful cellphone comparisons turned up nothing useful.

    Options Nut: I hope that means you spent a long time on your cell plan and not that you bought a house in 10 minutes!

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  6. Michael James:

    Did you read my analysis @ http://www.four-pillars.ca/2009/08/27/back-to-school-cell-phone-deals/ ? I think I went pretty thorough in the analysis and comparison. If you think it isn't helpful, please give me some feedback and I will try to do better posts.

    Another post about retention plans will come out @ four pillars this week. Howard forum is the best source about deals on Canadian cell phone fees if you want to your own research. Redflagdeals have info too.

    I gave personal advice to Ray of FinancialHighway blog about getting retention plans and Ray found to be helpful and he will try it out.

    Asymmetric information is very prevalent in Canada, meaning you never know about the best deals unless you are savvy. In the case of cell phones, I pay $31 a month including tax for a plan that another might pay $70 a month including tax. The discrepancy can only be explained by asymmetric information. As an economist, I don't accept asymmetric information as good thing and excessive asymmetric information can lead to the collapse of the market.

    I can design a calculator to help figure what people need when they argue with retentions. I'll write the pseudo code and maybe you can review it. I will contact the office of Tony Clement for the release of the cell phone plan calculator.

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  7. Remember before cell phones, when you wanted to make a phone call, you'd just put a quarter in the pay phone? Cell phone companies seem to be utterly allergic to that payment plan.

    And now the gov't seems to want to encourage the same sort of idiocy for recharging electric cars. We'll pine for the days when we would just pay for the gas we used.

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  8. Henry: Your cell phone analysis was good. Some advantages of a government-run calculator over reviews of the type you have done are that the government could reach far more people and would have the resources to keep it up-to-date as plan details change.

    Patrick: I can't say I fully understood the pricing model the government is proposing for charging electric cars, but my preference would be to pay for the number of kilowatt-hours taken on each "fill-up" (similar to the way I pay for gas now).

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  9. A reader pointed me to a web site run by a small business for doing exactly what the Industry Canada calculator was supposed to do: cellplanexpert.ca

    I tried it and it pointed me to 7-11 Speak Out and Petro Canada Mobility as the lowest cost choices for my basic needs. This is consistent with my own research. I'd be interested in opinions from other readers about how well this calculator works for them.

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