The new rules mandating a 25 per cent reduction in mid-range cell phone plans will not affect carriers’ Average Revenue Per User (ARPU) as more customers will move to pricier unlimited data plans, analysts say.

Innovation, Science and Industry Minister Navdeep Bains said in an interview on March 5 that Bell, Telus, and Rogers have to cut prices of plans that offer 2GB to 6GB of data over the next two years.

The brands that offer plans in this range are the carriers’ flanker brands that include Bell’s Virgin Mobile, Rogers’ Fido, and Telus’ Koodo.

He noted that his ministry reviewed total subscribers of all the carriers and saw that 40 per cent of Canadians are on these plans.

Bains also announced rules for the 3,500MHz spectrum auction, a much-anticipated band that will be used to deploy 5G networks across the country. The auction will take place in December 2020, which means full 5G availability won’t arrive until 2021.

Raymond James’ analyst Dave Heger said the 5G rollout would prompt Canadians to use more data, and switch over to unlimited data plans.

“That’s the ultimate goal and in the back of the carriers’ mind,” Heger said.

“You know the carriers will say ‘we’ll start reducing these prices over time in order to throw the government a bone but we’ll be pushing people to upgrade to higher-priced plans,’” he said. “Which is positive for ARPU [growth].”

Duncan Stewart, director of technology, media and telecommunications research at Deloitte Canada, said in countries where 5G is available, consumers are tripling their data consumption.

“Data published in November of last year said that 5G subscribers [in South Korea] were using almost 26GB of data per month in September 2019, while LTE subscribers only used 8.3GB, suggesting a more than tripling of data use for those on 5G compared to 4G,” he said.

RBC analyst Drew McReynolds also said in a note that the impact of the government’s announcement “could be absorbed” since there is a “natural shrinking of the subscriber base on data plans in the 2GB to 6GB range even at lower price points.”

There will be more pressure now for regional carriers to reduce prices to compete with the Big Three, McReynolds wrote.

Telus, which claims already to have reduced prices by 25%, noted in an emailed statement it was “extremely disappointed” in the announcement and said it was another “punitive action taken by this government against the companies that [have to] build Canada’s global-leading wireless networks.”

“As evidenced by the Minister’s announcement today, this dynamic is in stark contrast to the deep, punitive bent towards our industry in Canada. This contrast is giving us reason to think very carefully about where our next investment dollars should go,” Telus said.

Bell, in an emailed statement, also indicated the new direction was discouraging to investments.

“We’ll study the government’s direction,” Bell said. “It’s the worst time to jeopardize our country’s wireless success as carriers look to ramp up investment for the global move to 5G wireless.”

Rogers, in an emailed statement, said the market is “highly competitive” and will keep evolving its services “to meet the needs of Canadians.”

The government doesn’t plan to introduce legislation, Bains confirmed, adding that there will be an accountability measure put in place with the release of quarterly reports that show whether or not prices have come down.

Heger said by not legislating the rule it sends a message that “we will not force you” to reduce prices.

Scotiabank analyst Jeff Fan said in a note that prices are “naturally reducing over time” and the industry now has an understanding of the government’s target.

“Allowing pricing to evolve towards the target instead of a forced immediate change will allow carriers to manage the repricing risk,” he wrote.

Download the Yahoo Finance app, available for Apple and Android and sign up for the Yahoo Finance Canada Weekly Brief.