The Canadian Radio-television and Telecommunications Commission yesterday released the latest Wall Communications Report comparing prices for wireline, wireless, and Internet services in Canada and with foreign countries. While some initial reports focused on the increased wireless pricing for light wireless users (150 minutes per month with no data or texting) that was attributed to the shift from three-year contracts to two-year contracts, the bigger story is that Canadian wireless pricing is ranked among the three most expensive countries in the G7 in every tier.
The report measures four different baskets of users and for every usage Canada is one of the three most expensive countries in the survey (other countries include the US, UK, France, Australia, Japan, Germany, and Italy).
Summary of International Price Comparison 2014, Wall Communications Inc. http://www.crtc.gc.ca/eng/publications/reports/rp140714.htm
As the chart demonstrates, Canada is the most expensive among all countries for Level 1, third most expensive for Levels 2 and 3, and second most expensive for Level 4.
The initial reports focused on the Level 1 data, noting that high prices may be the result of the new wireless code that limits contracts to two years. However, Level 1 is an increasingly small part of the market since fewer and fewer consumers use phones for a small amount voice only with no data or texting (and those that do are more likely to use one of the cheaper new entrants). Indeed, Level 1 likely excludes all smartphone users as the plan offers only 5 minutes of talk per day with no data and no texting. It therefore has little to do with amortizing the cost of expensive devices such as the iPhone. Moreover, the increase in pricing for this service actually demonstrates again why the market is uncompetitive, since two-year contracts or less are standard in most other parts of the world, yet the Canadian pricing is the highest in the category.
Last week, I wrote about the sorry state of wireless competition in Canada, noting that Bell, Telus, and Rogers all recently confirmed that they are reducing promotional activity and exercising greater “price discipline”. This latest report provides further confirmation that Canadian wireless prices remain high by global standards and unless the new competitive measures succeed, the incumbents have no intention of changing that any time soon.
Far be it from me to defend the telecoms, but to be fair I can imagine the cost of service delivery in canada, given our vast geographic size and relatively small population, is much higher… and we see these costs passed onto us. (Yay capitalism.) I’d be interested to see how that data charts out. Its easy to forget when walking through a big city that we’re a big, wide open country, but I will hand it to telus on good coverage: last year my website got hacked and I got an email notification from my host as we were driving along a northern alberta highway on our way to a wedding. I was able to tether my laptop to my phone over an LTE connection and do some emergency password changes and delete some malicious files… and all within my plan coverage, in the middle of (basically) nowhere. It worries me that if we start being sticklers for a perceived imbalance in the cost of our services, we’ll see a decline in the more fringe services, like rural coverage. We get what we pay for. Now, if that’s all raw profit taking, hand me a pitchfork too…
Australia has similar challenges of a large geography paired with relatively small population, and their wireless prices are lower in every category.
“…given our vast geographic size and relatively small population…”
This excuse has been debunked over and over again.
Government subsidies have been taken by all the incumbents (and more than once), with each announcing they would expand all the necessary infrastructure – only to see them enrich their executive bonus programs and double up on their advertising campaigns.
@Devil’s Advocate
You must be using some of that funky new math to come to the conclusion that geography doesn’t matter. By my calculations the cost to build 20 cell phone towers (at $500K each) is about $10 million compared to $2.5 billion to build 5,000 cell towers. And then the carriers have to pay annual leases, taxes, power, maintenance, upgrades, etc. for each tower. If it was no more expensive to serve the entire country than a single small city then Wind would have done that right out of the gate instead of lobbying so aggressively for discounted wholesale roaming rates.
Please provide some real examples of the subsidies the government granted to incumbent cell phone companies and share your evidence that those funds were then diverted to executive bonuses.
@Yan:
Don’t know where you’re going with that.
No “math” was needed.
The incumbents made promises. Based on these promises, subsidies were given (from the taxpayers) to make it happen. It just didn’t happen.
@Devil’s Advocate
What promises were made and what promises were broken? If you can’t be specific we’ll have to assume you are making this stuff up.
If you need such an explanation, you can’t really be following this stuff very closely.
I’m sure everyone had already figured out your comments were a fabrication. Thanks for confirming.
I am at three and a half years on Wind $40 unlimited everything and am very satisfied. My wife is on the same plan. We cancelled our home line and ported the number. The all-in cost is less than we used to pay for our home line service + LD alone. Wind’s US roaming packages are a bargain. Canadian roaming, when I occasionally use it, is cheaper than it was when I was previously on Fido’s 2000 minute plan. Canadian roaming, and Wind network expansion, would not be a problem if CRTC wasn’t spineless and toothless. I really hope that Wind can find a way to survive and thrive without being forced to sell out.
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