Canadian cell prices competitive

The Canadian Radio-television and Telecommunications Commission (CRTC) could soon decide to reverse a two-decades-old policy of eschewing formal regulation of the wireless telephone sector.

Some observers maintain that the Canadian wireless sector is not competitive enough and that more regulation is required to force providers to lower prices, increase download speeds and improve service quality. Yet Canada is competitive compared with other developed countries.

OECD studies are among those most often cited to support the idea that Canada’s wireless telephony prices are too high. However, the OECD in a June 2011 report showed Canada’s prices to be lower than those in the U.S. in four out of six usage scenarios, although they remain higher than the OECD average. In the usage case including the most calls and text messages, Canada ranks as the fifth least expensive of 34 countries.

Canadian media outlets at the time claimed that Canada had higher roaming charges than all other OECD countries, a comparison unrealistically based on downloading one megabyte while roaming without a plan. A more relevant comparison from the same study — the cost of 20 MB in 20 sessions over a period of one month in the least expensive destination (for Canadians, the United States) — had Canada as the seventh least expensive of 34 countries.

In its latest study done for the CRTC, Wall Communications concludes that the price of a basic wireless telephone plan in Canada is comparable to what is paid in U.S. cities (Boston, Kansas City, Seattle) but higher than in the other cities surveyed (London, Sydney, Paris and Tokyo). For higher-usage plans, Canadian prices are lower than those in the United States and comparable to the average in other countries.

Neither is Canada behind in terms of deploying and using the latest wireless communications technologies. With regard to the spread of the fastest technologies, Canada comes off looking pretty good. Almost the entire population is covered by HSPA+ technology. In addition, three of the 98 LTE networks — currently the most advanced technology — in service in 49 countries and territories around the world are in Canada.

Since the dawn of the Internet, Cisco has published various studies on the progress of information technology that confirm Canada’s favourable position. They show that Canada is third in the world in terms of consumers downloading and uploading data over the Internet, just behind South Korea and France. Projections forward to 2015 show Canada maintaining its place among the front-runners. Cisco’s numbers also show that data transmission on mobile devices more than doubled in Canada from 2010 to 2011, increasing by 158%.

As for the penetration rate of broadband wireless services, Canada is not at a Third World level, as critics are fond of claiming, but once again right in the middle of the pack of rich countries. According to the latest OECD figures, with a penetration rate of 39.7% Canada places 24th among 34 developed countries, not far behind France and Austria, and ahead of Germany, Italy and Belgium. Indeed, a comScore study shows the extremely rapid growth of the penetration rate for smartphones in Canada. From March to December 2011, this rate grew from 33% to 45%.

Wireless services in Canada are competitive both in terms of prices and in terms of the technology available to consumers. The networks have been extensively developed in recent years and the downloading of data by wireless devices has grown tremendously. Penetration rates for broadband wireless service are increasing rapidly. With the launch of high-performance devices by players like Apple, Google and a few others, Canadians will continue to exert pressure on providers in order to be able to make use of the latest technologies.

The wireless market in Canada is in full expansion and functioning well. Canadians therefore have every reason to want to maintain the approach put in place nearly two decades ago, namely refraining from imposing specific regulation on this important sector of our economy.

Yves Rabeau is associate professor in the Faculty of Management at UQAM and associate researcher at the Montreal Economic Institute. The views reflected in this column are his own.