Canadian wireless prices competitive, despite simplistic comparisons

Montreal, May 8, 2018 – Critics of wireless prices in Canada regularly claim that these are among the highest in the world, but such comparisons are simplistic and misleading, argues the 2018 edition of The State of Competition in Canada’s Telecommunications Industry, published today by the MEI.

“It’s like comparing what two people have to pay to lease a car, without noting that the first is a highly-paid executive leasing a Lexus she uses every day, while the second is a low-income retiree leasing a Yaris that he uses once a week,” explains Martin Masse, Senior Writer and Editor at the MEI and author of the report.

Indeed, the annual Nordicity study upon which such comparisons are based has some serious methodological flaws. It does not account for the speed or quality of networks, or for geographical or socioeconomic factors that could explain price differences such as population density, usage levels, consumers’ capacity to pay, or other indicators related to affordability.

“It’s nothing more than a raw comparison of prices without any context,” says Mr. Masse. “And ignoring all of these factors creates a systematic distortion that makes Canadian services seem more expensive than they actually are.”

The reality is that Canadians are among the biggest consumers of data in the world, and they pay for some of the best services in the world, as acknowledged by OpenSignal, whose latest report calls Canada an LTE powerhouse, especially in terms of speed. This excellent performance is due to Canadian telecommunications companies investing more in their networks than companies in almost any other country, as shown by data from the OECD, GSMA Intelligence, and Bank of America Merrill Lynch.

“It’s true that consumers pay more every year for their telecommunications services,” notes Mr. Masse. “But this is because they are switching to higher quality services and buying more of them, not because prices keep going up. The data show that the prices of most telecom services have actually been going down in constant dollars for years.”

Moreover, Nordicity’s limited set of data hides the simple reality that Canadians have many more affordable options offered by flanker brands, regional providers, and resellers.

“Basically, Canadians are paying for a Lexus, not a Yaris,” concludes Martin Masse. “There is at least as much competition in Canada as anywhere else, and rates correspond to the quality services that Canadians demand and obtain. This is what emerges from a detailed analysis of relevant factors as opposed to a simplistic comparison of a few prices.”

The 2018 edition of The State of Competition in Canada’s Telecommunications Industry provides, as usual, updated statistics regarding the performance of the Canadian telecommunications industry compared with other jurisdictions, showing that Canadians continue to enjoy competitive, quality telecommunications services.

The report goes on to compare broadband internet regulation in Canada and the United States, looking at recent changes to net neutrality rules south of the border, as well as the CRTC’s opposition to zero-rating and its decision to force providers to share FTTP networks with resellers.

It also makes the case that since Canada has successfully transitioned from monopoly to competition, the CRTC should be phased out as Canada’s telecommunications regulator, and the sector should move to a general regime of competition law, like almost all other sectors of the economy.

The 2018 edition of The State of Competition in Canada’s Telecommunications Industry was prepared by Martin Masse, Senior Writer and Editor at the MEI. This publication is available on our website.

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The Montreal Economic Institute is an independent, non-partisan, not-for-profit research and educational organization. Through its studies and its conferences, the MEI stimulates debate on public policies in Quebec and across Canada by proposing wealth-creating reforms based on market mechanisms.

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