Canadian telecom prices justified by speed, quality: MEI

A report by the Montreal Economic Institute (MEI) challenging studies saying Canadian telecommunication prices are comparatively high against the rest of the world is being criticized by Nordicity as an unquantified analysis that misunderstood the scope of its work. The MEI’s annual state of telecom competition report, released Tuesday, challenged assumptions that the Canadian sphere was ruled by unduly high prices and little competition, pointing to the country’s fast wireless speeds, high investment in its networks, increased usage by Canadians and competitive options relative to other countries. But the report also served as a pointed critique of reports by Nordicity, whose latest study observed a trend of increasing prices for higher-tier services, despite falling prices for the low and mid-tier plans. “It is certainly true that the average bill that Canadians pay for their wireless and internet services keeps increasing,” the MEI report said. “But that’s not because they have to pay more for the same services. It’s because they are paying more for more and better services.” For example, the report highlights that the percentage of Canadians who own smartphones has risen to 77 per cent in 2016, from 51 per cent four years prior, and they are also opting for wireless plans with more data. That’s the same case with broadband, it added. It added that prices are actually declining. “The Nordicity study has collected data for various levels of usage over the past decade. When adjusted for inflation, the prices for wireless telephony service baskets have all gone down between 2008 and 2017.” The study, which is divided into four chapters, draws on reports from sources including Statistics Canada, Speedtest by Ookla, OpenSignal, the OECD, and content delivery network provider Akamai Technologies Inc. It uses the data to paint a picture of Canada as high on the list with other countries when it comes to speed, quality and investments in their networks and takes issue with headline-grabbing reports that suggest Canada’s telecom prices are some of the highest in the world without factoring why. "Everybody who talks about this issue should not be using their study and say, ‘look at that...we're paying more than everybody else’ and then stop at it without any contextualization of the situation as I've tried to do,” MEI report author Martin Masse said in a phone interview. “This is just misleading.” MEI’s point of contention is that Nordicity did not use other metrics in its report that would give a complete picture of prices compared to Canada’s international counterparts. Those metrics include differentiating the markets where products are produced and sold, the speed and quality of the networks, and options for Canadians, including flanker brands like BCE Inc.’s Virgin and Rogers Communications Inc.’s Fido. But Nordicity’s Stuart Jack said in an email that those factors, including speed and quality of the networks, consumer behaviour and socio-economic impacts were not supposed to be part of its research, which he said Nordicity’s reports already state. Jack also said that international comparisons, such as those from the OECD, don’t include some of those factors. But he still notes that flanker brands are still not an attractive option for the “vast majority” of subscribers because the services are limited in such things as service area, features and devices. However, Telus Corp. pointed out in a statement that's not necessarily always the case, noting that its Kodoo and Public Mobile flanker brands have the same service areas as its main brand. Masse acknowledged in a follow-up interview the limitations of Nordicity’s reports — a continuing series since 2008 for ISED and the CRTC — and the complexity of an endeavour to include all factors when assessing price comparisons. However, he said Nordicity must make those limitations more prominent, perhaps at the beginning of the report. Masse also acknowledged Jack’s concern that MEI’s assertions do not contain quantitative research to support its point, saying that the point of the report is to “criticize the interpretation that has been given over the years” by Nordicity and Wall Communications. “It would be a hugely complicated study to compare all these factors.” Despite their contrasting reports, Jack said Nordicity agrees with the MEI that the country has “unique geographic and climatic challenges and relatively low population density, making the cost of service per subscriber higher.” The MEI report also said that the telecom industry should not be regulated by the CRTC anymore, seeing as the industry evolved to have more competition. Instead, it said, it should fall under the auspices of competition law. The biggest result of this would be that the CRTC, stripped of its mandate, would not be able to set rules on the industry, such as mandatory network sharing, Masse said. Otherwise, Masse said he hopes MEI’s report will bring balance to the discussion, which he said has been a problem among media and government officials. “Let’s look at the full picture,” he said. — With reporting by Ahmad Hathout at ahathout@thewirereport.ca and editing by Anja Karadeglija at akarad@thewirereport.ca

Canadian telecom prices justified by speed, quality: MEI

News | May 8, 2018

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Canadian telecom prices justified by speed, quality: MEI

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