Canada’s wireless industry delivering greater value, affordability and investment

July 14th, 2021

The Economist’s Intelligence Unit’s Inclusive Internet Index ranks Canada first out of 120 countries in internet affordability (a combination of fixed line, mobile service, and mobile phone cost), and tied with a number of countries as having the least concentrated wireless market. Similarly, global accounting firm PwC recently ranked Canada first in the G7 for affordable wireless services.

Unfortunately, these studies are too often ignored. Instead, more attention has been given to one-dimensional and misleading price comparison studies that paint an inaccurate picture of telecom prices and affordability in Canada. The latest example is a mobile data usage study from Swedish firm, Tefficient.

This study claims that Canada is an outlier compared to other countries, suggesting that Canada’s wireless industry has the highest average revenue per user (ARPU) with the lowest average gigabyte (GB) per SIM, and receives the highest revenue per GB of data. This makes for good “clickbait”, but there are fundamental problems with the report and its conclusions.

Over a year ago, Tefficient founder, Fredrik Jungerman, acknowledged that the data it receives from the Canadian Radio-television Telecommunications Commission (CRTC) “is reported so late for Canada …we aren’t too interested in incorporating Canada in our analyses going forward.” If you were to assume that Tefficient has included Canada in its latest report because it now receives more current data from the CRTC, you would be wrong. The report clearly shows that Tefficient has once again used two-year old data for Canada while using more recent data for other countries.

A lot has changed in the Canadian wireless market since 2019. In mid-2019 the national wireless carriers introduced unlimited data plans which offer large data allotments at the highest speeds and no data overage charges. Today, a typical entry level unlimited plan offers 30GB of high speed data for $80; or $2.67 per GB. Millions of Canadians are now subscribing to these unlimited plans. Meanwhile, the Government of Canada has reported that the price of mid-range plans have declined by as much as 25% since early 2020. 1

On a per GB basis, these plans are many times less expensive than the €14 (approximately CA$20) per GB that Tefficient reports as the average service revenue per GB received by Canadian carriers. Even the 2019 figure used by Tefficient is questionable as the CRTC’s own Communications Monitoring Report reports that the average revenue received per GB of data in 2019 was CA$10.07 – a 64 per cent decline from 2015 and half the amount quoted by Tefficient. 2

The steady decline of wireless prices is further evidenced by data compiled by Statistics Canada. While the All-item Consumer Price Index, which shows the cost of all goods and services, increased by 5.5 per cent since January 2019, its Cellular Service Price Index has declined 27.7 per cent over the same period.

The Tefficient report also includes a chart (figure 16) containing an x-axis label “Highest ARPU yet lowest usage” below an icon signifying Canada. Some commentators have unquestionably repeated this line in reference to Canada, yet one only has to look at the entire chart to see that both the United States and Switzerland are shown to have a higher ARPU. Meanwhile we know that data usage continues to increase in Canada and comparing 2019 usage data to 2020 usage data in other countries presents an inaccurate result.

The report also suggests that a lower price per GB equates to better value. As we know with purchasing other goods and services, the cheapest is not always the best. For example, India is shown by Tefficient to have the lowest revenue per GB, yet independent network analysts Ookla reports that Canada’s mobile networks are among the fastest in the world and over six times faster than those in India. Canadians deserve and expect the best when it comes to wireless services and Canadian service providers have a long-standing international reputation of delivering world-class services.

Finally, any meaningful comparison of prices must also consider the cost of delivering the service. Compared to most other countries, Canada has a low population spread out over a vast territory. This, combined with our harsh climate, higher spectrum fees, labour costs, and other expenses means that it costs more to build world-class mobile networks in Canada than in other countries.

For example, a recent study shows that Canadian network operators incur 83 per cent higher costs for network building than the average of Germany, Japan, France, UK, Italy and Australia, and over 34 per cent higher than operators in the U.S. It comes as no surprise then that between 2005-2015 Canadian service providers have had to invest almost two-thirds more for digital infrastructure than the OECD average, while Canadian service providers’ investments in mobile networks beyond this period have continued to outpace leading economies such as Germany, France, Korea and the UK. 3

Fortunately, policy makers in Canada understand the need to strike a balance between the key objectives of quality, coverage and affordable prices. They also recognize that the best way to achieve these objectives is through competition among the network operators; also known as facilities-based competition. And the proof is in the results.

As prices decline, Canada’s telecom network operators continue to invest billions each year in expanding Canada’s digital infrastructure to underserved communities and ensure that Canada maintains its global leadership in quality of service by deploying next-generation technologies such as 5G. Largely due to these investments, Canada’s telecom industry contributes over $70B in GDP and supports close to 600,000 jobs across Canada.

As the COVID pandemic has highlighted, Canada’s economic well-being, safety and quality of life depend on high-quality digital infrastructure. Making world-class telecommunications services available to all Canadians at affordable prices remains the focus of our industry.

1 https://www.ic.gc.ca/eic/site/143.nsf/eng/h_00005.html

2 CMR data set – https://crtc.gc.ca/eng/publications/reports/policymonitoring/2020/cmrd.htm – Retail Mobile, tab MB-S3.

3 BCG, Future-proofing Canada’s digital infrastructure to unlock benefits for all (2019)