Telecom prices fell? Tell my cell bill
If the price of your telecom service supposedly drops but your bill doesn’t, did it really happen?
That’s the big question after a recent Statistics Canada report stated that wireless and internet prices are falling, a finding that is at odds with many people’s lived reality.
The problem is that Statistics Canada is looking at the wrong numbers. This is dangerous at a time when policymakers are considering options for creating more competition in telecom, which is the only way to truly bring down prices — and bills. Incorrect data may convince them that action isn’t needed, when in fact it desperately is.
Statistics Canada reports cellphone prices were 26.5 per cent lower in February than they were a year ago, following a 16.4 per cent decrease in January. Promotional prices for new plans and bigger data allotments for some services drove this so-called decrease.
Internet services were also supposedly 13.2 per cent cheaper, with February prices dropping 9.4 per cent from the month before. Statistics Canada attributed this dip to specials offered by internet service providers.
Together, these apparent declines helped lower inflation slightly, to 2.8 per cent in February from 2.9 per cent the month before, the agency said. But Statistics Canada doesn’t look at the information that really matters — customers’ bills. Unfortunately, these are steady or continuing to grow.
In wireless, there has been little change over the past two years in average revenue per user (ARPU), a key industry metric that serves as a good proxy for bills because it divides a company’s total revenue by number of customers. As a recent analysis by the Globe and Mail found, ARPU figures at the Big
Three of Bell, Telus and Rogers paint “a much different result than the plunging prices reported by Statistics Canada.”
Home internet, meanwhile, is becoming more costly. According to figures from the Canadian Radiotelevision and Telecommunications Commission, internet ARPU across all service providers was $71.56 in the third quarter of 2023, up 10 per cent from $64.56 when the pandemic was declared four years ago.
That result jibes with the decimation of competition over that period, where big companies have bought up nearly every major independent ISP.
The Big Three argue that ARPU is not a good proxy for bills because it can reflect add-ons and features that customers choose, which maintain their payments despite getting base services at lower prices.
But many of those add-ons aren’t necessarily optional. In wireless, for example, the carriers have repeatedly raised fees over the past few years for new activations — effectively a tax for switching providers — and international roaming. Switching to get a better deal or using one’s phone while travelling are hardly optional decisions for many users.
Statistics Canada’s results also reflect a quality adjustment rather than an actual price drop. If, for example, a carrier doubles a customer’s data allotment but keeps the service cost the same, the agency counts that as a price drop even though there’s no change in the monthly bill.
These adjustments are certainly good for consumers, but they stop mattering after a certain point. Users don’t tend to see much difference between 50 gigabytes of monthly data and 100 GB, so additional adjustments only serve to further skew Statistics Canada pricing models.
Independent international comparisons continue to illustrate just how bad Canadians have it.
Canada ranks 216th in the world in wireless prices and 136th in internet, according to U.K.-based price comparison site Cable.co.uk. The federal government’s latest telecom report, by Wall Communications, finds Canada has some of the highest prices among surveyed countries in both wireless and internet. The U.S. Federal Communications Commission in 2022 ranked Canada 25th out of 26 peer countries in several studies of internet pricing.
Statistics Canada acknowledges its findings are based largely on a decline in per-gigabyte wireless data costs — a global trend — and advertised promotional pricing. Seemingly aware that its numbers don’t tell the full story, the agency says it is seeking further information from the big companies to improve its methodology.
It’s no wonder those companies are resisting these efforts, as Statistics Canada’s existing reports serve their purposes nicely.
The federal government is under pressure to fulfil its 2015 election promise to lower telecom bills and to show that it can combat inflation. The Statistics Canada numbers, which focus almost exclusively on superficial developments that seemingly mask the ongoing problems with competition and Canadians’ sky-high bills, do much to take the heat off both the carriers and the government.
Policymakers and the Canadian public shouldn’t fall for it. Supposedly or even temporarily lower prices do not mean that our country’s long-standing telecom oligopoly problem has been magically solved. Steady and climbing bills prove the opposite.