Cellphone and internet prices are going down and are contributing to lower inflation, according to the latest figures from Statistics Canada. Many Canadians, looking at their monthly bill, beg to differ. What’s behind this disconnect?
The truth is that the data, released earlier this week, reflects the falling global cost of data and temporary promotions – not actual Canadians’ bills, which are among the highest in the world and are in fact continuing to go up.
Accuracy on this point is important, given that regulators are in the midst of determining crucial rules that will determine whether Canadians will get competition for telecom services or whether they’ll continue to be gouged by big companies such as Bell, Rogers and Telus.
According to Statscan, consumers who signed onto a cellphone plan last month paid 26.5 per cent less than they did a year ago, following a 16.4-per-cent decrease in January. The decline was driven by lower prices for new plans and bigger data allotments for some services.
Internet access prices also fell 13.2 per cent year-over-year, owing to a monthly decline of 9.4 per cent. Importantly, Statscan attributes this decrease to “specials offered by internet service providers.”
These apparent declines helped drive slightly lower inflation in February, to 2.8 per cent from 2.9 per cent in January, the agency said.
Canada’s Big Three continue to rake it in, however, as measured by average revenue per user. ARPU, an all-important industry metric that the companies regularly tout to investors, is an excellent proxy for the average customer’s bill because it divides a carrier’s total revenue by its total number of customers.
As a recent analysis by The Globe and Mail notes, there has been little change in wireless ARPU at the big carriers over the past two years – “a much different result than the plunging prices reported by Statscan.”
ARPU in home internet, meanwhile, continues to rise across providers, according to the Canadian Radio-television and Telecommunications Commission (CRTC), to $71.56 in the third quarter of 2023, from $64.56 when the pandemic was declared four years ago – a 10-per-cent increase.
The Big Three’s chief executives this week argued at the House of Commons Industry committee that ARPU isn’t a good proxy for prices because it can reflect optional choices consumers make that effectively keep their monthly bills at the same level. A consumer who switches to a lower-priced plan, for example, may then choose to add extra features that keep their monthly bill – or ARPU – the same.
The problem with that is the question of just how “optional” those choices are.
In conjunction with lower advertised monthly prices, the carriers have jacked up other ancillary fees, including roaming and new activation charges. They’ve done this again and again and again and again.
Consumers may save a few dollars a month by switching to a cheaper plan, but after paying these supposedly “optional” activation fees, possible early cancellation charges on their existing contract or using their phone abroad, it’s clear how those ARPUs stay steady and rise. These additional fees also don’t show up in Statscan figures.
Not surprisingly, independent studies regularly find Canada’s telecom prices to be among the highest in the world.
Cable.co.uk, a price comparison site in the U.K., ranks Canadian wireless prices as 216th in the world and internet prices as 136th. The latest report by Wall Communications, prepared annually for the federal government, found that Canada has some of the highest prices in both wireless and internet among surveyed countries. The U.S. Federal Communications Commission Market Report in 2022 ranked Canada as 25th out of 26 peer countries in several studies of internet pricing.
In trying to assess pricing, Statscan is looking at the wrong figures. As The Globe and Mail’s fact-check detailed, the agency has its workers visiting company websites and recording prices. The results are thus heavily influenced by promotions and “likely overstate the extent to which people are paying less.”
Its conclusions don’t tell us anything about the state of competition, only that the per-gigabyte cost of data has gone down – a trend occurring globally. But stable and growing ARPUs suggest that the carriers are not actually passing on these savings to consumers.
It’s therefore a stretch to say that lower per-gig costs and promotional rates – despite steady or climbing bills – are driving inflation down.
Bell, Rogers and Telus are aware of how Statscan arrives at its results - and they’re also acutely aware that the federal government would very much like to proclaim its 2015 election promise to lower telecom prices as fulfilled, not to mention take credit for lowering inflation. So is it any wonder that they’re advertising prices that show up as statistically lower, but not where it really counts?
The CRTC is currently determining how and if the remaining smaller, independent telecom providers will be able to compete with the bigger companies. The regulator must look at its own, more accurate data, which shows that more competition delivered via more competitors – not fewer – is the only way to actually bring down people’s bills, and in a sustainable manner. Statistical smoke and mirrors won’t do it.
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