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Scratch the surface and the shine comes off critic’s mythology


Despite his claim to the contrary, a recent post by academic and regular telecom industry critic Michael Geist about the new OECD wireless pricing report actually proves the point that Canadians pay competitive prices for very good wireless service – if you scratch the surface of his arguments to expose the facts underneath.

We’re not about to argue that Canada has the cheapest wireless rates in the world – that would be no more factual than the oft-repeated mythology that our prices are the highest.

Sugar_Maple_LeafThe facts, however, prove Canadians pay very competitive rates for some of the best wireless technology in the world – backed by very high investment by TELUS and our competitors.

One key fact – Canadian pricing is better than the U.S. in 12 of the 15 wireless pricing categories the report looks at. The U.S. has similar geography and economic conditions (including incomes) as Canada, though 10 times the population, and therefore makes for a better comparison than countries with far denser – and therefore less expensive to serve – populations and far lower average incomes.

A second fact – when you look at Mr. Geist’s chart, note we are being compared to countries like Slovenia, Slovakia, and Turkey – hardly a legitimate comparison when you consider their markets and economies are vastly different from ours. Despite that, if you focus on the high-usage tiers for smartphone service, which are the most relevant for comparison because that’s where the average Canadian sits, we finish 21st and 22nd out of 34 countries. That’s about average. If you compare us to just the G7 countries, which have more comparable economies, we finish third and fourth out of seven – right in the middle. As mentioned above, we do even better when compared to the U.S. one-to-one.

Check out the chart below for a comparison to G7 countries, using the OECD data.

A third key fact – the OECD report’s methodology is limited. It is not a comprehensive report, but rather it takes a random sampling of one or two plans for each country in each category and does not take into account the different flavour of services in countries. Their reports often end up comparing apples to oranges as a result.

The wireless data-only plans are a good example of this. At first glance it looks like Canadian prices are high for these plans – which are typically used on a laptop with a thumb-sized wireless modem. However, scratch the surface and you find that Canadian data-only plans offer customers far better speeds than plans in other OECD countries do. The OECD itself notes that in the 10GB basket, the plan representing Finland only delivers up to 400Kbps, Estonia 1 Mbps, and Canada 100 Mbps! They’re more expensive because they’re better plans, on better networks, and deliver vastly superior customer experience.

The OECD report also does not factor in the fact that most Canadian providers subsidize handsets for customers whereas that is uncommon or unknown in many OECD countries. Ignoring an upfront cost of $500 or more is not comparing apples to apples. It also does not factor in that typically Europeans pay for two or  more wireless accounts because they frequently travel between countries or cannot get the all-in pricing North Americans take for granted – for example, one account for daytime calls, a second one for evening and weekend calls. That’s why you get penetration rates of 160 per cent in Norway – 1.6 wireless devices for every adult and child in the country.

Which raises a fourth fact. The report highlights, and Mr. Geist ignores, that Canadian carriers invest almost twice as much in technology and infrastructure per customer than the OECD average. The only country that invests more is Australia, and that’s because they are undertaking a massive tax-payer funded infrastructure project. Our investment is all private, at no cost to taxpayers.

The chart below highlights just how much more we invest per capita compared to the OECD average and several countries including the U.S.

OECD report

Consider that world-leading level of private investment in the context of population density, and the challenges that come with serving a vast, sparsely populated landscape. Canada has only 12 subscribers per square km, compared to an average of 37 in the U.S. and 312 in the UK. If you factor out the unpopulated areas of Canada that don’t have wireless networks and only include the geography that does have wireless service, we are still serving the 200th least densely-populated landmass in the world. Despite this, 99 per cent of Canadians have access to cutting-edge wireless technology.

That investment back into service for our customers comes out of the profits we earn, and is directly responsible for the quality of the networks we offer. TELUS alone has invested $100 billion in Canada since 2000. On the back of that investment Nokia Siemens, an international telecom technology firm, found TELUS has the best 4G LTE network in the world – best quality, least dropped calls. I’m very proud of that, and the work that made that remarkable achievement possible.

When you consider our enormous investment, challenging geography, sparse population and outstanding networks Canada really SHOULD be the most expensive country for wireless service in the OECD, but we’re not. That’s a great success story we should be celebrating.

Scratch the surface of the report to get to the facts and you will find it says the same thing report after report says – Canadians pay about the same prices as people in similar developed countries for wireless service that puts us among the world’s leaders, all supported by heavy private, non-taxpayer funded network investment.

The CRTC and Industry Canada-funded Wall Report issued earlier this month found the same thing, so did earlier reports from Nordicity, Jeff Fan of ScotiaCapital, and even the 2011 OECD report – good prices, great technology.

Don’t let the critics with a vested interest in a well-established, but ill-informed, position spin you on this one. Scratch the surface of their arguments and get to the facts.

Service plans