Public policy
44

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

  1. jon:

    uhhh… all privately funded? i smell BS. http://openmedia.ca/blog/bc-government-invest-1-billion-telus-network


    • Ted Woodhead:

      Yup all privately funded.


  2. pho:

    >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

    This is a good thing. It’s called choice. My experience has been that every other country I’ve traveled / lived / worked in has had much better plans, flexibility and have treated their customers better. Contracts can be a great way to subsidize phones for some people, but literally forcing it down everyone’s throats in a convoluted mess of service tiers and options-that-aren’t-really-options and tabs is bad. You have no idea how amazing it is to go to Europe or Asia and simply grab a phone and a SIM card and be on your way without any hassle, haggling and harassment from the telcos.


  3. Tyler Lussier:

    All this proves is how out of touch your company is with the general public. The Big 3 are expensive as hell and isn’t it your job to try and be competitive instead of more or less price matching?

    Also, raising prices on monthly plans because we are finally (and thankfully) going to two year contracts is a jerk move. It just shows you are a greedy company and won’t change for the better until we have the government intervene more. I am glad they blocked your Moblicity purchase. You don’t deserve to have them.

    You are right we are aren’t as densely populated as the U.S. or Britain, but when almost all Canadians live within a couple hundred kilometres from the U.S. border, it makes your point invalid. You can quickly expand your network coverage a little bit and claim you cover 90% of the population, yet cover 1% of our land mass. If you actually had to tell the public how much of the land you cover instead of population then it would be a different story and it would show how much you aren’t putting into covering this country.

    Example, Northern Ontario, why is that area NEVER getting coverage? What is your reason for that? People need to drive down Highway 1 and if they say get stranded they will not have cellphone coverage because you as well as the other 2 big companies decided its not worth putting some money in covering the country.

    Before you write another report like this, take a step back, realize that you have no idea what you are talking about and that you have no idea what the Canadian consumer wants.

    What we want is good coverage, good prices for good services, and good customer service. Until you can do that you are just like Rogers and Bell.


  4. Vishal Malik:

    Hello again Ted:

    You mentioned that Nokia Siemens found that Telus has the best 4G LTE network in the world. Can I access that report somewhere?

    Vishal


  5. Neil:

    Wow, Ted. It takes real chutzpah to claim that Michael Geist, Canada’s Research Chair in Internet and E-commerce Law, has a “vested interest in a well-established, but ill-informed, position” on this issue, given your title as “Senior Vice President of Federal Government and Regulatory Affairs” (ie lobbyist spin-doctor) for a major Canadian telco.

    Clearly, you must not have a vested interest in this issue, apart from the fact that your work entails traveling to Ottawa, cap-in-hand, to claim your employer isn’t raking in huge profits and shouldn’t be subject to additional regulations or competition to protect consumers from your industry’s oligopoly and high prices. Meanwhile, your CEO and CFO talks to the financial community boasting about its high ARPU, strong margins and profitability, and the considerable cost savings of building out a wireless network with a competitor (Bell) while avoiding passing on those savings to customers.

    I guess you’re right, Ted. We SHOULD have the highest prices in the world, given the fact that even having a cost advantage to a competitor like Rogers doesn’t create a downward pricing incentive for your own services to gain market share. With captive customers thanks to high switching costs (previously 3-yr contracts and the long-running practice of huge cancellation fees and retention deals) and high barriers to entry (expensive spectrum and build-out costs, foreign ownership rules that have only recently been liberalized for fledgling upstarts), why chase customers? They only have 3 national choices, each with near-identical prices, packages, and with around 1/3 market share with low churn rates (see: captive customers).

    Forget Bill Gates, you guys are the real philanthropists by not charging the highest wireless prices in the world despite the fact that you easily could and SHOULD. You’re leaving money on the table.

    By the way, Mr. Geist has added a follow-up post about this issue, and another focusing on wireline broadband. In the interest of seeing more dialogue on this issue, including your valuable and apparently conflict-of-interest free contributions, I’d love to get your take on their most recent posts.

    Regards,
    Neil


    • Ted Woodhead:

      Thanks Neil,

      As you can see from my previous response I disagree. I don’t agree with the OECD report or Michael’s analysis of it. It remains simplistic and there are many factual ways to disprove it if you care to look. I think we should be looking at the world leading deployment of technology and investment. I am most taken with your call out to me. My repsonse to that is we DON’T have the highest prices in the world. We have the best networks in the world and we have the best quality of networks and value.

      ted


  6. Martin:

    I’m an instrument tech for a pipeline company in Alberta and almost always have cell phone coverage everywhere I go, even up at Fort Chipewyan which is about 1,000 km north of the US border so I’m not sure where Tyler Lussier gets his impression there is no cell service outside of Toronto – maybe he doesn’t get out much. Most of Alberta also appears to have LTE which allows me upload my telemetry logs just about as fast as the wired connection in my office.

    I have a personal cell phone that costs me $40 a month which is about the same price as a pizza in Fort McMurray! The cost seems reasonable to me (the phone, not the pizza).


  7. Lugnuts McGruff:

    And Michael’s response.
    http://goo.gl/iyLjO

    But no no… I fully agree with Ted, we’re lucky dare I say fortunate!

    Or put another way, “Shut up and give me your money your ungrateful filth!”

    Well stated… Well stated…


    • Ted Woodhead:

      Thanks for your comment lug@nuts.com. If I may begin with your comment perhaps I can explain myself and where I come from on this. I became involved in wireless when I was 16 years old and that was a long time ago. I got an amateur radio licence from the Department of Communications to operate an amateur radio station from my room with a small wire attached to a tree in my backyard (my parents and neighbours were very tolerant). I was mesmerized by the ability to communicate with people all over North America and occasionally in Europe and South America. I was hooked on wireless.

      I was thinking about this because it calls out the technological challenges of wireless. These challenges exist everywhere. It’s physics. It’s also geography and distance. Canada is the most inhospitable environment in which to deploy wireless or wireline of any that I know of. Spool ahead to today. I am not going to bore you with the details but we have many competing networks serving 99% of the Canadian population with the most advanced networks in the world. We have 4,5, 6 and more competitors in major markets in Canada and even beyond. I don’t understand your post. Michael’s post is simply incorrect and it looks only at a flawed report from the OECD and attempts to engineer a thesis that is incorrect. It is methodologically unsound and no one ever questions it because the only focus they want to bring is price. There are many reports that have a more balanced view and many more commentators that do as well. Lug@nuts.com we don’t compare to the 34 OECD countries on price alone. We have many differences in terms of standard of living, cost of living, size, density, quality, value, etc. I will post again about what a small G7 country has and what it needs in terms of a digital economy strategy and what it needs in terms of investment incentives to continue Canada’s leadership in networks.

      I guess will have to leave you with this. I disagree. Oh, and my daughters are still doing the radio relay thing with folks all over the world on the Internet. Funny how that works!

      ted


  8. MMD:

    I can tell you my experience as a telus customer…… I pay 100+ for a cellphone i don’t really use for anything but data. Telus has some of the worst data plans for cellphones in all of the GTA (at the very least) and I can’t wait to jump ship. You can’t tell me we are competitive when you have O’Leary using his Verizon plan in Canada because it’s cheaper (a man that’s made his name in capitalism and being a free market cheerleader).

    If Telus is so great why can’t i get a real data plan with something more than 2 gigs….maybe something that isn’t 150 bucks a month.
    As to this blog post. Yes we aren’t the worst, but comparing us to other countries getting gouged doesn’t address the issue either. And as for the chart comparing us to the rest of the G7 “we aren’t the worst we’re … 5th or 6th or 7th, so there” also not a very good point. So you aren’t the bottom, but you’re pretty close to it. Look we all know the big 3 telcoms aren’t hurting for money so quit acting like it. Take all the % of profit you get from text messaging (it gets carried on the backbone anyways so they have to be sent so it’s essentially free) and build northern ontario some towers.

    Also where are the 4,5,6 competitors…. do you really consider Wind and Moblicity as competitors… it’s not like Telus, Rogers and Bell are going to let them fairly compete in the wireless spectrum auctions so they’re essentially dead anyways.

    I can’t wait for my telus contract to end. I’m counting down the months and jumping ship…. it’s blogs and comments from Telus pretending they aren’t that bad makes me want to leave.


  9. Rob:

    The 2 year pricing blatantly proves that we need to open up this country to more foreign players. The pricing is so exact between the big three that you may as well all merge into one company for all the good it does us. We need to definitely hold more spectrum aside to force competition. The very fact that we had to force the incumbents to implement 2 year contracts also says a lot. When your living in Canada and torn between paying US roaming charges on a US carrier for service vs a Canadian contract, something is very wrong.

    The US seems to be deploying what they call “small cell towers” that blend into the environment are we looking to do the same thing? It seems like it would cut down on the big ol towers (I have one right above my head right now on top of our building)

    and don’t get me started on our lack of FTTH internet. If you compare our base technology to other countries and price its not very good. The LTE is so so, the coverage is so so and the prices are very high that my vantage point as a consumer not knowing how much investment goes into it.


  10. MMD:

    So the CRTC asked Telus to make cheaper 2 year contracts for phones

    Telus responds with this:
    http://www.thestar.com/business/personal_finance/2013/07/16/telus_says_new_twoyear_wireless_plans_offer_better_value_despite_higher_prices.html

    Mr. Woodhead while I commend you for enabling comments on this post you clearly are a thinly veiled lobbyist for your company. Do not question the integrity of Mr. Geist’s opinions and views when your company is engaging in actually double speak.


  11. Lugnuts McGruff:

    @ted

    Look Ted, thanks for taking the time to reply back, really.

    I don’t know what to tell you but to provide you with some first-hand annecdotal evidence.

    While visiting family down in the states over Christmas I wanted to have mobile service as we were going to be on the road for part of our stay. Armed with my unlocked Nexus 4 (unsubsidized) I walked into a retail T-Mobile store and picked up 1 month of service, (was only staying 2 weeks but meh), that entitled me to 100 anytime nationwide minutes (didn’t use any but nice to have), unlimited nationwide texting (used that a lot), and unlimited data (firsrt 5 Gigs unthrottled, unlimited but throttled after that). All of that costed me US$30 (They waived the $10 Sim card fee, how nice of them!)

    We traveled through the South and for the most part coverage was fine. From time to time I dropped to 3G and once to edge but +95% of the time I was on HSPA+.

    All that for $30 bucks plus tax! And that was a regular plan, not a promotion, in fact I think its still available although I haven’t checked recently.

    So please explain to me again where I’m missing the value of paying more than twice as much for similar service please?


  12. Ted Woodhead:

    MMD I’m not sure what you’re complaining about. The CRTC eliminated 3 year contracts because it presumably wanted to help competitors. As I said numerous times following the Code decision in some cases it might lead to higher prices in others not. 4 year car leases are cheaper than 3 year car leases. In either circumstance the retail price of the car remains the same just like an iPhone 5. With respect to Professor Geist, he’s just wrong.


  13. Ted Woodhead:

    Rob, thanks for dropping by. On Micro Cells, TELUS was the first telco to commercially deploy LTE micro cells in the world in 2012. On FTTH there are fibre to the home deployments in Canada although the pace of that investment is dependent on various regulatory factors that are outstanding. Sorry you think it’s double speak. To me it’s simply common sense.


  14. Ted Woodhead:

    MMD, I see you posted twice. I wanted to say as well that you can get a 6GB plan for $65 and while we’re on Verizon let’s look at that for a bit. 16GB iPhone 5 TELUS is $199, Verizon $199. Activation Fee at TELUS $0. Activation Fee at Verizon $35. Term: 2 years for both TELUS and Verizon. Minimum monthly spend $70 at TELUS and $80 at Verizon. Total cost over term at TELUS $1,879 at Verizon $2.154.


  15. Ted Woodhead:

    Martin, thanks for your comment. That is exactly what I’m talking about and that is the point that other commenters seem to miss.


  16. Ted Woodhead:

    Neil thanks for taking the time. Obviously I think Michael Geist is wrong on this issue – not slightly wrong, somewhat wrong but completely wrong. He has a thesis and won’t deviate from it regardless of readily available information. In any event, you seem to be under some curious notion that Canada can sustain multiples of wireless carriers. That isn’t going to happen. It never has happened in the past and it won’t in the future. The US can’t sustain 5. France has 4 for the moment, Germany 4, Italy 4, Japan 3, the UK 4. Each of these countries has population densities greater by factors than Canada. The US ten times greater, Japan one hundred times greater. Most of these countries are much smaller than Canada. I could fit all of western europe inside BC and AB.


  17. Ted Woodhead:

    Hi Vishal,

    I do not have NSN’s permission to release the report but I can ask.

    ted


  18. Vishal Malik:

    Thanks Ted,

    What I’m interested in that report is:

    1. What was the test parameter?

    2. Which countries and operators were studied?

    3. What was the ranking of operators, Canadian or international, other than Telus?

    -Vishal


  19. Neil:

    Hi Ted,

    Thanks for getting back to me. I appreciate your taking the time to respond to my comments and questions.

    I’m curious to learn more from you about how our geography and population density factors into our ability to sustain more competition, be it through mobile networks or the MVNO structure. Are you suggesting that our vast size presents a higher-cost operating structure than other countries, making it more difficult to build economies of scale and, consequently, sustain new market entrants?

    Taking a look at our coverage maps compared to the U.S., you’d see that we have less area covered by our networks in Canada. TELUS doesn’t build out for our whole country, just where they want to (or are paid to). Canada’s population was 81% urban in 2011 (identical to the U.S. 2010 figure), and we’re concentrated mostly in cities near the U.S. border so clearly we’re not spread out very evenly across our great country. Plus, as “jon” stated earlier in this thread, the BC government had to PAY YOU to build out in rural BC because you wouldn’t do it yourselves. It must be great to have taxpayers subsidize your capital expenditures if we’re talking about establishing a “level playing field” as your CEO advocated last week vis a vis Verizon.

    Other markets, including most of the EU and UK, collect lower ARPU, and have higher churn rates (Merrill Lynch’s Wireless Matrix). We’re only now eliminating our 3-year contracts thanks to the CRTC, which should increase churn somewhat. You never answered my point about how all three of our incumbents have near-identical pricing/packaging structures. With choices like those, why WOULDN’T I want more choices for Canadians? As far as I see it, Canada has 3 national carriers, operating on 2 networks (Bell/TELUS & Rogers), with 3 almost-identical offerings on their primary brand and another for their flanker brands they only developed to copy and fight the upstarts.

    In their most recent earnings, Orange (operating in France, Spain, Poland, other Euro countries and emerging markets) had a consolidated EBITDA margin of 30% (no wireless breakout). Deutsche earned just under 30% (EBITDA-capex, a simple “quick and dirty” free cash flow tool) in Germany, AT&T 28%.

    TELUS delivered a wireless EBITDA-capex of network revs of 39%, Bell delivered 36%. Rogers didn’t have the luxury of building with a competitor to share costs as TELUS did with Bell, but still delivered a 31% operating margin-capex. Rogers doesn’t break out wireless-specific EBITDA or Depreciation/Amortization in their disclosures so that 31% is very conservative.

    Where’s our geography and sparse population density factoring in? By your logic, Canadian telcos should be having a tougher time scaling up and turning a profit, making it a weaker climate for any new entrants. By the looks of these numbers, international telcos would love to have our financial performance! Merrill Lynch also confirmed in their wireless matrix that Canada’s one the most profitable markets. In the EU, regulators have capped roaming rates and are scheduled to decline dramatically over the next few years. Maybe we need the same thing.

    Your most disturbing remark was about how Canada can’t sustain more competition, and never will. That’s quite a dismissive statement, and since I don’t have the resources to obtain a crystal ball unlike TELUS, I can’t draw my own sweeping conclusions about the future. I can only point to how profitable you guys are relative to most international carriers in the developed world and pose this question: How about a continental network that would reduce roaming rates and consolidate North America like how Vodafone, Orange, and Deutsche have done in Europe and elsewhere?

    That leads into my point about Verizon. I can understand Mr. Entwistle’s fear regarding Verizon entering the Canadian market. TELUS would be the most exposed; unlike Rogers and Bell, your company has little to no media content, and therefore can’t bundle anything on mobile devices to buffer against the inevitable price reductions you’d have to undertake should Verizon enter the market as a cost leader. I imagine TELUS will be lobbying for an elimination of all foreign ownership caps so Entwistle can sell the Company before margins start declining and investors get restless, which would create a real “bloodbath”.

    I’d like to see that NSN report as well. Even an executive summary would work. Consumer Reports ranks all 3 of Canada’s national carriers well below the U.S. big 4, which includes surveyed results from consumers in both countries.

    Cheers,
    Neil


  20. MMD:

    You might want to read this Mr. Woodhead … You can’t deny Telus seems to be getting a lot of criticism over its prices

    http://wp.me/p16NxN-1V5


  21. MMD:

    “Don’t let the critics with a vested interest in a well-established, but ill-informed, position spin you on this one.”

    But I wanted to post another of Telus’s questionable policy/views links
    http://www.michaelgeist.ca/content/view/6915/125/

    Because you (Mr. Woodhead) would be impartial and unbiased as a Telus exec?


  22. Jon:

    The 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.

    Those facts are dishonest. Wireless technology that doesn’t work is useless. There’s been NO INVESTMENT to upgrage or provide better services in my coastal comunity in BC . I’m paying $90 a month to use dialup internet. It use to be $29 untill telus disabled ICD making the phoneline unusable when online. Yet A fiber optic line runs past my door but our community is not allowed access to it. Telus Cell phones are unreliable so wireless internet is basically useless. With Telus The future is more HOT AIR.


    • Ted Woodhead:

      Hi Jon,

      Canadian telecommunications carriers actually invest more per subscriber than those just about anywhere else – almost double the average for developed countries. The challenge lies in Canada’s geography and sparse population which creates a barrier when trying to provide service in very rural areas. With that said, 99 per cent of Canadians have access to wireless from TELUS and nearly 80 per cent of the Canadian population can access cutting-edge LTE networks thanks to continual investments by Canadian carriers. We continue to add more wireless sites every month to further extend our network – the B.C. coast, while challenging, is very much on our radar screen. We want to see that number continue to grow but, in order for that to happen, we will need access to much needed spectrum in the upcoming auction.

      Jon, I would like you however to contact me about your issue with wireline Internet. I think we can discuss ways that we can creatively address this with Government. Please DM me.

      Ted


  23. Rob:

    “Ted Woodhead: “Rob, thanks for dropping by. On Micro Cells, TELUS was the first telco to commercially deploy LTE micro cells in the world in 2012. On FTTH there are fibre to the home deployments in Canada although the pace of that investment is dependent on various regulatory factors that are outstanding. Sorry you think it’s double speak. To me it’s simply common sense.”

    Hey Ted,

    Thanks for responding, that’s good to hear about Microcell towers and that would make the cost go down and make the coverage mobility a lot more manageable. Its a shame about FTTH, I am not sure it is a regulatory issue as the company “onegigabit” seems to be poised to run fiber or to dish buildings to carry big data and they are a tiny start up. Your current most potent internet plan is 20-50 mbit a month for 75$ a month (700$+a year factoring promotion no doubt gets cheaper if you bundle not overall but for the web). Meanwhile I can and do go get a 10Gbit VPS in Europe for 20 dollars a month. There is just a massive disparity present in nearly all areas and its really difficult not to notice as a consumer. So when I hear things like “we have the best network” and you offer max 50mbps its hard not to choke on my coffee a bit.

    Re: the pricing I am not sure full page ads or a “broadening” of the perspective will help us here. I mean we should be realistic, as customers we travel and we know what its like in other countries, we have seen the average revenue per use you make, we know how much phones cost elsewhere unlocked, either outright and on subsidy for 1-2 year contracts and while you should try to make as much money as possible I think customers feel you have really reached the end of what you can possibly get away with.

    I would assume, if your prices were as good as you could do, and you had explained why that a number of Canadians would come into your blog and on websites and social media to validate and support what you are saying and to compliment you on what you are able to offer and if this is truly and honestly as best as you can do they would just relax about it. However that is not what happens, I think you should try to explain why this is the best you can do and try to make us understand so that we can help you out as consumers and Canadians and pressure the government to make changes that would help you be able to lower prices.

    Alternatively If Verizon comes in, especially with government assistance I strongly hope that it will be the push you never needed because you took bold action preemptively to look objectively at the country, cut where you need to cut and adjust where you need to adjust to offer a solid price that we can be proud of, I don’t doubt what you say is accurate in your original post, but its only part of the story, we as consumers live the other part.

    Again this is my somewhat un-informed view on things not knowing how much investment goes in or what the hurdles are, just as a person working in the technology sector and as a tech consumer in general.


  24. MMD:

    Now that Telus can’t win the PR battle it’s trying to sue the goverment. Because its soooooo fair

    http://bit.ly/1e8b0j0


  25. Ted Woodhead:

    Neil, MMD,

    Have a read of this and it will explain the total disaster of European wireless policy and how Canadians enjoy the best networks and extract superior value than in other countries:

    http://www.gsmamobilewirelessperformance.com/GSMA_Mobile_Wireless_Performance_May2013.pdf

    Oh, and before you start typing, I’ll have some more for you later.

    ted


  26. MMD:

    Well Ted,

    I Tried to find that 60 dollar data plan you mentioned but all I could find was your company’s smartphone lite plan which for me (heavy data user) turns into 130+ (60 for the plan itself plus the top tier 80$ charge) so I left for moblicity who is charging me 35 + 20 for 4g data up to 20 gigs (tells doesn’t even offer that size data plan as far as I can tell). Thank you Ted for gouging me enough to become proactive about leaving and this combined with this very self serving blog post was the straw that broke my back.


  27. MMD:

    Mr. Woodhead I see your EU report and i raise you a report from the public interest advocacy center

    http://www.piac.ca/telecom/big_three_wireless_companies_desperate_to_avoid_competition/


  28. MMD:

    Oh and the GSM association of owners and operaters aren’t a biased sourced?… I “Scratched the surface” of that report and found it was more big companies whining…again.


  29. Adam:

    I see this more as a generational issue rather than anything else. There are 2 distinct groups with different views and opinions on this issue, young(socialist) and older generations(conservative)

    The younger and more socialist groups see the injustice of it all. Over paying for service they see as essential. Any of the canadian companies(Rogers,telus, bell) can defend the price is comparable to USA and for most parts this is true. People can find instances where there are inconsistencies but these are few and far between. The issue with the younger group is overall price. When “TELUS Corporation’s fourth quarter 2012 revenue increased six per cent to $2. 85 billion from a year earlier” this is a problem. It is an overall gouging of consumers. The big 3 aren’t charging more than their USA counterparts, everyone is just overcharging. Suggesting that jobs are at risk while making 2.85 billion just doesn’t make sense.

    The older and more conservative generation may see it different. I read a good article today on how the 90’s changed the way business measures success and how investors expect higher revenues. The 2.85 billion was presumabably seen as great and the stock price price has continued to go up since 2010. For the gen Xers who are reliant on good returns this is probably great news and with a dividend of 5.4 %(as of today) that can’t hurt either.

    My view:
    The problem with all of this is the changing attitudes on big business for the younger generation, who rule the internet and social media. Telus and other providers will keep seeing negative views on business while continuing to have a revenue in the billions.

    Myself, I don’t believe that adding another competitor to the market will decrease cost over the long term, only short term to gain consumers who are on the hunt for cheap service. A drastic change needs to take place in business North America wide, where the market does not react with dramatic gains and losses on a 2% revenue change.
    I don’t envy the PR people who must impress upon Canadians that adding additional providers will possibly provide initial lower rates but at the end of the day it is just another pig at the trough that will hurt stock prices and hurt Canadian business, all the while sending jobs overseas because of cheap pay rates.

    Any rhetoric about loss of canadian jobs well having call centres in India just makes you look stupid. (This is meant specifically for you, Telus)


    • Ted Woodhead:

      Thanks for your comments Adam. In response to our comments on Canadian job losses, my comments are not hypocritical at all. TELUS does operate call centres around the world, which are owned and operated by our subsidiary TELUS International. However, only a small number of the TELUS International team actually supports TELUS’ customer experience needs in Canada – they primarily provide contact centre solutions for Fortune 500 companies. Our contact centre in Manila, for example, has about 8,000 employees, of which over thousand speak with TELUS customers. The vast majority of our call centre jobs are in Canada, where we employ more than 7,000 customer support agents – a number we plan on continuing to grow.


  30. Adam:

    On top of my last comment I have one more thing to add. As I said, I don’t believe that service rates will change for a long term basis, but hopefully quality of service will. Telus shut down all the locations servicing land lines in my hometown, there is no place to talk to anyone, except over the broken phone. Closest technician is 7+ hours away. Waiting 4 days to have someone service a broken landline is a fail on Telus’ part.


  31. DST:

    Mr. Woodhead, can you justify recent claims that cellular plan costs are dropping when they are entirely driven by the discount plans from the 4th party carriers (Wind, Mobilicity, Public Mobile, Petro-Can/7-11, etc.) – plans which are anywhere from 1/3 to 1/3 the price of Big 3 plans? Wind and Mobilicity have even built their own networks with only a fraction of the generous government support provided to the Big 3 over the last few decades, so why are they able to provide discounted services while the Big 3 aren’t, even with their transparently manipulatory discount brands? (Koodo, Fido, Virgin, etc.)


    • Ted Woodhead:

      DST,

      Actually, wireless rates have gone down pretty much every year since wireless service was launched in the 1980’s, even in the many years before the new entrants. The decrease in the cost of wireless rate plans in Canada has been a result of new technology and brisk competition in a maturing industry. A good source of information around this is a study that was conducted by Wall Communications Inc. for the CRTC in April of this year (page 24).

      Ted


  32. Sean:

    Great article Ted. Having seen the research it seems that the government is trying to win votes by fixing a problem that really doesn’t exist. People feel like they pay too much? I know I pay too much… I pay $12 for a drink on a Friday night…. I pay $250 per month for gasoline …. I pay $15 for a movie ticket and then I pay another $15 for popcorn and a bottle of water. Considering how much I use my cell phone, $65 per month is one of the few reasonable expenses I have.


  33. Chris:

    The argument that wireless infrastructure costs more in Canada due to its land mass is fallacious. Like any other country the infrastructure is placed near people. For example Whitehorse has 19 cell towers while Edmonton has 600. Canada has ~14,500 towers for ~26M wireless subscribers while the US has ~220000 towers for 327M wireless subscribers. It would seem per subscriber Canada actually has less infrastructure. So while we live in a vast country, most of it isn’t served by wireless. Anyone who has driven on the Yelllowhead or #1 highway can attest to the fact that consistent coverage is confined to populated areas.

    However, all thee arguments as of late seem to be smoke screens around maintaining a market that benefits a handful of incumbents. If the Canadian players feel they are delivering good value they should also be confident the market will sustain them in the face of real competition. Instead of lobbying policy makers the carriers should be making a credible case to the public.

    Being in a senior position with Telus I’d guess you haven’t had the pleasure of having to navigate through a maze of interactive voice response units to simply talk to a person. After all the prompts and waiting you feel excitement having actually managed to hear a real person, only to be tranferred to yet another labyrinth or reach a person not empowered to do anything but reiterate a script.

    I’d pay more money for a higher standard of customer service, heck…any customer service would be good. At Telus the future may be friendly but the present is downright surly.


    • Ted Woodhead:

      Chris,

      It’s important to note that when you look at coverage areas, just those square kms where we have wireless and excluding those unpopulated areas where we do not, Canada still has one of the sparsest populations in the world – just 12 subscribers per square km while the UK has 312. In part because of that, Canadian carriers invest almost twice as much per capita in wireless as the average in the OECD, in fact more than any other country in the OECD.

      As for wanting to maintain a protected market, that’s also not accurate. TELUS has been on the record calling for a lifting of foreign ownership restrictions in Canada going back to 2001. We welcome foreign competition, whether from Verizon or any other company. We are simply asking that it be on a level playing field.

      Ted


  34. Adam:

    Hi Ted:

    All your answer does, in my opinion, is prove my point. Telus has created a sister company so that they can claim no meaningful responsibility or liability for it. By your own ommison Telus International has over 1000 people serving Telus customers, these were Canadian jobs that were moved or just not developed in Canada inthe first place. Employees were offered buy outs and instead of highering a new Canadian employee you moved the position out of the country and contracted it to yourself. The Telus International branch could be run in Canada, if Telus’ priority is Canadian jobs, but Telus decided not to because Canadian jobs aren’t the priority. The priority is money. Renaming and splitting the business does not change that the company is Telus.

    But i will pay devil’s advocate for a moment.. So based on your response, as a Telus representative, I have the perfect solution. Just as Telus is not hypocritical, Verizon getting these 700mhz bands isn’t unfair. As long the number is small enough it is still considered fair. You had 8000 Canadian jobs and shipped 1000 to Manilia. (12%) but you say you still support Canadian jobs. So as long as Verizon takes less than 12% of the bands it shouldn’t been seen as unfair.

    Or if you prefer Verizon can do the same. Create a subsidiary business here, they aren’t Verizon anymore.. They are Verizon Canada. They don’t have 4 times the business, in fact the have no business. All the money that will be spent is for Canadian business and for Canadian infrastructure. The bulk of employees will be in Canada, sure they will contract a few but what’s a few between friends.


  35. Alexander:

    what will drop our phone bills? they are still too high for data! i was just in Italy and 5 euros (almost 7 CAD) got me 3gigs of data for my tablet. Another 15 Euros (22 CAD) got me 2 gigs of data on my cell phone, plus unlimited texting, plus unlimited nationwide calling (within Italy). WIll we ever see plans like this here??? We all pay a lot for data and cell service here, and i am curious when that price will eventiualy drop??? Italy is a fairly comparable economy, but i have seen that four carriers is very helpful in keeping prices down.


  36. Al:

    What’s cheaper in Canada than in the US? I can only come up with maple syrup as an answer.

    Why do the conservatives have a fixation on wireless prices? Trying to garner support from voters? Votes to a political party are like profits to a private company. It’s the only way they can stay alive and flourish. This said it’s our decision as a society to choose the path to our collective success and happiness. In a democracy with a capitalist system, this becomes chaos as anyone who perceives a personal gain will want to get things done his way. Very often, common sense prevails. Sometimes it does not. I don’t have a better system to propose for this post. I can only provide my personal contribution to this public policy blog.

    People want lower prices. I, as an individual do too – for everything! Our Canadian government needs more revenue to provide the services we expect as a modern society – without going more deeply into debt.

    If I put myself in the government’s shoes, the phone companies are an easy target for 4 reasons:
    -people (voters) typically have a negative opinion of them thanks to years of negative reinforcement (that’s a whole other topic)
    -they generate rather positive revenues for the government (gst on bills, wireless auction revenues, taxes).
    -phone/cable companies have been quite profitable for the last few years.
    -phone companies are heavily subjected to government regulation (CRTC, Industry Canada). Fair enough, as it seems to be the case in most developed countries.

    A lot of businesses have been quite successful for the past few years. In the capitalist system, that’s a good thing. That’s a company’s objective: bring profits to shareholders. If you can create jobs and national prosperity through the services you provide, that’s a plus. This is where phone/cable companies are good, if not great. Telecommunications are a huge enabler for a democratic society and economic prosperity. Let’s not start a race toward the bottom here!

    So the conservatives haven’t been letting the people down completely: they indeed failed so far to bring a new 4th national wireless carrier as they intended, but they brought in a boatload of money for us, the people, in the last airwave auction. That surely helped to pay some bills.

    So this time around, we have this spectrum auction coming. The new providers (I’ll call them the newbies) that emerged since the last round haven’t done well. It has been at least 4 years so everyone in Canada’s wireless contract has been renewed at least once- meaning people could have fled to the newbies. It didn’t happen. Turns out, people prefer having a subsidized phone and a lot of other things that the newbies business models didn’t plan for. The prices are (were) A LOT lower (public mobile for example 19$ a month unlimited voice – their price keeps going up). Still not much traction. Videotron in Quebec may be doing ok, since they already had a client base for cable services. But it hasn’t been, by any means, a mass exodus to these newbies. Nor have opinions really changed about wireless companies. It’s a head scratcher. Meanwhile our federal finances are still a cause for concern and the ruling party’s plan to have a 4th national carrier is still far away from reality (which will surely be a topic that will be rubbed in their face by the opposition in the next election).

    So here’s where the shortsightedness comes in, according to me: we are going to let Verizon in on our airwave auction, with a special incentive meant for startup companies- an incentive that may actually even hurt the newbies themselves given that Verizon could afford to buy all the spectrum or at least bid the prices way up? Sure, the companies at the auction, the more money we’ll make from it. It just doesn’t make sense to let a US giant get into our market with an unfair advantage in comparison to our larger established companies. Sure, let the newbies have a a swing at discount spectrum, as in the last auction, to give them a chance to stay alive. They did create some jobs local jobs, contribute to lower prices in general and make some satisfied customers.

    Why would we want to let Verizon in with a special deal though? The real head office and good jobs will always be in the US. They have the money to bid at market priced spectrum and not reserved discounted spectrum, right? It’s also the fact that in giving Verizon a special deal, we’re penalizing our existing companies and their shareholders – most of them Canadians.

    Let’s make some auction money, let’s have more competition, but let’s not give an unfair advantage to a foreign giant.

    Thanks for this opportunity to voice my opinion.


    • Ted Woodhead:

      Hi Al,

      I appreciate you taking the time to share your insights and opinions on this topic. I wholeheartedly agree that Verizon should not be given any unfair advantages. Bring on the competition, but let’s compete on a level playing field.

      Ted