What a lot of bombast and nonsense has come from the Harper government about Canada’s telecommunications industry.
Sniffing political gain, the government targeted the industry with inflated or false accusations. Unlike the oil industry, which the government defends to the hilt, the telecommunications industry has been subjected to constant attacks for, among other things, excessively high prices, not enough competition and too-high roaming rates.
To protect “hard-working Canadian families” from these alleged practices, the government has bragged that its policies are bringing prices down. In fact – and facts usually flee when the government starts talking about telcos – the government’s attempts to bring sustained additional competition by restructuring the industry have failed miserably.
New entrants were supposed to stand on their feet and compete fairly and fully with the Big Three – Rogers, Telus and Bell. Instead, they have been given special treatment but still can’t make a go of it. Mobilicity is in bankruptcy protection. Wind Mobile is looking for new investors, without which it cannot build a serious national network. And who can forget the opéra bouffe last summer when the government tried – and failed – to interest U.S. giant Verizon to enter Canada?
The telcos themselves have done an Air Canada: launched a lower-cost service. These so-called “flanker brands” (Bell Virgin, Rogers Fido, Telus Koodo) might disappear if Mobilicity and Wind were to fold, but maybe not because they are targeted, like Air Canada’s Rouge, at a different part of the market.
In any event, the widespread belief that Canadian telecommunications prices are far too high – a belief eagerly propagated by the Harper government for political purposes – lies somewhere between a stretch and a falsehood, as demonstrated (yet again) by the Wall Communications report done for the Canadian Radio-television and Telecommunications Commission.
The yearly Wall report has become a kind of gold standard for hard data about telecommunications pricing. If you’ve got an hour, and are interested in facts as opposed to conjecture and bombast, the Wall report repays a read. The takeaway conclusion about pricing is that comparative measurement depends hugely on what kind of service is being analyzed. In some cases, prices have gone up by more than inflation; in other cases, they have declined.
Against the U.S., which is the comparison most Canadians make, Canadian prices are not out of line, including in-country roaming charges. Says Wall: “Consumers are no better off in either country as far as overall roaming charges are concerned.” Over all, telco prices are lower in Europe and Japan than in Canada, but higher in the U.S. (It might be remembered that Canada’s massive geography imposes costs on providers of national networks far beyond those in small geographic countries such as Japan and those of western Europe.) Cross-country comparisons can be tricky, since they depend on a range of service, network speed and volume.
What about prices that the average consumer frets about? For basic mobile wireless with low long-distance and local call volumes, prices went up 16 per cent from 2013 to 2014, a very big jump to be sure. Over the past five years, this kind of service has increased on average by 5 per cent. More comprehensive plans – more features, texts and call volumes – have fallen by 15 to 27 per cent from last year. So, once again, it depends on what is being compared.
New entrants do indeed offer lower prices for all levels of service – and they are all in financially dire straits, which means that these prices are a false dawn. The government claims its policies have allowed these entrants to exist. Their existence has driven prices in the industry down, says the government, but consumers are being misled if they think these prices will last. The fragility of the companies suggests otherwise.
It’s easy to cherry-pick findings from the data-rich Wall report to assert that Canadians are being hosed by telecommunications companies. It’s just as easy to find data to assert the contrary. Facts aside, the public believes in the narrative of rapacious companies. That’s the narrative, facts and careful comparisons aside, that the government delights in repeating, posing – and it is a political posture – as the defender of the beleaguered consumer.
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