OTTAWA – Despite a drop in prices for many high-volume talk, text and data plans, Canada’s mobile wireless prices once again rank among the highest when compared to other G7 countries and Australia, according to an annual report commissioned by Industry Canada and the CRTC.
Prepared by Ottawa’s Wall Communications, the 2015 edition of Price Comparisons of Wireline, Wireless and Internet Services in Canada and with Foreign Jurisdictions is an annual telecom services price comparison study that combines and averages wireline, mobile wireless, broadband Internet, and mobile Internet service rates, as well as bundles of these services along with basic digital TV services, and compares Canadian plans with other international jurisdictions.
For each individual service category, prices are measured for a series of defined "service baskets" which have been designed to reflect typical Canadian low to high telecom service usage levels and features, including an “average” consumption basket for a typical Canadian consumer. There are two to five service baskets or "levels" defined for each individual service covered by the study. The lowest available advertised prices, as offered by the surveyed service providers included in the study, are used to measure the prices of each of the defined service baskets.
For Canada, the surveyed service providers include the incumbent telephone companies (e.g., Bell and Telus) and cable companies (e.g., Rogers, Shaw and Videotron), resellers (e.g., Primus and Teksavvy) and wireless market entrants (e.g., Wind and Mobilicity). Prices were measured in the metropolitan areas of Halifax, Montreal, Toronto, Winnipeg, Regina and Vancouver, and aggregate Canada-wide prices were determined on a weighted average basis.
For international comparison purposes, prices were also measured using the same methodology for the same set of service baskets for Australia, France, Germany, Italy, Japan, the United Kingdom (U.K.) and the United States (U.S.).
The new additions to this year's study include the expansion of the geographic coverage within Canada and the U.S. to include the cities of Winnipeg and Minneapolis, increasing the number of Canadian and U.S. cities covered to six and four, respectively; the addition of a fifth mobile wireless service basket, which includes "unlimited" nationwide talk & text and 5 GB of data; and the inclusion of additional reseller competitors in the mobile and broadband markets: PC Mobile and Teksavvy, respectively.
Mobile prices are lowest in Manitoba and Saskatchewan, especially in the case of higher volume talk & text and data service plans, the report found. Incumbent flanker brand (Rogers Fido, Bell Virgin and Telus Koodo) prices are roughly 10% to 25% lower than the incumbents' primary brand prices, with the smallest differences applying in the case of unlimited talk & text and high-usage data plans.
The report also found that the new entrant (Wind, Mobilicity, Videotron and Eastlink) prices are roughly 25% to 50% lower than the incumbents' (Bell, Rogers and Telus) comparable service plan prices, with the largest prices differences applying in the case of unlimited talk & text and high-usage data plans (i.e., including 2GB or 5GB of data usage per month).
Wireline
Three service basket levels are considered in the case of wireline services: Level 1 includes low local and long distance call volumes, Level 2 includes average call volumes plus 2 features, and Level 3 has high call volumes plus a full set of features.
This year, Canadian wireline service baskets prices have increased significantly. The Level 1, 2 and 3 service basket prices increased 4%, 9% and 8%, respectively, relative to last year. These increases are consistent with the historical trends in wireline service prices over the last five years which has seen Level 1 and 2 basket prices increase at average annual rates of 6% and 5%, respectively, whereas Level 3 basket prices have increased more slowly at 2% per year on average (i.e., at roughly the rate of inflation).
Canada's Level 1 and 2 wireline service basket price rankings relative to the seven surveyed jurisdictions included in the study have slipped from being in the middle to now residing at the higher-end of the group. On the other hand, in the case of the Level 3 (higher-usage) basket, the Canadian average price continues to sit in the mid-range of wireline prices measured for the group of surveyed countries.
Mobile Wireless
Five service basket levels are considered in the case of mobile wireless services: Level 1 includes low local and long distance call volumes; Level 2 includes average call volumes plus 2 features and 300 texts per month; Level 3 includes high call volumes (but not unlimited) plus a full set of features, 300 texts and 1 GB of data usage per month; Level 4 includes unlimited nationwide talk and text along with 2 GB of data; and Level 5 includes unlimited nationwide talk and text along with 5 GB of data.
Canadian Level 1, 2 and 3 mobile wireless service basket prices all increased significantly this year relative to last – i.e., by 4%, 8% and 7%, respectively. In marked contrast, the Level 4 basket price declined, dropping by 11% from roughly $93 to $83. The average price of the Level 5 basket is roughly $107 in Canada; however, since it is new to the study this year, its price cannot be compared to previous years. Average mobile wireless prices were generally found to be lowest in the cities of Winnipeg and Regina.
Relative to the seven foreign jurisdictions included for this study, Canada's average Level 1 basket price is the highest of the group. For the Level 2 and 3 baskets, Canada ranks on the high side of the group, with lower average prices than only Japan and the U.S. Similarly, Canada's ranks on the high side of the group for both the Level 4 and 5 baskets, with a lower average price than only the U.S.
A comparison of cross-border roaming rates offered by the Canadian and U.S. incumbents does not suggest that consumers are significantly better off in either country as far as the overall set of available roaming charges is concerned. On the other hand, the Canadian incumbent flankers and new entrants offer far lower roaming rates than the Canadian incumbents, whereas the U.S. regional carriers offer either no roaming services in Canada whatsoever or, where they do, their discounts relative to the U.S. incumbents are more limited. Consequently, the Canadian incumbent flankers' and new entrants' roaming rates generally compare more favourably to those available from both the U.S. incumbents and regionals.
Broadband Internet
Four broadband Internet service baskets are included in the study, which are primarily defined on the basis of download speed: Level 1 covers service speeds of 3 Mbps or less, Level 2 covers 4 to 15 Mbps, Level 3 covers 16 to 40 Mbps and Level 4 covers services with speeds over 40 Mbps.
For the most part, Canadian broadband prices declined this year relative to last year. The average prices of the Level 1, 3 and 4 broadband service baskets decreased by 5%, 1% and 7%, respectively. In contrast, the Level 2 basket price increased by 3%. Over the last five years, Canadian broadband prices have generally trended upwards. Level 1 and 2 basket prices have increased faster than the rate of inflation (i.e., 8% and 3% per year on average, respectively), whereas Level 3 and 4 basket prices have increased at an average annual rate equal to or below the rate of inflation (i.e., 2% and 1% per year on average, respectively).
Reseller ISP broadband service prices are consistently lower than those of the incumbents across all four service baskets, with price discounts ranging from 21% in the case of the Level 1 basket to 30% in the case of the Level 3 basket. Typically reseller ISPs also offer either higher data caps than the incumbents or no data caps at all.
Very few of the surveyed service providers continue to offer Level 1 (sub 3 Mbps) broadband services. Those who do were found in Canada, the U.S. and Japan. Among these countries, Canada was found to have the lowest average Level 1 broadband basket price. Canada also compares favourably in the case of the Level 2 (4 – 15 Mbps) broadband service basket, where it falls in the middle of the group. Otherwise, Canada's average Level 3 (16 – 40 Mbps) and Level 4 (> 40 Mbps) basket prices are at the high end of the group of surveyed countries included in the study.
A comparison of residential rural and remote area fixed wireless broadband services available in Canada and the U.S., the U.K. and Australia was also conducted for the same Level 1 to 4 broadband service baskets. In this case, average Canadian Level 1, 2 and 3 fixed wireless broadband Internet service prices compare favourably with those available in the U.S., but are otherwise considerably higher than those in Australia and the U.K. None of the surveyed Canadian ISP offered a Level 4 (40 Mbps plus) fixed wireless broadband service. Of the other three countries considered, there was only one instance of a surveyed service provider offering such a service and it was located in the U.K.
Mobile Internet
Two mobile Internet service baskets are included in the study. Level 1 covers plans providing 2 GB and Level 2 covers plans providing 5 GB of data usage per month.
This year, the Canadian average Level 1 and 2 mobile Internet service prices increased slightly relative to last year, by just under 1% in both cases. Since 2010, the Level 1 basket price has declined by 20% overall, whereas relative to 2012, the first year the Level 2 mobile Internet service basket was included in the study, the Level 2 price has declined by only 2% in total.
The wireless entrants continue to offer mobile Internet prices that are significantly lower than those of the incumbents – i.e., 22% less for Level 1 and 32% less for Level 2. The Level 1 and 2 differentials are somewhat smaller this year compared to last.
Canada's average Level 1 and 2 mobile Internet service prices are on the high-side of the group of seven surveyed countries, generally only lower than or close to the average prices measured for the U.S. and Japan.
Bundled Services
Three service bundles are considered in the study: Bundle 1 includes wireline, broadband Internet and mobile wireless services; Bundle 2 includes wireline, broadband Internet and basic digital TV services; and Bundle 3 includes all four of these services.
This year, Canadian average Bundle 1, 2 and 3 prices increased by 9%, 2% and 3%, respectively. Over the course of the last five years, the average prices of all three bundles have generally trended upwards at rates between 3% and 4% per on average – i.e., slightly above the average annual rate of inflation.
Canadian bundled service prices fall on the high side of the group of countries surveyed for this study. While differences across countries in the underlying services included in the bundles (especially broadband and digital TV services) can make bundled service comparisons somewhat tenuous, it is noteworthy that Canadian bundled service rates continue to compare very favourably to those in the U.S., where service pricing and provisioning practices are similar to those in Canada.
