GATINEAU – An annual report commissioned by the CRTC confirms that pricing for wireline, wireless and Internet Services in Canada are generally competitive when compared to other major markets, the big exceptions being high-speed Internet and entry level mobile wireless. Priced on average at $94 a month, Canada’s highest speed broadband service was the most expensive of all the jurisdictions surveyed except the U.S. While the average cost of entry level mobile wireless in Canada ranks as the highest of the surveyed countries.
The report also found that new entrant pricing for mobile wireless was in some cases 44% less than that of the incumbents (Telus, Rogers, Bell, SaskTel).
Prepared annually for the commission by Ottawa’s Wall Communications, the 2012 update “Price Comparisons of Wireline, Wireless and Internet Services in Canada and with Foreign Jurisdictions” combines and averages wireline, wireless, broadband and bundled rates in Canada and compares them with plans with other international jurisdictions.
Wall`s price comparison methodology for wireline and mobile wireless, involves three separate service "levels" or "baskets" (a fourth was added for broadband) which have been defined as follows:
- Level 1: entry level or low-volume service usage
- Level 2: average or mid-level service usage
- Level 3: premium level or high-volume service usage
Overall not much has changed in the past year. Average wireline prices in Canada have increased at a moderate rate or about 2% per year in the case of the Level 1 and Level 2 baskets. Weighted average Canadian wireline service rates generally compare favourably with the surveyed foreign jurisdictions. On balance, Canadian wireline prices tend to fall into the middle of the range of prices measured for the five surveyed countries (Canada, U.S., UK, France, Australia and Japan) included in the study.
For mobile wireless service in terms of Level 2 (medium use) and Level 3 (high use including data) basket prices, Canada tends to fall into the middle of the pack. However, as noted, in the case of the Level 1 (low use) service level basket, Canada now has the highest average rate of the group of surveyed countries – just above the U.S. and well above the other four surveyed countries.
It found that Canadian broadband Internet service prices compare favourably with the other surveyed countries in the case of the Level 1 broadband service basket (≤ 3.0 Mbps download speeds). As to Level 2 (4 – 15 Mbps), Level 3 (16 – 40 Mbps) and Level 4 (> 40 Mbps), Canadian broadband Internet service prices tend to be higher than the corresponding prices measured for the surveyed countries included in the study, especially so in the case of the higher speed Level 3 and 4 baskets.
For bundled rates Canada tends to fall in the middle of the group of countries surveyed for this study. It noted that 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 found 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.
Methodology
In this year's study Wall made two significant changes in methodology. They revised the definitions of the four broadband Internet service baskets included in the study. Available broadband speeds, especially in urban areas, have continued to ramp upwards. Consequently, Wall has revised the four broadband Internet service baskets to reflect the faster broadband speeds generally available to consumers today. Second, they have added an additional mobile Internet access service basket in order to consider prices for higher monthly data usage levels.
Canadian wireline service – average pricing
Average monthly prices for the Level 1 basket have gradually increased from a low of $30 to $33 this year (roughly 8% in total). Average monthly prices for the Level 2 basket have also gradually increased from $48 in 2008 to $52 in 2012 (also roughly 8% in total). In contrast, the average prices for the Level 3 basket have remained relatively stable at roughly $60 to $61 over the course of the last five years. Thus, on balance, average wireline prices in Canada have increased at a moderate rate – i.e., about 2% per year in the case of the Level 1 and Level 2 baskets, or roughly equal to the rate of inflation of the same period.
International wireline service price comparisons
At roughly $33 per month for the Level 1 basket, Canada falls just above the middle of the group of the surveyed countries. The Canadian Level 1 wireline service basket price is slightly higher than the corresponding average prices found in the U.K., France and Japan, but significantly lower than those measured for the U.S. and Australia.
For the Level 2 wireline service basket, Canada falls just below the middle of the group of the surveyed countries. In this case, only the U.K. has a lower price, while the measured price in France is very similar to Canada. On the other hand, Level 2 wireline service basket prices are considerably higher in the remaining surveyed countries, namely the U.S., Australia and Japan.
A similar ranking applies in the case of the Level 3 wireline service basket. The U.K. has the lowest price among the group of surveyed countries. The Level 3 wireline service basket price is slightly higher in France compared to Canada, while the measured prices for the remaining three countries are significantly higher than those in Canada.
Mobile wireless service – average pricing
As in the case of wireline services, Wall does not include activation fees since they are often waived for new customers, or offset by initial promotional discounts. Roaming charges are also not included in any of the wireless service baskets as the complexity of including them would make “obtaining reasonably straight-forward comparable measurements impossible.” In addition, handset costs are not included since they are often discounted or subsidized by wireless service providers.
Canadian average monthly prices for the Level 1 mobile wireless service basket have increased slightly from $33 to $34 over the past five year period, representing an overall increase of close to 5%.
In addition, average monthly prices for the Level 2 mobile wireless service basket have declined substantially from $61 to $51 since 2008, representing an overall decrease of close to 16% (or roughly 4% per year on average). The drop in the Level 2 wireless service basket price can largely be explained by reductions in the monthly plan rates as well as the near complete elimination of former System Access Fee by most incumbent wireless service providers maintains Wall.
Average prices for the Level 3 mobile wireless service basket have also declined considerably since 2008, from $112 to $98, an overall decrease of over 12% (or roughly 3% per year on average). Much of this decline occurred in 2011 due, in part, to the introduction of lower cost smartphone voice and data plans.
Incumbent pricing vs new entrants
In the Level 1 mobile wireless service basket, the monthly prices charged by new entrants are between 19% and 29% lower than those of the incumbents and 27% lower, on average, for the three cities combined. The relative price discount available from the new entrants is similar in the case of the Level 2 service basket, where entrants' prices are between 12% to 31% lower by city, and 23% lower on average.
It noted that differences were even greater in the case of the Level 3 service basket, where the price discounts offered by entrants relative to the incumbents' name brand services are 24% to 44% lower by city, and 37% lower on average. The somewhat lower entrant discount in the case of Montreal is largely due to Videotron's pricing strategy, which appears to be based on providing greater discounts when its mobile wireless service is bundled with other Videotron services rather than purchased on a stand-alone basis reports Wall.
The report found that compared to last year's study, the price discounts offered by entrants relative to the incumbents’ name brand mobile wireless service offers have “grown markedly for all three service baskets, especially so in the cases of the Level 2 and 3 service baskets.”
International mobile wireless service price comparisons
In the case of the Level 1 mobile wireless service basket, the Canadian average monthly price of $34 is roughly equal to the average price in the U.S. However, the Canadian and U.S. average Level 1 prices are considerably higher than rates found in all of the remaining surveyed foreign jurisdictions. Moreover, the $34 rate is significantly higher than the rates found in the U.K. (i.e., roughly twice the price).
In the case of the Level 2 wireless service basket, the Canadian average monthly price of $51 falls roughly in the middle of the group of surveyed countries. It is similar to, but slightly higher, than the Japanese rate, and well below the rates for the U.S. and France. On the other hand, Level 2 rates in the U.K. and Australia are considerably lower than in Canada.
In the case of the Level 3 wireless service basket, the average Canadian monthly rate of roughly $98 falls on the high-side of the average for the group of surveyed foreign jurisdictions as a whole. In this case, the Canadian Level 3 rate is well below the rates found in the U.S. and Japan, but well above those in the U.K., France and Australia.
Broadband Internet access service – average pricing
The new broadband service level baskets included in the study are defined as follows:
- Level 1: Speed: "basic" Internet access service with advertised download speeds of up to 3.0 Mbps (with a targeted speed in the upper end of the range). Data usage per month: 5 GB.
- Level 2: Speed: "average" (Canadian) high-speed Internet access service with advertised download speeds of 4.0 to 15 Mbps (with a targeted speed in the upper end of the range). Data usage per month: 20 GB.20
- Level 3: Speed: high-speed Internet access service with advertised download speeds of 16 to 40 Mbps (with the targeted speed in the upper end of the range).Data usage per month: 50 GB.
- Level 4: Speed: high-speed Internet access service with advertised download speeds of over 40 Mbps (with the targeted speed in the 41 to 100 Mbps range).
The average monthly price of the Level 1 basket increased slightly from roughly $33 to $35 between 2008 and 2011. With the new Level 1 basket definition, the average price is now higher still, at roughly $39. While the average price has increased in 2012 relative to 2011 by roughly 13%, the average advertised download speed for the Level 1 broadband services increased more significantly from roughly 1.1 Mbps in 2011 to 1.9 Mbps in 2012 (a 73% increase).
The average monthly price of the Level 2 basket also increased slightly from $47 to $50 between 2008 and 2011 and, with the new basket definition, is now $54. The 2012 over 2011 price increase is roughly 9%. In this case, however, the Level 2 average advertised download speed was 6.3 Mbps in 2011, whereas it is 10.4 Mbps this year under the new basket definition (i.e., 65% higher).
The average monthly price of the Level 3 basket declined from $69 to $63 between 2008 and 2011. With the new basket definition, the average price increased in 2012 to $68 or by roughly 7%. In this case, the average Level 3 advertised download speed was 14.2 Mbps last year, while it is 28.0 Mbps this year under the new basket definition (i.e., roughly 100% higher).
Lastly, the average price of the new Level 4 broadband service basket increased from roughly $78 last year to $94 this year, an increase of 22%. The advertised download speeds for the Level 4 broadband services included in last year's study ranged from 25 to 50 Mbps, with an average of 28.9 Mbps. With the new basket definition adopted for this year's study the range of speeds included under the Level 4 basket range from 50 to 100 Mbps, with an average speed of 66 Mbps (over twice as high as last year's average Level 4 speed).
International broadband service price comparisons
In the case of the Level 1 broadband Internet service basket, Canada's average monthly price of roughly $39 is considerably lower than the average prices in the U.S. and Japan – the only two countries for which Level 1 prices were measurable. As noted, none of the surveyed service providers in the U.K., France or Australia currently offer a broadband Internet service with a download speed equal to or less than 3.0 Mbps.
In the case of the Level 2 broadband service basket, Canada's average monthly price of roughly $54 falls into the middle of the group of surveyed countries. Rates in the U.S., Australia and Japan are higher, whereas rates in the U.K. and France are lower than in Canada, considerably so in the case of the U.K.
For the Level 3 broadband service basket, Canada's average monthly price of roughly $68 falls on the higher side of the range of rates for the surveyed countries. It is considerably lower than the rate in the U.S. Otherwise, it is higher than the rates measured for France and Japan, and considerably higher than the measured rates for the U.K. and France.
A similar ranking is found in the case of the Level 4 broadband service basket. Canada's average monthly price of roughly $94 is only lower than the rate measured for the U.S. Otherwise, it is considerably higher than the measured rates in the other four countries, significantly so in most cases. Wall notes that all of the countries with lower rates in this case also offer higher average download speeds compared to Canada.
Mobile Internet service – average pricing
At $52.55, average Level 1 mobile Internet service prices have changed little from 2011. However, the average Level 1 price is lower than the average price of $54.19 first measured in 2010. The service plans included in this category typically offer between 2 and 3 GB data usage per month, with the average being 2.5 GB per month. Mobilicity offers a single unlimited data plan which has been included in the Level 1 basket.
The average Level 2 mobile Internet service price is just over $65. The service plans included in this category typically offer between 5 and 10 GB data usage per month, with the average being 5.7 GB per month. Again, Mobilicity offers a single unlimited data plan which has been included in the Level 2 basket.
The average advertised speed of the services included in this year's study is much higher than last year at roughly 64 Mbps (downstream) reflecting the fact that Rogers and Bell have recently launched 4G LTE mobile Internet access services. Rogers, for instance, advertises that its 4G LTE network provides maximum theoretical download speeds of up to 100 Mbps, but that speeds are dependent on network spectrum and the hardware being used. It also suggests that currently its LTE customers are more likely to experience typical download speeds ranging from 12 Mbps to 25 Mbps. All to say that advertised and actual average speeds can vary significantly in the case of mobile Internet services.
International mobile Internet service price comparisons
The current Level 1 average mobile Internet price of roughly $53 in Canada is comparable to the average rates in the U.S. and Japan, but considerably higher than rates in France and significantly higher than rates in the U.K. and Australia.
For Level 2 mobile Internet service rates the average Canadian price falls in the middle of the group, below the U.S. and France, but considerably higher than average rates in the U.K. and Australia. The rate in France was based on a single plan offered by France Telecom, the other two surveyed French service providers do not currently offer a mobile Internet service plan with more than 3 GB of data usage per month.
Bundled services – average pricing
The average monthly price for Bundle 1 had declined significantly between 2008 and 2011, from roughly $147 to $134 (i.e., by roughly 9% in total). In 2012, it increased to $140 (or roughly 5%). Much of the increase is due to the higher speed broadband service component included in the bundle. The average Level 2 broadband service price increased by 9% (or roughly $4.50) this year relative to last; although the corresponding service speed increased by much more (i.e., by 65%) as a result of the redefinition of the broadband service baskets.
The average price for Bundle 2 had increased slightly over the period 2008 to 2011, from roughly $120 to $123. The Bundle 2 price increased further in 2012 to $128 (or by roughly 5%). Again, the increase is largely due to the higher speed broadband service component included in the bundle.
Lastly, the average price for Bundle 3 had declined noticeably between 2008 and 2011, from roughly $181 to $168 (by roughly 7% in total). The 2012 Bundle 3 price increased to $175 (or by roughly 4%) for the same reason noted for the other two bundles.
International bundled service price comparisons
In the case of service Bundle 1, the average monthly price in Canada of roughly $140 falls into the middle of the rates measured for surveyed group countries. Bundle 1 rates are lower in the U.K. and France, but higher in Australia, Japan and, considerably so, in the U.S.
A similar result occurs in the case of Bundle 2. The Canadian average monthly price of $128 is once again higher than the rates in the U.K. and France, but lower than rates in Australia, Japan and the U.S.
The same relative ranking applies in the case of Bundle 3, which includes all four services – wireline, broadband, wireless and digital TV.
