TORONTO — In a climate where the prevailing feeling is wireless prices in Canada are still too high, a new report from PricewaterhouseCoopers (PwC) suggests Canadians spend less on wireless services than their counterparts in other countries.
In its new report, Understanding affordability of consumer mobile wireless services in Canada, PwC compares wireless spend in Canada to the U.S., Australia and the U.K. for what it calls a “high-level relative wireless affordability comparison against Canada.” When looking at the percentage of income spent on wireless in each of the countries, PwC found that, in 2016, an average Canadian household spent 1.6% of its disposable income on wireless services. In comparison, for the same year, the average U.S. household spent 2.6% of disposable income on wireless, and the average Australian household spent 2.1%. However, the wireless spend as a percentage of disposable income in the average U.K. household was only 1.3%.
PwC’s focus in its study was the affordability of wireless services, and it drew on the OECD’s definition of affordability “in terms of the relative burden of paying for communication services with a given income for a given set of benefits derived from access,” the PwC report says. In its study, PwC evaluated three factors: income, price (especially entry-level prices) and utility (consumer benefit) derived from access.
What PwC found was an average Canadian household’s cumulative, absolute expenditure on wireless and wireless-substituted services slightly declined from 2010 to 2017 at a compound average growth rate of 0.1%. However, the cumulative expenditure as a share of adjusted household disposable income declined at a CAGR of 2.2% over that time period.
The study also found the average revenue per user (ARPU) from wireless services in Canada grew by a CAGR of 2.3% during the 2014-2017 timeframe, while at the same time, the average Canadian consumer’s wireless data consumption increased by a CAGR of 38.0%. This resulted in the average Canadian’s wireless plan spend per gigabyte of data consumed decreasing by a CAGR of 25.9% during 2014-2017, according to the study.
PwC notes the majority of data use and growth during the 2014-2017 period is attributable to video and social media usage. In fact, PwC says data use in Canada is dominated by media and entertainment categories (video, music, games, social networking), which accounted for 88.9% of data usage growth. Communication and web browsing accounted for 9.0% and 0.9% of data consumption, respectively, according to the report.
In its evaluation of the impact of wireless expenditure on an average Canadian household’s non-discretionary expenditure, PwC says it determined wireless spend did not impose an unreasonable burden on the average Canadian household from 2010 to 2017. In addition, PwC pointed out more than 62% of Canadians (from 2014-2017) opted for more expensive wireless plans from Rogers, Bell and Telus, despite having the option of discount brands such as Fido and Koodo that are almost 15% less expensive (excluding device costs) on average.
In an addendum to its report, Impact of unlimited data plans on affordability, PwC reviewed wireless affordability in light of the launch of unlimited data plans by Canada’s largest wireless service providers in 2019. Among its findings, PwC’s follow-up study found the introduction of unlimited data plans in Canada are expected to reduce mobile data overages by up to 80% by the end of 2020, and reduce the price paid per gigabyte of data by 50%, between 2018 and 2020. In addition, unlimited data plans are expected to increase affordability of wireless services by 6% for the average Canadian consumer, by the end of 2020, the study says.
PwC’s full report can be accessed here. The addendum published separately can be accessed here.
