OTTAWA – While the perception that Canadians pay too much for too little for wireless persists (thanks to our own government’s overt efforts), data presented Tuesday at the IIC Conference in Ottawa suggests otherwise.
In a luncheon presentation, Jeffrey Eisenach, managing director at Navigant Economics, acknowledged that Canadians do pay more for their mobile wireless services, but explained they pay more because they get more. Canadians enjoy a better quality service than their European counterparts because of broader LTE coverage here as compared to across the Atlantic, where Eisenach says regulatory meddling has stalled the deployment of next generation networks.
Eisenach prefaced his conclusion with some figures from a report he co-authored to back up his claim. First, Canadians use about twice as much data as Europeans, 800 MB per month compared to 400 MB due to, again, superior network performance here. With respect to voice, Canadian consumers also use about twice as many minutes per month, 370 versus 170. Lastly, Canadians pay on average $58 per month for wireless services, or about twice as much as European wireless consumers.
So all told, that means Canadians pay approximately the same for an equal amount of mobile services as do Europeans.
But that’s only half the story, said Eisenach in his keynote, noting that it’s too simplistic to just compare prices paid for wireless services in Europe and Canada. It doesn’t take into account the fact that there are only two markets in the entire world with near ubiquitous 4G LTE coverage: Canada and the United States. “Europe is lagging far behind,” he said, noting that only about one quarter of Europe’s population has access to LTE coverage. In Canada, about 7% of all mobile connections are made over an LTE network, while it’s less than 2% in the European Union.
“Simply put Canadians spend more because they get more both in terms of the amount of usage and in terms of quality,” said Eisenach.
He argued in his 30-minute luncheon keynote that while lowering barriers to entry into the wireless market is a good thing and the elimination of foreign investment rules would help, subsidizing uneconomic entry by undercapitalized players will create problems down the road.
“Canada’s strong performance is mainly attributable to the existence of a relatively efficient market structure and relatively market oriented policy, at least up until now, under which that structure has developed,” Eisenach said. “Efforts to mimic European policies by subsidizing inefficient entry into the market or imposing various forms of price regulation will result in worse performance, not better, and ultimately harm consumers.”
