Articles by: Michael Geist

Competition Not Contracts: The Real Reason Canadian Wireless Prices Are on the Rise

This week, Telus and Bell announced new wireless pricing plans based on two-year contracts (Rogers has said their plans will be released shortly). Those plans – particularly those from Telus which seems to be taking its suggestion that Canada should be the most expensive wireless country seriously – feature higher prices, which some claim are the product of the shift from three-year contracts to what is effectively a two-year maximum under the new CRTC wireless code. The narrative behind these cost increases is that consumers are amortizing the cost of their device over a shorter period of time and therefore can expect higher monthly fees. This argument is perfect for the carriers as they get to blame the CRTC (and by extension, the Competition Bureau, consumer groups and consumers themselves) with an “I told you so” for the increased prices. Yet the higher costs are not strictly a function of shorter contracts, but rather a product of Canada’s uncompetitive marketplace.

Many other countries have two-year contracts with cheaper rates and bigger device subsidies. This is because consumer price is not primarily a function of contract length or device cost, but rather marketplace competition. For example, Spain’s wireless pricing has been dropping in recent months as their four major carriers find consumers more aggressively shopping for better prices or cancelling their wireless services altogether. In response, all four Spanish carriers are dropping prices to stop the churn and attract new customers. For example, BGR reports that Yoigo (owned by Telstra) has offered free iPhone 5’s on two-year contracts for as little as 25 euros (C$34) per month (the article emphasizes how competition through innovative pricing has led to profit declines at incumbent carriers). The decline in price is illustrative of why it is competition, not “regulatory costs” or device subsidies, that are the key factor to consider.

[Update 7/27: A commentator below helpfully points out an inaccuracy in the BGR article since the Yoigo price was for phone only and not service. A fuller comparison of the Spanish offer is as follows: Yoigo for 24 months of 25 euro phone + 25 euro service (unlimited voice + 1 GB data) is C$1636.24. Add another 12 months of service for C$409.56. Total three year cost is $2047.80. Bell’s current offer on an iPhone 5 with the same voice and data for three years is $179.95 for the phone, $35 for the activation, and $70 per month of the service for 36 months. Total three year cost (not including taxes) is $2734.95.]

July 18, 2013 — 19 comments — News

The “Miracle in Marrakesh” Provides a New Path for Digital Access

Negotiators from around the world gathered in Marrekesh, Morocco late last month for a diplomatic conference aimed at concluding a new United Nations treaty to improve access to copyrighted works for people who are blind or have other perceptual disabilities. Despite years of discussions, there was ample reason for pessimism.

My weekly technology law column (Toronto Star version, homepage version) notes the treaty talks had become bogged down in the months leading up to the conference, with large lobby groups such as the Motion Picture Association working feverishly behind the scenes to undermine it through changes to rules on digital locks and fair use.

As the deadline approached however, the majority of the world lined up behind user rights for the blind. With Canada playing an important facilitative role, the negotiators were ultimately able to craft compromise language that resulted in a new landmark treaty. More than 50 countries immediately signed on, suggesting that the treaty is well on its way to establishing new rights for the blind (20 countries must ratify it before the treaty formally takes effect).

July 17, 2013 — Comments are Disabled — Columns

The “Miracle in Marrakesh” Provides a New Path for Digital Access

Appeared in the Toronto Star on July 13, 2013 as The “Miracle in Marrakesh” Provides a New Path for Digital Access Negotiators from around the world gathered in Marrekesh, Morocco late last month for a diplomatic conference aimed at concluding a new United Nations treaty to improve access to copyrighted […]

July 17, 2013 — Comments are Disabled — Columns Archive

OECD Report: Canada Still Among Ten Most Expensive Countries for Broadband Internet Services

Yesterday I blogged twice about the 2013 OECD Communications Outlook, a major international report issued once every two years with detailed comparative data on telecommunications throughout the developed economy world. My first post noted that Canada’s wireless performance ranks poorly, as it is among the most ten most expensive countries within the OECD in virtually every category and among the three most expensive countries for several standard data only plans. After Telus responded to my post, I followed up with a second post that examined some of the Telus-specific data used by the OECD. Those measures ranked Canada as the 2nd most expensive of 7 countries for 1 GB of wireless data (at speeds Telus customers are likely to receive) and the second most expensive of 19 countries for 500 MB of wireless data for tablets (again at speeds Telus customers are likely to receive).

The OECD report also includes comparative data on broadband services with Canada ranked among the ten most expensive countries in virtually every tier (note that the OECD measures the cost by purchasing power parity so that differences in income are factored into the analysis). For example, for plans offering 54 GB of data per month at speeds of 45 Mbit/second, Canada ranks as the 9th most expensive in the OECD. Move down a notch to 42 GB of data per month at 30 Mbit/second and Canada is the 8th most expensive country in the OECD. At slower speeds, Canada remains expensive – 33 GB of data per month at 15 Mbit/second is the 11th most expensive and for 18 GB of data per month at 2.5 Mbit/second it is the 9th most expensive.

July 16, 2013 — 18 comments — News

Telus: Canada Should Be the Most Expensive Wireless Country in the OECD

Telus has responded to my post on the 2013 OECD Communications Outlook, which ranked Canada among the most expensive countries in the OECD for wireless services in virtually every category, with its own post claiming that Canadians should be celebrating our relatively high prices. The post notes the investment that Telus and other companies have made in Canada (Peter Nowak explains the reason behind much of that investment) and argues that:

When you consider our enormous investment, challenging geography, sparse population and outstanding networks Canada really SHOULD be the most expensive country for wireless service in the OECD, but we’re not. That’s a great success story we should be celebrating.

It is a testament to how out-of-touch Canada’s incumbent wireless providers have become that they think Canadians should be celebrating the fact that we are not the single most expensive wireless country in the developed economy world. Telus says that scratching below the surface of the OECD report will lead people to conclude that Canadians pay about the same as other developed countries. Yet in its own chart, Canada ranks among the more expensive countries within the G7 in every category but one.

July 15, 2013 — 37 comments — News