The Canadian government’s decision to move ahead with the Digital Services Tax Act, legislation that will take effect in 2024 should the international agreement at the OECD fail to materialize by that date, is problematic for reasons that extend beyond sparking a trade battle with the United States and potentially leading to billions in tariffs on Canadian goods and services. The plan also appears to violate Canada’s commitment at the OECD, in which all members agreed to a moratorium on introducing new digital services taxes.
Post Tagged with: "OECD"
The OECD released the latest data on broadband usage this week highlighting yet again that the high costs of Canadian wireless services have real world consequences when it comes to consumer data usage. Earlier this month, Canadian Wireless Telecommunications Association President Robert Ghiz told an industry conference:
Consumption of mobile data – through all kinds of apps and every flavour of streaming content – continues to grow at an astounding rate in Canada. Mobile data traffic in our country increased by 41% between 2015 and 2016 alone.
Yet the OECD comparative data tells a far different story. First, OECD data indicates that Canada is at the low end of countries when measured by mobile broadband subscriptions per 100 inhabitants, ranking well below the OECD average and ahead of only six other OECD countries.
Last year’s explosive battle over the potential entry of wireless giant Verizon into the Canadian market may be a distant memory, but the debate over the state of wireless competition remains very much alive. Industry Minister James Moore has pointed to a modest decline in consumer pricing and complaints as evidence that government policies aimed at fostering a more competitive market are working.
The big three wireless carriers remain adamant that the Canadian market is competitive and that while pricing may be high relative to some other countries, that is a function of the quality of their networks. In other words, you get what you pay for.
There is seemingly no major international entrant on the horizon, but the Canadian Radio-television and Telecommunications Commission is currently grappling with an assortment of policy measures aimed at improving the competitiveness of new entrants and facilitating the development of a more robust market for virtual operators who could enhance consumer choice. Moreover, the government is planning another spectrum auction early next year that would benefit new entrants.
My weekly technology law column (Toronto Star version, homepage version) notes that at the heart of the debate is whether creating a fourth national carrier is a legitimate policy goal or a mirage that will do little to decrease pricing or create market innovation. The major carriers argue that the Canadian market is too small to support a fourth national carrier and that competitiveness is not directly correlated to the number of national operators.
The OECD released its latest Internet broadband data yesterday, covering the 34 OECD member states. The update emphasized wireless broadband access, comparing subscription rates across the OECD (many other aspects of the OECD data collection, including pricing and speeds, were not updated). Wireless broadband has emerged in recent years as a critical method of Internet connectivity with consumers and businesses relying on mobile broadband, yet the OECD data has Canada ranking poorly for wireless broadband subscriptions when compared to the rest of the developed economy world (coverage from the Wire Report (sub req)). The OECD release comes one week after a CRTC sponsored report found that Canadian wireless pricing is among the most expensive in the G7 in every tier of usage.
Seven countries, including Finland, Australia, Japan, Sweden, Denmark, Korea, and the U.S., have at least one subscription for every inhabitant. In Canada, the number drops to 53.3 subscriptions for every 100 inhabitants. That places Canada 24th out of 34 OECD countries.
Telus’ decision to file a lawsuit against the federal government over its spectrum transfer rules continues a trend of flip-flopping on policy issues at the company. What does Telus think of the government’s wireless policies? Apparently it depends when you ask. For example, in March 2012, Telus said the following about the spectrum auction approach:
TELUS believes this is a thoughtful and balanced decision that meets the Government’s objectives of promoting consumer choice, supporting sustainable competition through investment in technology and further expanding broadband services in rural markets.
Sixteen months (and the possibility of a Verizon entry) later, CEO Darren Entwistle now says:
There’s going to be a bloodbath, because people are not going to give up on getting that block. So it’s going to be prohibitively expensive and suck a lot of money out of the industry – money that won’t go to infrastructure and technology, money that won’t go into rural coverage or support lower prices.
There is similar change of tune with the latest lawsuit.