Mark Goldberg


www.mhgoldberg.com





Fox Group Dispatch

The economics of Canadian telecom

Earlier this week, Cartt.ca wrote “All I want for Christmas is a telecommunications price comparison report.” Over the next couple of weeks before the Christmas holidays, we expect to see 3 indicators of communications services pricing: the CRTC’s Telecommunications Monitoring Report, the OECD’s Digital Economy Outlook Data and ISED’s annual international pricing benchmark study.

As such, it is especially timely to see a report released this morning by the School of Public Policy at the University of Calgary, entitled “The Economics of Telecommunications in Canada: a backgrounder.” The report, by authors G. Kent Fellows and Mukesh Khanal, “examines the role of the telecommunications sector in Canada’s economy, including the role of investment in the sector, related labour statistics, how the telecom sector supports the activities of other sectors and the services telecom provides directly to individual households.”

The report sets important context for the pricing studies that will be released over the next two weeks, observing that, while expenditures on telecom services exceeds $50B annually, the underlying value to consumers is significantly higher than that. Further, the telecom sector is among the top 5 sectors for investing in its infrastructure, responsible for 5% of private sector industrial capital expenditures in Canada. 

When it comes to the very things that policy-makers do seem more likely to show interest in, namely the prices, service and value that telecom companies provide to Canadian households, there in fact seems far less cause for concern. Consumers continue to find significant value in the internet and mobile services they are buying and are increasingly choosing higher quality services that involve higher costs and prices.

In summary, the services that the telecom sector provides are not only important for Canadian households, but are also critical for every other Canadian industry. One often overlooked fact is that virtually every other Canadian sector employs a significant value of telecom products as an input, thus making telecom a critical keystone of the Canadian economy.

The service providers are investing in upgrading technologies, delivering faster networks and services, and Canadian consumers are making the choice to buy those higher priced services.

As the report notes, telecommunications services are not only important for Canadian households, but are also critical for every other Canadian industry. “One often overlooked fact is that virtually every other Canadian sector employs a significant value of telecom products as an input, thus making telecom a critical keystone of the Canadian economy.”

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