Mark Goldberg


www.mhgoldberg.com





#CTS20

How long is a piece of string?

How long is a piece of string?

What is the price of mobile service in Canada?

The response to both questions is, “it depends.”

And personally, I don’t think that should change. It’s reasonable to ask “around how much does it cost for unlimited national minutes and global texts and say, 10GB of full speed data,” but that still should just get you to a rough estimate of pricing. There are still lots of variables at play. Things like: do you want a new device? Financed over how many months? How many other lines do you want for family members? Is your company or school or affinity group entitled to a group discount? Do you subscribe to other services (like home internet or TV)? Do you need access to cross-border or international roaming? Do you have (or want) a connected tablet as well?

Those are just some of the choices facing consumers today when they are going into a retail channel for a mobile service provider.

So, if it is hard to define the price of mobile service in Canada, consider the challenge of price comparisons between one year and the next. While the CRTC has observed that the price of service plans it surveys declined on average by 28% from 2016-2018, some consumers have the impression that the cost of wireless services are not changing much from year to year.

Data consumption is increasing dramatically each year. For many consumers, the base price they pay may not have changed from one year to the next, but a lot more services, especially data, are included in their plan. In the past 6 months or so, we have seen many Canadians sign up for unlimited plans, or plans with other forms of data overage protection, which eliminate the risk or actual pain associated with overage charges.

How do we compare prices from one year to the next?

In its 4th quarter results release, Rogers reported that nearly one and a half million mobile customers had switched over to Rogers Infinite unlimited data plans. On average, those customers are using 65% more data than they had under their old plans. Of those, 60% upgraded to higher priced plans; 40% downgraded to lower priced plans. But these plans had a significant impact in reducing ‘overage’ revenues – wireless fees incurred when using more data than the plan included. Rogers said that overage used to contribute 5% of wireless revenues. It said that the reduction overage fees was equivalent to a 2% reduction in ARPU – average revenue per user.

Once again, how do we compare prices from one year to the next?

A couple weeks ago, we noticed a promotional price plan from TELUS, offering its 20GB Peace of Mind plan for $75 per month, discounted from its usual $95 per month level. On Twitter, I asked how many people took advantage of such price promotions, or waited for back-to-school or Christmas seasonal offers. How many people actually pay the equivalent ‘manufacturers suggested retail price’?

But once again, this highlights the challenge of how to compare prices from one year to the next?

Frankly, the worst way to compare prices would be for the government to try to force service providers to offer a ‘standard’ price plan. Such regulation is the antithesis of competitive choice.

There is an alternative. In its recent report, “Understanding wireless affordability in Canada” [pdf, 4MB], PwC used proxies for prices, normalized by data consumption in order to compare average spend per gigabyte of data consumed. In its report, PwC found the average Canadian’s wireless spend per gigabyte of data consumed decreased by a compound annual growth rate of 25.9% during 2014-2017.

And this was before the introduction of national unlimited plans in the summer of 2019. In an addendum to the study [pdf, 1.6MB], PwC forecasts that the unlimited data plans will reduce the price per GB by a further 50%, between 2018 and 2020.

A normalized approach, such as that used by PwC, may be the best way to measure price performance and changes in value for the money being delivered to the consumer.

How long is a piece of string?

What is the price of mobile service in Canada? I’m not sure what price you’ll pay, but PwC says it’s been getting 25.9% better each year!

Comments are closed.