Yesterday, the OECD released a new study of mobile pricing and the CBC interpreted it with a leadoff paragraph saying
The average Canadian cellphone user is paying among the highest bills in the developed world, according to a new international study.
Actually, the OECD study said nothing of the sort.
What the OECD study said was that in their mythical world, if the average Canadian used their mobile phone the way they constructed an average handset user, we would be paying rates that are higher than most European countries, but less than Americans. The OECD service definitions should cause serious researchers to laugh.
There are so many problems with the OECD study that I am troubled with where to begin. To start with, the OECD defines a light user as someone who uses their phone for one minute a day (30 minutes a month) and sends a text a day, plus an extra one each week. In OECD-land, a medium user is someone with 65 minutes per month and 12 texts per week while a heavy user is 140 minutes per month and 55 texts per month. The OECD says our heavy users pay about $42 per month.
Well guess what Canada, our average users are actually using way more than double the OECD model of heavy users. According to Rogers recent financials, their average monthly minutes of use was 604 – more than 4 times the OECD heavy user. Bell and TELUS average customers weren’t as high but were still well off the charts by OECD standards (316 and 402, respectively).
Of course an explanation for these numbers also reveals the most significant flaw in interpreting the OECD figures. The OECD doesn’t look at users costs, they look at phone costs. And since so many European users have more than one phone, the average European user is paying more than one bill. When you normalize the data to consider those supernormal penetration rates, suddenly you start to understand what is really going on.
If you have penetration rates of more than 150%, who do you think is paying the bill for the extra phones?
I won’t even get into the fact that outside of Canada and the US, it costs the caller an outrageous premium to call a mobile handset. Those costs, incurred by the caller, were ignored by the OECD. I’d call that a cost of mobile.
Oops.
Of course, in depth analysis won’t produce as eye catching a headline.
have a look at my blog to see the reaction of Tad Reynolds of the OECD. Turns out there is an error in the PDF it's about calls, not about minutes and they make some allowances in the text as well
Rudolph's blog can be found at: http://tinyurl.com/ppflzl
The OECD researcher, Taylor Reynolds, comments on Rudolph's blog that the numbers are for calls, not minutes and the OECD assumed 140 calls per month works out to 246 minutes for the "high user" category.
Taylor wrote "This works out to around 4 hours a month of outgoing calls which is a good size in Europe but on the low end of typical consumption patters in Canada and the United States."
As my main post described, this so-called high usage level of 246 minutes would be lower than average for the lowest of Canada's big three carriers.
So, despite the OECD claiming Canada and the US have among the highest prices, apparently our users are making way more calls.
Will these inconsistencies make it into any articles?
Actually Mark, my story has Reynolds pointing out that a) the baskets are based on calls, not minutes, and b) it is in fact difficult to come up with a standardized comparison. I'd also point out the National Post, Globe and Mail and many other media interpreted the results in exactly the same manner as we did at the CBC. It seems that you (and the carriers) are alone in your interpretation.
Let's keep it really simple and pick up on a very basic point: if US and Canadian prices are so out of whack, why are we making so many more calls than everyone else?
Has any mainstream news account picked up on the possibility that the OECD study is just not meaningful information for North America?
Hello,
The calling patterns are determined by data we receive directly from operators from across the OECD.
As I commented on Rudolf's blog, the data are for calls, not minutes in the baskets.
Consumption patterns in the Canada and the US actually get a slight benefit in our analysis over the other 28 countries. That's because we count only outgoing minutes. The high usage basket has 1680 calls (2952 minutes) per year but those are all outgoing. Users in other countries don't pay for incoming minutes as Canadian and US users do.
As a result, the prices you see for the US and Canada reflect the cost of 2952 outgoing calls but no incoming calls during the year.
Subscribers in the other 28 countries would have all their incoming minutes included for that price.
The Finns tend to use their phones as much or more than Canadians according to our most recent data on minutes per subscriber so high prices aren't necessarily the result a country having a high level of consumption.
(See Table 3.8 in the Outlook on Page 91 for minutes of use. The data for Canada and the US in 2005 is both outgoing AND incoming which is why it is so large. All other countries report just outgoing.)
Canadian telecom is still WAY overpriced and customers are still GOUGED by extra 'system' fees and changes to confusing plans.