ISED’s telecom price study

As promised, here is further look at the 2022 edition of ISED’s telecom price study report [pdf version, 1.8MB].

In its press release, ISED claims the government “continues to deliver on more affordable telecom services”.

The report is clear, Canada’s wireless prices declined by an average of 2.6% across all levels, with declines up to 16% for the largest data plans in 2022. For home Internet, prices declined or were stable, an 11% decline was recorded for mid-range plans. The report also shows that regional competitors are offering prices up to 39% lower than the major national service providers.

I’m not convinced the telecom price study report, or the press release for that matter, is so clear. That paragraph starts with a sentence about wireless plans, then a line about home internet.

To which service does that third sentence refer? “Regional competitors are offering prices up to 39% lower than the major national service providers.” All of the facilities-based internet service providers are regional; the national providers are the wholesale based ones. You have to search the report to find Table 3, to find that the 39% refers to Freedom Mobile’s Level 7 price plan in Ontario. Level 7 is defined as “unlimited nationwide talk and text along with 20-49 GB of data.”

The report also indicates that “Average prices in Quebec tend to be among the lowest in the country.” This has been a highlight driving a number of policies out of Ottawa. Yes, prices have been lower in Quebec but do we actually understand the reasons? Is there enough focus on what is driving lower prices in some parts of the country?

Are lower prices in Quebec actually due to the presence of Videotron as a “disruptor”? Or, are lower prices driven by lower rates of adoption and attempts by service providers to stimulate demand in a province with lower average income levels?

Let’s look at what the press release says is “clear”. “Canada’s wireless prices declined by an average of 2.6% across all levels, with declines up to 16% for the largest data plans in 2022.” I’m not sure the data in the report is really that clear.

The source for this line appears to be this chart (found on page 10 of the pdf version):

As can be seen readily, the average price change (-2.6%) is heavily skewed by the nearly 13% price increase in Level 2 pricing. Of course, very few people choose to subscribe to such a plan any more. Indeed, the report itself acknowledges “very few providers currently have a stand-alone 1 GB plan. Only Virgin offers this service across the country and only one regional provider (SaskTel) offers this type of plan.”

Also, recall that the mid-range plans had already dropped by more than 25% prior to the start of last year. That helps explains why one might expect modest price declines for those price baskets.

Although the press release says “The report is clear, Canada’s wireless prices declined by an average of 2.6% across all levels”, what is actually clear is that prices declined significantly more if you exclude the obvious outlier.

As with other international price comparisons, look at the data with a critical eye. As a test, see if you can find the typo at the bottom of page 69 of the pdf version (Table A3.1).

The missing caveats from the older editions of ISED’s telecom price study should be returned. As I wrote earlier this week, “Prices in Canada and international jurisdictions are driven by a complex mix of a number of factors: cost of service, competitive positioning, technological advances, consumer behaviour and regulatory frameworks.”

In the absence of such notes to the reader, is it fair to describe any price study as “clear”?