Falling prices for telecommunications services highlighted yesterday’s Statistics Canada release of the June 2023 Consumer Price Index (CPI).
While Canada’s overall CPI rose 2.8% year over year, the cellular sub-component fell 14.74% and internet access prices fell as well.
As a result, prices for telecommunications services merited a special mention in Statistics Canada’s CPI summary in The Daily:
Prices for telecommunications fall
Consumers paid 14.7% less for cellular services year over year in June, following an 8.2% decline in May. This was a result of both lower prices for cellular data plans and promotional pricing.
Prices for Internet access services fell 3.2% in June on a year-over-year basis after increasing 1.0% in May. On a month-over-month basis, prices declined 5.0%, the largest 1-month decline since February 2019. This was mostly due to promotions in Ontario and lower prices in Quebec.
Since January 2021, the cellular component of the price index has fallen nearly 30% while the overall CPI has risen nearly 15%. If prices for cellular service had tracked at the average for Canadian prices, plans would be 60% higher than they are today.
The latest report on falling prices provides more evidence supporting my post from last month, where I asked, “Is it time for government telecom policy makers to say, “Mission accomplished”?”
Measuring price without consideration of variances in quality produces meaningless results. “Value” seems to be a much more relevant metric.
Policy makers need to look at factors beyond price as a measure of competitiveness. The marketplace is working. As I told the Canadian Press a couple weeks ago, price reductions we are seeing in the mobile market are “well beyond any of the expectations that were set by Ottawa”.
So, are authorities in Ottawa preparing to declare “mission accomplished”? That would be unlikely. However, with the recent substantive changes in the structure of the sector, it might be appropriate to ask if regulators should stand aside and let marketplace dynamics work.
