What’s the opposite of shrinkflation?

ShrinkflationEvery grocery shopper has experienced shrinkflation. Headline prices for asparagus, previously quoted by the pound, are now often listed for 325g bundles – you end up with 25% less for the money. Boxes of cookies and snacks are smaller; cereal boxes shrank. Prices for items may appear to hold constant, but the packaging is smaller. The headline price disguises the fact you are getting less.

Last month, I wrote “Statscan says cellphone prices are plunging – and they are”. In that post, I used a purely hypothetical apartment metaphor to describe how Canadians might choose to lower their monthly bill for a similar size apartment, or pay the same amount and get a bigger place with better quality. That might be the case if the cost of accommodations happened to be falling. If only!

But, despite these inflationary times, Canadian telecom – especially Canadian mobile wireless service – is actually delivering more value for less money.

A recent post by the Canadian Telecommunications Association talks about this effect in terms of grocery shrinkflation.

In a world of shrinkflation, Canada’s telecom sector stands apart.

  • Lower prices – more data

    While prices for most things have increased, prices for both home internet and wireless services are declining. According to Statistics Canada, overall consumer price inflation has risen by 18.5% over the last five years, but prices for cellular services have decreased by an average of over 47% and prices for internet access services have decreased by an average of nearly 8% during the same period.

    For example, according to the Government of Canada’s annual telecom price study, in 2019 the average price of a wireless plan that offered 1GB of data (and 1200 call minutes and 300 texts) was approximately $65 per month (or approximately $75 in today’s dollars). Today, for $65, a consumer can get a plan that offers 75GB of 5G data and unlimited talk and text Canada-wide, with no overage fees. This amounts to a 98.6% decline in price per GB (without factoring in additional savings attributable to unlimited talk and text and zero overage charges). Smaller data plans are also available, like 30GB wireless plans for $34 and $50 for 60GB, which offer more data at lower prices than what was available just a few years ago.

  • Faster Speeds

    If you check the label on your favourite packaged good you may find that one or more ingredients have been switched for a cheaper and lower quality ingredient. The opposite is the case in telecom. Though prices are declining, the quality of service has steadily increased. For example, the average mobile data download speeds in Canada have increased by 90% over 5 years1 and fixed broadband download speeds by nearly 400%2. With faster speeds, Canadians can stream movies, play games online, and join video conferences while on the go.

  • More coverage.

    While other industries are shrinking the size of their products, Canada’s telecom providers are steadily expanding the coverage of their wireless and fixed networks, with the vast majority of Canadians now having access to mobile wireless and high-speed internet services. And with investments being made in new innovations like cellular-to-satellite communications, Canadians will soon be able to connect from even the most remote parts of Canada.

While other industries are shrinking their products, the telecom sector is giving more, not less. By investing billions each year, it is providing Canadians with more data, faster speeds, and wider coverage, all at lower prices.

I shamelessly stole the shrinkflation metaphor last week when I was quoted by Canadian Press talking about the latest Statistics Canada consumer price index report. In February, the cellular price index was down more than 25% compared to a year ago.

Price declines in the national inflation report could indicate that consumers are getting more bang for their buck through new offers, such as bigger data packages, international roaming perks, or voice-to-text voicemail services.

“They’re either getting more for the same price or they’re paying less for the same thing,” said Goldberg, who likened it to “the opposite of shrinkflation.”

“If you go into a grocery store and the box of cereal on the shelf is $3.99, but last month it was a 500-gram box and this month it’s a 400-gram box … you’d say prices went up 25 per cent. In this case, it’s the opposite.”

For years, Canadian telecom policy has recognized the value of investment in telecommunications infrastrucutre. In approving the merger of Orange and MasMovil, I noticed that Spain has recently adopted a similar view, with Digital Transformation Minister José Luis Escrivá saying “the competitiveness of a country partly depends upon its digital infrastructure and its connectivity.”

Here, we phrase it simply. “Canada’s future depends on connectivity”.

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