It has been a little over three years since I last looked at mobile affordability in detail. We frequently hear the term “affordability” used interchangeably with “lower spending”. That isn’t necessarily so, as we will see from a detailed examination of data from the latest release of Statistics Canada’s Survey of Household Spending (SHS).
Lower prices make items more affordable, but stable prices with rising incomes can have the same effect. Lower prices can also serve as an incentive for people to consume more of a service, or substitute one service for another. Statistics Canada’s Consumer Price Index (CPI) reveals mobile services prices are less than half what they were 5 years ago. Contrast that with the overall price index (reflecting goods and services across the economy), which is now 20% higher over that same time frame. So, mobile services are certainly more affordable than before.
At the same time, mobile penetration has risen substantially. According to the CRTC, there were 33.0M mobile subscribers in the first quarter of 2019. There were 35.2M by the first quarter of 2023, an increase of 10%. In addition, people are subscribing to enhanced services packages, using faster mobile data with larger data buckets.
More people choosing to connect, and more people choosing more data, serve as additional indicators of affordability.
That helps to explain why monthly household spending on mobile services has increased from $111.92 in 2019 to $125.33 in 2023. Still, as a percentage of after tax household spending, mobile services have remained constant at 1.8%.
I thought it was interesting to see that household spending on income taxes have increased 38% over the period 2019-2023, nearly double the increase measured by the overall CPI.
This isn’t to say there are no households for whom communications services are unaffordable. There are households that have trouble putting food on the table and staying warm in the winter. At virtually any price point, these households might find communications services unaffordable. As I wrote last November, targeted solutions (including measures to improve digital literacy) are the best approach to address mobile affordability concerns.
I may take a deeper dive into the Survey of Household Spending data through the summer. There is a lot of data embedded in the SHS tables for those who choose to poke around.
In the meantime, be wary of those looking for overall communications prices to come down in the name of “affordability”. Targeted programs remain the best way to address such cases.