Why do so many hate their communications service providers?
The feeling comes to the fore whenever a comparative report shows that we have the world’s priciest this or the world’s lowest that. Playing to a popular view, academics and analysts alike fail to look at the data to see if it passes reasonableness tests (what I like to call the smell test).
The latest entry to attract attention is a study [pdf, 130KB] from New America Foundation. Using a sample size of one (a single calling plan from Rogers), the study says that Canadians suffer from paying the highest mobile phone rates in the world. Had anyone looked at the footnotes, they would readily see that the Canadian pricing appears to have been overstated – doubled, in fact: the sampled 250 minute plan includes a ‘double minutes option’, among other call volume options (such as My5 Canada-wide, Unlimited Rogers calling, etc. That means that at worst case, a customer would get 500 minutes for the CAD$40 price, not the base 250 that apparently was used by the study.
I won’t comment on where the corrected amount would place Canada in the rankings, because I am left with no confidence that the other countries were correctly sampled either.
Why didn’t any of the smart people who tweeted the links to New America Foundation pick up on this pretty obvious error?
We see a new campaign from Mobilicity that is looking to capitalize on the negative feelings that so many Canadians have for their service provider. Mobilicity has invited Canadians to share their “mobile bill horror story” with a contest called FMyBill.
So why do so many Canadians hate their wireless service providers? And our internet companies. And our phone and cable companies.
The service providers have worked hard to develop bundles to entice customers to get everything from one company. Many Canadians have chosen to get multiple products from their service providers – that would usually be seen as a vote of confidence in the relationship.
So, why do we love to hate them so much?
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I hate my cell company because of the sales strategy. Buy in to a three year plan. You want to leave early, they don’t just bill you for the cost of the phone remaining, they bill you for lost potential profits. This strikes me as unethical.. forcing people to pay for nothing.
This has to change, until then, I can’t trust or like my provider.
The Bank of America Merrill Lynch shows similar results to the New American Foundation study, though. According to that study, “Canadian consumers pay an average of $57.09/month — the highest among 50 nations in the report, while penetration sits at 70%, 6th last behind Peru, but just ahead of Pakistan.” The quote is from the Financial Post.
I think the bigger story here is how this dissatisfaction – which is very, very real – is being used by groups like Seaboard to propose that the Harper government opens the doors to foreign investments with the only safeguards in place being government intuition.
There are plenty of reasons to hate the status quo in Canada, that’s for sure. But when the “answers” proposed seem even worse, it’s hard to know where to turn.
Notwithstanding the article in Financial Post, the Bank of America Merrill Lynch study does not agree with New America Foundation. There is a big difference between ARPU and rates. In fact, the BAML study shows that Canada has among the best (lowest) average revenue per minute and among the highest minutes of use per month.
ARPU is not an indicator of rates, given that there are different mixes of products. It is skewed by different adoption rates of enhanced services packages. Low ARPU may be more of an indicator of low adoption of data services rather than low prices.
But I hear your frustration, Jordan, and appreciate your contribution to the discussion. What do you suggest?
The BAML study reveals that Canada has the highest monthly fees in the world for wireless service. Period.
It also reveals, interestingly, that Canada’s providers have higher profit levels than anyone else in the developed world. The profit rates of the Big Three were more in line with those in emerging economies, in fact.
ARPU may not be, according to you, an indicator of rates but it is an indicator of a status quo in Canada that is starting to be unworkable for the average consumer.
You are right when you say that Canada has among the best average revenue per minutes, however. The problem here is that Canada is slipping and the U.S. carriers still top us out by a considerable margin. You are also right when you say that Canada has among the highest minutes of use per month, but there’s also a problem here in that Canada has the rare distinction of counting incoming calls as part of total minutes. So this changes things somewhat.
In terms of what I’d suggest to change things, I’ll cop to being not overly sure. I’m sure I’m more acquainted with what not to do instead. It’s probably easier to be negative anyway. 🙂
Dear Mark, you are claiming that their sampling is wrong, which is fair…but yours is wrong as well. A $40 plan, does not cost you $40. It is $40 plus a few things.
Right now, I am looking at my Rogers bill…and my “100 Pooled Weekday Minutes” plan which costs “$20” in fact costs: $20 + $6.95 (System access fee) + $0.75(Emergency Access Fee) + $12 (Essential Value Pack) + 13% Tax.
So why do you assume that Europeans don’t get 2X minutes for their X minutes plan?
And their taxes (VAT) is already included in their price plan. And call display comes standard and you don’t have to pay extra. And roaming charges are much cheaper. And long distance is much cheaper. And you are charged only when you call and not when you receive calls.
I travel frequently to EU and I know how much cheaper their rates are.
I was recently in London and purchased a 16 GPB (about $23 CAD) SIM. I used it to dial in Canada to join conference calls, call my friends in UK and a two other EU countries. Without having a contract, I had more minutes (International Calls) than I have with Rogers, for local calls, with contract.
So no, I don’t “hate” them because “I love to hate” or because “it is easier to be negative” (isn’t this always the typical Canadian answer when somebody complains about something Canadian).
I “hate” them because they are expensive and the quality of service is not great either.