Rates go down and bills go up. Huh?

Today’s post is going to be getting into the mathematics of telecommunications.

For years, a number of so-called industry analysts have had trouble with the concept that wireless rates are coming down, but monthly bills are going up. Maybe we need more precision in the way terms are used, consistently. The language is important.

For clarity, I think most of us view a “bill” as the total amount we pay. Rates refer to the prices for the things on that bill. The two are related, but comparisons are only meaningful if the number of things being bought are considered.

In telecommunications, rates have declined over time, but monthly bills are, in many cases, going up. More of us are buying more stuff. We have added data plans, or increased the speeds and data volumes. Our voice plans include more features, better roaming, more long distance. In most cases, we are buying more, precisely because the relative value proposition has improved for the things we are buying: the prices are lower and we see more utility from these capabilities.

While that may seem obvious, there was confusion about bills versus rates in a Twitter response to a Globe and Mail story (“SaskTel says regional wireless carriers overlooked in federal policy“) from Industry Canada’s spokesman:

There are two problems in this tweet.

First, there is the confusion between bills and rates. Second is the question of correlation versus causality. It would have been correct to say that consumers are paying 22% less for wireless services. But, how do we know that the change in rates is due to “our policies”? In the same period, wireless rates in Australia also fell by 22%. was this due to the Canada’s wireless policies? US wireless rates fell by 31% in that period. What does that say about “our policies”?

Panel discussions and keynote addresses at The 2015 Canadian Telecom Summit will explore these issues and much, much more. Early bird rates available through February 28. Book your seat, today.