Search Results for: affordable

Let me be very clear: Just because local prices may be higher than in other places, doesn’t mean a particular good or service is unaffordable at home. There are lots of things for which Canadians pay more than our peers to the south, or other countries. An awful lot of things. Some are basic needs, like milk, eggs and poultry. Some are everyday items like fuel or alcohol or electronics. We gripe about paying more, but the vast majority of us can afford to pay the price.

For most Canadians, mobile services are affordable.

There. I said it.

The affordability of mobile service is measurable. Every quarter, more Canadians are subscribing than ever before, meaning more Canadians are finding a mobile plan they feel they can afford. Quarterly financial results are showing increasing numbers of Canadians are upgrading their service plans, increasing their monthly bills because the new data packages deliver more affordable value. I know. It sounds like an oxymoron to say people are increasing their monthly spending because they are getting more value.

As I wrote a couple weeks ago, PwC recently produced a couple reports showing that “Canadian mobile services top G7 affordability ranking”. It is a headline that must have made many heads explode since it is completely contrary to the popular narrative. Looking at the data, PwC examined the affordability of wireless services for Canadians in proportion to income and compared that to other jurisdictions. In addition, PwC considered discretionary spending by Canadians, testing whether household budgets were being strained by spending on mobile plans. It turns out that household discretionary spending increased in every income quintile; at every level of income, year over year people had more money left over to spend on fun stuff, even after paying for their communications bills.

So, while we all might want our monthly bills to come down (and who wouldn’t want to pay less for everything we pay for?), the vast majority of Canadians are paying for mobile service that they felt they could afford when they signed up, and they continue to pay their bills each month.

And indeed, last week the CRTC released the results of its own survey and found that 83% of Canadians were satisfied with their current service provider, with 35% saying they are very satisfied.

So, can we please stop the empty rhetoric about “too much pressure” on the average Canadian’s household budget? It is distracting from the real question of affordability for that segment of Canadians who truly can’t afford a smart phone and can’t handle the price of a mobile voice and data plan. There is a real problem for a number of low income households. Their calls for help are getting lost amid the populist noise calling for across the board price reductions. Lowering prices or increasing data volumes for the same price doesn’t change the calculus for a household at the margins trying to choose between the luxury of President’s Choice macaroni and cheese or the yellow box No Frills version once again.

Those are the Canadians for whom we need to talk about affordability. That conversation just isn’t happening.

In the CRTC’s upcoming Review of Mobile Services, the Coalition for Cheaper Wireless Service has proposed that carriers be mandated to offer an income-tested mobile services plan with unlimited Canada-wide voice and texting, and 4GB per month of data at LTE speeds for $25-30 per month. The coalition was silent on the subject of how the low income household gets a hold of an affordable LTE compatible device. There is a lot of merit to a targeted affordability program. I am not crazy about having just one plan available for these households; I would prefer to see a portable direct subsidy for those who need the social assistance and allow them to select the best plan to meet their specific needs. It is also my view that no specific plan should be prescribed in a regulatory decision because of the potential for the market to make any plan obsolete.

Funding such a plan could be the subject of many more blog posts: should it be funded by a general tax on telecom revenues, like the Broadband Fund; or, perhaps it should be funded by social service government programs? By way of example, Ontario’s Electricity Support Program may be a useful model to examine.

In any case, we also need to work out a solution to get affordable devices into the hands of lower income households. That is a non-trivial challenge.

For many, we still need to show them the basics. There are too many who don’t see the value of a mobile broadband service at any price.

Our national digital strategies have to consider gaps in service adoption with the same focus as programs that target service availability. There are far more people who have access to service but haven’t subscribed, than there are people living in unserved territories.

Canada needs to talk more seriously about increasing adoption of digital technologies and services in lower income households. So far, there has been too much noise to hear about the real problems, let alone develop real solutions. We need to change that.

We need to talk seriously about affordable wireless.

Earlier today, the CRTC rejected an appeal of Telecom Decision 2016-496 (“Modern telecommunications services – The path forward for Canada’s digital economy”) by the Association of Community Organizations for Reform Now Canada (ACORN) together with the National Pensioners Federation and the Public Interest Advocacy Centre (PIAC). The group had sought the creation of an “affordability funding mechanism for low-income telecommunications users” to be part of the modernization of Canada’s basic telecommunications service definition. In rejecting the group’s appeal, the CRTC reiterated what it had said in the original Decision:

… most ISPs generally recognized the issues experienced by certain vulnerable consumers in paying for their telecommunications services, but were of the view that these issues stem from broader socio-economic conditions and not exclusively from the pricing of telecommunications services. The Commission agrees with the ISPs and remains of the view that concerted efforts from a variety of stakeholders is essential to making progress in the area of affordability.

The CRTC cited statements from the original Decision, where the Commission identified “Affordability of broadband Internet access services” as one of the issues to be addressed in the decision. However, it determined:

A comprehensive solution to affordability issues will require a multi-faceted approach, including the participation of other stakeholders. In this regard, the record of this proceeding demonstrates that various stakeholders, including ISPs and community organizations, have begun to implement innovative solutions to meet the wide-ranging needs of lower-income consumers. The Commission is mindful that its regulatory frameworks should be sufficiently flexible to allow for such solutions and does not want to take regulatory action that would inadvertently hinder the development of further private and public sector initiatives.

In the CRTC’s submission to the Government’s Innovation Agenda (issued concurrently with Decision 2016-496), the CRTC wrote:

The CRTC considers that, in light of its necessity to participation in so many aspects of life, broadband access should be considered more holistically as part of the social safety net for vulnerable Canadians. The development of initiatives related to the affordability of broadband Internet access service for Canadians is of considerable concern and will require concerted efforts from a variety of stakeholders.

And with today’s Decision on the review application, the Commission has confirmed that it relying on the development of those initiatives in a multi-stakeholder environment.

On a number of occasions, FCC Chair Ajit Pai has said that closing the digital divide is his top policy priority. Earlier this week, the FCC held the fourth meeting of its Broadband Deployment Advisory Committee. In his opening remarks at the meeting, Chairman Pai said:

I’ve long said that every American who wants to participate in the digital economy should be able to do so. And the plain reality is that if you live in rural America, you are much less likely to have highspeed Internet access than if you live in a city. If you live in a low-income neighborhood, you are less likely to have high-speed Internet access than if you live in a wealthier area.

I remember the first time I noticed the correlation between broadband adoption and income. It was about 10 years ago and I was preparing a proposal for a training session that we used to deliver for regulators. We noticed that the rate of adoption of internet services was slowing and the asymptote was approaching the low 80% or so of households. I noticed that this was also the level of computer adoption in Canadian households. Digging into the numbers in Statistics Canada’s Survey of Household Spending, we were able to see the correlation between income and computer ownership and similarly, between income and internet adoption.

In our opening remarks at The 2008 Canadian Telecom Summit, we first called for an examination of the practice to subsidize rural broadband without regards to means while so many urban households were unable to afford service that so many of us considered affordable. Over the next few years, we continued to prod (some might say we nagged) industry leaders, Industry Ministers, Opposition critics, Members of Parliament, regulatory commissioners and who ever would listen. I remember sitting with an industry executive back in 2010 at one of those business club luncheons in a 5-star hotel ballroom and we started talking about the unconnected schoolkids among Canada’s economically disadvantaged households. I still have the follow-up email I sent him:

I am quite passionate about trying to figure out how we get computers and broadband into the most economically compromised members of society. I am not known for being left leaning, but like you, I am troubled that there are households with school aged children that lack computers, let alone broadband.

How do those kids stand a chance of competing with their classmates and breaking out of their circumstances?

I remember a frustrated email to another industry executive shortly after the US cable TV industry launched its low income broadband initiative as part of the Comcast/NBC approval process. I wrote, “Internet penetration in homes is virtually 100% of households with computers: these are skewed, as you would expect, by income. Our problem isn’t access to broadband; it is affordability of computers and connections. This is more of a problem in urban areas than rural.”

Since that time, in their home internet territories, TELUS [Internet for Good] and Rogers [Connected for Success] have created programs that provide computers, connectivity and digital literacy training in thousands of low income households.

To bridge the digital divide in the US, the FCC Chair has decided to pursue an approach that removes “outdated and unnecessary regulatory barriers” in order to incent the “massive investment to construct, expand, and improve wired and wireless networks.”

It is notable that in Canada so far, industry has been leading the development of programs to get connected computers into lower income households with school aged children, without funding from the government. I can appreciate the frustration of ACORN that Canada still does not have a national initiative. There are large areas of the country where broadband is available, but beyond the reach of families struggling to pay for basic sustenance. An affordability funding mechanism was not necessarily the best approach, but we are long overdue for the development of a national initiative for affordable broadband and a champion to lead it.

There is funding planned by the CRTC for rural and remote broadband to supplement government funding for similar programs. The Commission has acknowledged the multi-stakeholder approach to develop private and public sector initiatives to address affordability. Should Canada establish its own Broadband Deployment Advisory Committee to help guide a holistic approach to increase broadband adoption in urban and rural households?

The following commentary appears on National News Watch in the National Opinion Centre section.

In their letter of welcome to new CRTC Chair Ian Scott, Ministers Melanie Joly and Navdeep Bains wrote that the government’s objectives are to improve the quality, coverage and price of telecommunications services. This echoed remarks from Minister Bains earlier this year at The Canadian Telecom Summit.

There is a difficult tension in these objectives, seeking increased investment while maintaining, if not improving affordability. The Ministers wrote “All Canadians and Canadian businesses deserve high quality telecommunications services at affordable prices.”

It is a delicate balance. Quality and coverage require significant levels of capital investment, especially in a country like Canada.

How do we define and measure “affordable”? We all want lower prices for everything, but the modifier “high quality” makes low prices more of a challenge. That is why we should be careful not to equate “affordable” with rock bottom prices.

A number of recent speeches and announcements from the government have claimed Canadians pay more for entry-level cell service compared to residents of the US and the UK. There have historically been problems with the way the OECD and CRTC has collected communications pricing information. For example, the CRTC does not include flanker brands (such as Virgin, Koodo or Fido), or examine pre-paid plans, precisely the kinds of services that would be the most attractive choices by lower income consumers. Both OECD and CRTC do not account for the difference in the quality of networks nor for the difference in density of population for these comparisons. Further, the information collected is typically outdated by the time it is published and tough to verify.

A recent report by Wall Communications submitted to the CRTC observed that “an inherent problem in defining affordability is the need to invoke some benchmark for which there is no objective definition.” Canada’s Public Interest Advocacy Centre has suggested communications services are affordable when they make up no more than 4% to 6% of a household’s income.

The Wall report found “The lowest priced Smartphone service that is widely available across Canada constitutes roughly 1% or less of the low income cut-off.” Further, measured as a percentage of low income level, Canadian entry level prices for a voice, text and data plan is similar to Germany, Italy and Australia, and almost half the level of the US, where entry level voice, text and data plans cost 2% of American low income levels. So, while Canadian prices may not be the lowest, entry level plans are affordable when compared to our peers, consistent with a report from The Economist Intelligence Unit ranking Canada number 1 in communications services affordability.

What about coverage and quality?

A February 2017 report from the GSMA found that Canada had the highest spectrum cost measured on a per capita basis, roughly $350 (US) per person, as compared to $200 per person in the US and about $50 per person in the UK. Recent reports have shown that Canada led all G-7 countries in capital spending per subscriber. Measured as a percentage of revenue, Canadian capital spending was top in the G-7 and fourth in the OECD. All of that investment has been paying off, providing high quality network wireless coverage to most Canadians. In announcing the latest spectrum policy consultation, the government acknowledged that Canada’s networks rank second among G7 countries for average wireless connection speeds and 98% of Canadians have access to LTE wireless technology.

Canada is now setting the rules for the next multi-billion dollar auction of spectrum and the country has launched a consultation on what its spectrum policy should look like for the next 5 years. At the same time, the wireless industry is preparing for what has been called a “generational investment” in the latest 5G technology.

Lower prices won’t ensure Canadians have access to affordable options no matter where they live. Regulations, spectrum policy and auction rules have to preserve the delicate balance that enables mobile service affordability, while encouraging investment in high quality networks that are available from coast to coast to coast.

Frequent readers of this page know that, for too long, I have been writing about the need to develop a national strategy to target bridging the biggest gap in digital adoption in Canada. Almost half of Canadian households in the lowest income quintile have no home computer and no broadband connection.

As I wrote a few weeks ago, I would like to see us immediately start addressing households with school aged children so that all kids have a chance to start the school year equipped with the right tools. In the US, FCC Commissioner Jessica Rosenworcel refers to this as closing the #HomeworkGap.

The new school year opens in a month and a half. Will service providers be ready with a new type of “back-to-school special”?

To mark World Consumer Rights Day 2017, Canada’s Public Interest Advocacy Centre (PIAC) asks “How do we build a digital world that is affordable for everyone?”

Are governments and policy makers in Canada and the rest of the world ensuring everyone can get online? PIAC believes much more can and must be done, especially to ensure low-income families – those who could benefit most from being online – can affordably access broadband.

PIAC notes that low income households are far less likely to subscribe to home internet service, as regular readers of this page know. PIAC says that cost was the number 2 reason cited by respondents for not subscribing. Lack of interest was the primary reason given, but other surveys have found this to be a euphemism affordability for families that are having trouble putting food on the table or paying for shelter.

As I wrote last month, during the hearing that led to the Basic Service Objective determination, CRTC Chair JP Blais interrupted the proceeding and said “Every day that goes by without a more robust Canadian broadband strategy means a Canadian who is socially and economically vulnerable continues to be profoundly disadvantaged.” Still, as PIAC notes in its press release, “the CRTC decided not to address affordability for low-income households at all, and instead asked the Canadian federal government to add this issue to its forthcoming Innovation Agenda.”

Since 2008, my opening remarks each year at The Canadian Telecom Summit have called for government and industry to work together to help increase adoption of broadband services in low-income households. TELUS and Rogers have stepped up to offer significant discounts on broadband service as well as low-cost computers, technical support and literacy training. But the government missed an opportunity to make such a program even more widely available as part of its approval of the Bell / MTS acquisition.

PIAC writes, “Affordable broadband will not only be a challenge in Canada but for all low-income consumers wishing to go online around the world. It is a challenge all governments and policy makers must recognize and urgently address.”

As I have written before, I support creative initiatives, such as Facebook’s “Free Basics,” as a way to encourage increased digital participation. In another post, I wrote that “Zero [rating] is better than nothing.” PIAC may differ on some elements of how to implement solutions to increase broadband adoption among low income households, but I unreservedly endorse PIAC’s concluding remark:

Universal digital participation is key to innovation and to building a digital world consumers can trust. For World Consumer Rights Day 2017, we believe Canada needs to ensure there is affordable broadband internet for all.