Search Results for: affordable

Another indicator appear to show that Canadian telecom services are affordable, further contradicting the oft-repeated misrepresentations of some critics.

Just last week, a World Bank study showed that Canada’s mobile services ranks among the world’s most affordable, measured as a percentage of income.

Now, the Pew Research Center released a report that shows Canadian adults are among the world’s most connected, with 90% of Canadians affirmatively answering the question “Do you use the internet, at least occasionally?” Only Australia, marginally higher with 92%, had a higher percentage of its adult population reporting online access.

The detailed survey has data from a similar 2007 study allowing a comparison of changes between countries. In 2007, 75% of Canadians had answered the occasional use question “yes”; 78% of Americans said yes in 2007, compared to 87% in the most recent study. Unfortunately, no comparable 2007 data is available for Australia.

Canada and Australia were also among the top countries responding “several times a day” to the question “Overall, how often do you use the internet — several times a day, once a day, at least once a week or less often?”.

Together with last week’s World Bank study, Pew Research provides further ammunition to challenge those critics who repeat tired slogans about the state of Canada’s communications services. Will these studies help inform the CRTC’s upcoming “Review of basic telecommunications services“?

Access to broadband internet service isn’t an issue for the vast majority of Canadians. Almost all Canadians have access to superfast broadband. Still, so many people focus on the “supply” side of the adoption calculation, rather than the much more difficult question of stimulating “demand”.

As a result, a number of articles attack the government for setting “unambitious” goals for its broadband strategy [Digital Canada 150, 3MB pdf], without understanding the real challenges of providing broadband service in rural markets (see “Rural broadband isn’t easy“).

There are companies making substantial investments to improve rural broadband coverage and service quality. The release of the 2500 MHz spectrum auction results last week saw millions of dollars being invested by Xplornet and Corridor Communications to improve the reach and speeds for their broadband services.

The biggest challenge restricting Canadians’ ability to participate meaningfully in the digital economy isn’t access to broadband, it is the question of affordability.

How do we determine what is affordable? Of course, we all want to pay less that what we are paying today. Affordability isn’t measured by what we want to pay, but more by what we are willing to pay. In the interests of rural and urban parity, people sometimes point to the prices being charged in urban markets as an appropriate target for affordable broadband service.

The problem is that there simply isn’t a “one size fits all” price point for universal broadband. Should a system of subsidies be set up to bring rural pricing down to urban levels? Such a “geographic-based” system appears to be premised on a belief that higher rural prices are not affordable. Equally, such a system also presumes that urban prices are, in fact, affordable to all.

Neither of these presumptions are supported by the data.

We continue to have a problem with broadband adoption in low-income households, whether urban or rural, despite government programs continuing to define digital adoption as a problem framed in terms of geography, not affordability.

The CRTC’s consultation launching a “Review of basic telecommunications services” examines the issue, but there is a risk that the consultation will also approach the problem with the same prejudice:

In phase 1, the Commission will review its policies regarding basic telecommunications services in Canada. The Commission will also gather information from the industry to better understand which telecommunications services are being offered across Canada and whether any areas in Canada are underserved or unserved.

The CRTC is starting with an examination of what areas might be underserved when it might be more useful to start by trying to understand “who in Canada is underserved or unserved”? The preamble of the consultation starts with a presumption that the problem is geographic, not based on any other factor. It is as though we are already asking about solutions for “where” before asking about “who” needs help.

In paragraph 3 of the Basic Service public notice, the CRTC acknowledges that Section 7 of the Telecom Act sets the following relevant policy objectives:

(b) to render reliable and affordable telecommunications services of high quality accessible to Canadians in both urban and rural areas in all regions of Canada; and
(h) to respond to the economic and social requirements of users of telecommunications services;

The Appendix to the public notice does in fact seek input in terms of economic requirements of users. The CRTC asks participants to “Identify and explain the barriers that limit or prevent Canadians from meaningfully participating in the digital economy (e.g. availability, quality, price, digital literacy, and concerns related to privacy and security). Identify which segments of the Canadian population are experiencing such barriers.”

However, in seeking public comments on solutions, we continue to see the terminology of a geographic bias. “What action, if any, should the Commission take where Canadians do not have access…” and “What action, if any, should the Commission take in cases where its target speeds will not be achieved…”

What evidence do we have that says “affordability” is a rural/urban issue? Why is there no discussion specifically seeking comments on the advisability of lifeline services [such as Lifeline Services described by the FCC] based on income?

When last produced, Statistics Canada showed that more than a quarter of households in Montreal had no internet use from home; the same was true for 1 in six households in Toronto and Vancouver; 1 in 5 in Regina.

Our telecom policy seeks to render affordable telecommunications services in both urban and rural areas in Canada, which requires substantially more information about economic and social factors that inhibit service adoption, in accordance with Section 7(h). Based on Statistics Canada’s information, there may be more Canadians in urban markets who are not subscribing to internet service than in rural markets.

Who are they and why are they not on-line?

Who will speak for the households that don’t have internet access?

The Commission says it “will consider what its role should be in ensuring the availability of basic telecommunications services, particularly in rural and remote regions of Canada.”

Before we answer the question about “where” the CRTC should be acting, perhaps we need to have a more clear understanding of “who” needs help and “why”.

We may need to find a solution that turns the current subsidy system upside down. Rather than subsidizing the “where”, has anyone looked at providing subsidies directly to those who need it?

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Update: [May 19, 7:45 am]

An article today at AEI’s Tech Policy Daily by Bronwyn Howell looks at “The rural-urban divide on broadband adoption and pricing: Fact or fiction?” from an econometric perspective. “The bottom line is that broadband adoption is complicated, and that price is only one of its many determinants. When regulators are facing a problem where the root causes are ill-defined (or perhaps the problem is even non-existent and simply a statistics-mirage), a high degree of regulatory humility becomes important.”

I drove to and from Montreal over the weekend and passed through a lot of rural territory that has been the subject of various rural broadband projects. For example, the Eastern Ontario Warden’s Caucus (EOWC) is looking at enhancing the broadband capabilities of its residents.

It seems to me that an important issue is broadband affordability – rural and urban. More than simply being concerned with connectivity, how do we make broadband affordable for all Canadians? We have technologies available that can reach every Canadian household and business, but can they afford to sign on?

We have a session called Building Broadband on June 15 at The 2009 Canadian Telecom Summit. Have you registered yet?

Technorati Tags:
EOWC, broadband, Canadian Telecom Summit

Bell Canada has announced an unlimited mobile data plan for $75 per month. Details are available on the Bell website.

The plan is designed for wireless connection cards operating on Bell’s EVDO Rev A high speed mobile network, offering peak upload speeds of up to 1.8 Mbps and peak download speeds of up to 3.1 Mbps and covering about 70% of the Canadian population. The small print says that Bell’s acceptable use policies apply, meaning you agree not to use you device in a manner that “consumes excessive network capacity in Bell’s reasonable opinion, or causes our network, or our ability to provide services to others, to be adversely affected.”

A clause that will raise eyebrows is that you also agree not to use the service “for multi-media streaming, voice over Internet protocol or any other application which uses excessive network capacity that is not made available to you by Bell.” Well, so much for unlimited service!

These restrictions seem to conflict with some of the freedom that is promoted in the press release and may be artifacts of an older acceptable use policy. I’ll post an update if Bell lets me know that these restrictions no longer apply.

System access fees apply, so the monthly cost is actually $84, but this a dramatic improvement in data services affordability.

How will other carriers respond?

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Update [October 24, 10:50 am]
Today’s NY Times includes a story about Verizon settling a case with the NY attorney general’s office. According to the story, New York found that Verizon Wireless had marketed certain mobile internet plans as “unlimited,” without disclosing that actions like downloading movies and playing games online were prohibited.

Technorati Tags:
Bell, EVDO

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.