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‘Wireless propaganda’ and the lame denials it inspires

Cellphone industry supporters and executives are trumpeting price studies that don’t mean anything.

wireless propaganda

Canadian Carriers Cartel on Pricing?

Wireless Propaganda:

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It’s common knowledge that Canadians are getting hosed on their wireless bills, but there are still a few “climate change deniers” out there, so to speak.

In a recent blog post, telecom consultant Mark Goldberg took issue with CBC coverage relying on an “old canard” about how Canadians pay “some of the highest wireless rates in the world.” It’s a “tired” and “mistaken” claim that “propagandists” continue to repeat as a “lie,” he writes.

To disprove the alleged falsity, Goldberg cites numbers recently put together by World Bank data scientist Tariq Khokar, who compares wireless costs in 173 countries in several ways.

Canada actually ranks in the most affordable quintile in a comparison of expenditures as a percentage of gross national income, Goldberg writes: “The study shows Canadians spend just 0.68% of income to run mobile phones, ahead of the US (0.80%), Japan (0.87%), Belgium (0.88%), Netherlands (0.98%) and France (1.11%).”

When purchasing power parity (PPP) is factored in, Canadian mobile prices aren’t even in the top 30 most-expensive, he adds.

Telus executives jumped on his post with enthusiastic tweets of support:

It’s too bad there’s a big problem with the data.

For his comparisons, Khokar drew on “Measuring the Information Society,” a 2015 report from the International Telecommunications Union. The prices in question correspond to the monthly cost of a prepaid low-user basket including voice and SMS services,” as spelled out on page 100 of the report.

Such figures might have relevancy in developing countries, where many cellphone users are on basic prepaid plans that offer just voice minutes and texting but no data, but they’re virtually useless in comparing against or within developed nations, where most people are on postpaid plans with data.

In Canada, specifically, the overwhelming majority of wireless users – 86 per cent in 2014 – are on postpaid service and not prepaid, according to the CRTC’s Communications Monitoring Report:

postpaid

Khokar himself agrees with this assessment and suggests a more accurate method of measuring expenditures in developed nations.

“The ITU ‘basket’ of prices they use is just prepaid SMS and voice, which is less applicable in richer countries,” he said in an email. “A better route for richer countries is to use ARPU (average revenue per user) data that’s typically reported by operators to folks like the GSMA Intelligence unit. I believe Bank of America’s research guys do something like this too.”

The Bank of America Merrill Lynch Global Wireless Matrix is indeed the best source of wireless data – I often refer to it as the industry’s Bible – since it tracks and compares a wealth of statistics in developed and emerging markets, including ARPU.

Average revenue per user is also a great indicator of prices, as Khokar suggests, because it effectively reflects the size of the average subscriber’s monthly bill.

Canada’s performance in the Bank of America’s ARPU measure shouldn’t be surprising to anyone but the figurative climate change deniers by now. Here are the most recent results, for the third quarter of 2015:

arpu

In case the chart above leaves any doubt, Canada has the highest ARPU – also known as monthly bills – in the world at $48.54 (U.S.). That’s more than the $42.92 in the United States, and considerably higher than the $29.27 average among the 22 developed nations tracked.

A few other numbers of note from the Global Wireless Matrix:

  • With the exception of Hong Kong at 7.9 per cent, Canada had the greatest year-over-year increase in ARPU among developed nations, at 2.4 per cent. That is at odds with global trends: monthly bills went down an average of 4.5 per cent in developed countries, and 0.3 per cent in emerging markets.
  • Profit margins at Canadian wireless carriers are fourth highest among developed countries at 47.4 per cent, after Norway, Hong Kong and Sweden.

It is probably not correct to say that Canada has the highest wireless “prices” in the world, since those are notoriously hard to measure thanks to differences in service plans, market characteristics and numerous other factors. Or, it’s at least hard to say it and prove it.

There is no doubt, however, that Canada has the highest “bills” in the world. Carriers and their supporters have myriad ways of rationalizing that fact, but when combined with the ARPU growth and heady profit margins… well, as they say… where there’s a whole lot of smoke, there’s usually fire.

None of this is to say that Khokar’s study has no merit. Its primary value is in showing just how expensive even basic cellphone service is in poor countries. A typical user in the Congo, for example, has to spend more than half of his or her average income just to run a phone.

Beyond that, it’s also perhaps marginally useful in highlighting the slight differences in prices on the sorts of bare-bones cellphone plans in rich countries that few people actually use anymore.

But does it do anything to disprove the “old canard” and the “professional Canada bashers?” Not at all.

So what was that about lies and propaganda again?

5 Comments on ‘Wireless propaganda’ and the lame denials it inspires

  1. I wonder what would happen if Ottawa forced all of the telco companies to spin off their wireless divisions as separate entities? I often get the impression, especially as customers continue to cord-cut (Rogers) and drop landlines (Bell/Telus), that the wireless divisions are increasingly on the hook for growth targets. I’m not an MBA or CPA, but it seems to me these divisions would be way more competitive on price if they were running their own show. Or is that just wishful thinking and nothing would really change? 🙂

  2. I’d personally enjoy seeing BCE/Rogers/Telus/Shaw vertically dis-integrated. Movie production companies cannot own Movie theatres in Canada, so why can broadcasters own multiple television and telecommunications companies?

    As a matter of law, they shouldn’t be allowed to own multiple platforms and levels of communication services: Oligopoly should be guarded against as much as monopoly.

  3. One thing ARPU doesn’t tell is what you get for your money. For instance, Americans pay a high ARPU, but they get a lot more services for their money than Canadians do.
    It would be interesting to compile some sort of usage index, then compare that to the cost/user.

  4. One of the “old canards” trotted out by the oligopoly is that we pay more because we have less population density, so underuse the infrastructure. Well, Australia has a similar population density to Canada, and they pay a LOT less than we do.
    They are also very careful to cover only those areas with sufficient population to cover their costs, leaving most of Canada with no coverage at all.

  5. I also think the vertical integration is a big concern, and wish there was more public awareness along with demand that government change things. Thusfar, unless I am mistaken (which I would love), there is no sign whatsoever that the Liberals have any intention of doing anything. I wish someone would connect the dots as to why this is the case.

    Take a look at the mess that is Rogers and sports. As it is likely there will be no Canadian team in the NHL playoffs, along with low Canadian dollar (they paid for their rights in US $) they will no doubt take a hit.

    Even worse, look at how they have handled the Jays. After decades of mediocrity, they finally manage to pull something together. What do they do? They lose the guy that made it happen, and bring in a management team whose top talent is reducing payroll. They don’t even bother negotiating with David Price, get into a fight with the superstar player who kept them afloat, while also leaking info on 3-way trade. The next season will obviously determine everything, but thus far, it appears they are heading back in the other direction. While Bautista’s “demands” might seem nuts, they do seem to add up (according to journalists who have compared stats), and his point about increasing Rogers shares is solid. I think it is nuts that many Canadian fans have been conditioned with siding with Rogers frugal approach. In fact, Bautista’s hard stance is exactly how Rogers treats it’s customers, so kinda ironic.

    My sad, yet favourite analogy for MLB is: The only way the Jays will win another World Series is if Rogers finds a way for the CRTC to mandate it. Otherwise, they just don’t have what it takes to actually compete with other teams (businesses).

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