Big Three WSPs vindicated on pricing

The Canadian Wireless Telecommunications Association (CWTA) and its three largest members - Bell Mobility, Rogers Wireless and Telus Mobility - have claimed vindication in their battle with rivals over wireless pricing levels in Canada. The association points to two reports that counter claims Canadian wireless customers pay more for services than their counterparts south of the border. The Organisation for Economic Co-operation and Development's (OECD) Communications Outlook 2007, released on July 12, indicates that Canadian wireless prices are generally lower prices than those in the United States and Mexico (see table below for more details). The second is a study from Analysis Consulting Ltd. - filed as part of Rogers' reply comments - which concludes that only high-usage customers would get a better deal south of the border. Medium, low and family plan users would pay between 40% and 55% more for equivalent services in the US. Peter Barnes, president and CEO of the CWTA, says the OECD report debunks some of the myths about wireless pricing in Canada. " brings an appropriate balance to the debate because there's been a number of studies out there that I think have been one-sided," he tells Report on Wireless. "There's been so much said that we're lagging the US. Well here's an impartial, no-axe-to-grind, third-party body that says on low, medium and high Canada is ahead of the US, and we're in pretty decent shape vis-à-vis all of the OECD."The Big Three, along with CWTA, have been waging a war of words and numbers with smaller competitors MTS Allstream Inc. and Vidéotron ltée over wireless prices in Canada. The battle is part of overall lobbying efforts to convince Industry Canada to set rules for the upcoming spectrum auction . The Big Three want an open, unfettered auction with all bidders treated the same, while competitors want the government to set aside spectrum exclusively for new entrants. Both sides have lobbed statistics as evidence to discredit the other's arguments. MTS Allstream and Vidéotron point to a SeaBoard Group report that paints a dire wireless pricing picture in Canada, with subscribers here paying substantially more for wireless service than comparable customers in the United States. They say this can only mean competition isn't as vigorous as it could be and therefore Industry Canada has no choice but to limit incumbent wireless carriers' ability to bid on spectrum. Barnes says some of the previous reports pointing to high prices in Canada were too narrow and didn't have the right mathematics. "When you use three cities to come up with a country average, and...two of them are New York City and Athens GA, that sounds to me like you're trying to do something with the numbers," he argues. "That's why I think the OECD study and others like the Analysis ...are consistent and they give you a pretty good message of where things are going." The OECD study isn't unanimous in lending support to the incumbent wireless carriers' claims on pricing. The report notes that generally average revenue per user (ARPU) declined from 2003 to 2005 by a margin of slightly more than 0.3%. In the US, annual ARPU decreased from US$565 in 2003 to US$506 in 2005 while in Canada it increased from US$448 to US$507. With final comments submitted at the end of last month, Industry Canada is now working through the various positions to determine the rules for the spectrum auction, expected to be held early next year. OECD Figures Low UsageMedium UsageHigh UsageCanada - Rogers $177.14$474.95$513.59Mexico - Telcel $309.30$434.01$727.71US - Cingular (now AT&T) $190.31$629.04$636.92Source: OECD's Communications Outlook 2007Note: Dollar amounts have been converted to US dollars at purchasing power parity. Analysis Figures Low usageMedium UsageHigh UsageFamily PlanRogers$48$54$81$33AT&T (formerly Cingular)$71$76$70$51Verizon$71$76$70$59Source: Analysis Consulting Ltd.Note: Dollar amounts have been converted to Canadian dollars at purchasing power parity.

Big Three WSPs vindicated on pricing

News | July 23, 2007

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