Do Canuck bucks go as far as greenbacks?

Do Canadians really pay less than Americans for wireless services? At least two organizations claim the answer is "yes," and rather convincingly. But one group makes an equally compelling case reaching the opposite conclusion. Which side is right? Time to dust off the old adding machine. The Organisation for Economic Co-operation and Development's (OECD) report and Analysis Consulting Ltd.'s research said Canadians pay less than Americans, while the SeaBoard Group study indicated Canadian prices are higher than in the US, except for low usage plans. With all three presenting convincing arguments to support their respective positions, I figured it was time for Report on Wireless to do a wireless price comparison. The cities of Ottawa and Boston were used. I can hear the groans and criticism: "He's a writer. He barely knows how to use a calculator let alone conduct an in-depth wireless pricing analysis." Well, you might be right. I'm not even sure I know what an in-depth wireless pricing analysis is, but I do know how to add...using a calculator. And I can tell you $40 per month nets more airtime minutes and text messages in the United States than it does in Canada. A collective groan from the Big Three, the Canadian Wireless Telecommunications Association and their supporters: "That's way too simplistic. He didn't even factor in the exchange rate, and he certainly didn't consider purchasing power parity (PPP)." True, I didn't consider the exchange rate because the two currencies are basically at par, or will likely be in the near future. And PPP is for economists and academics - it's not required when Joe or Jane Consumer asks the simple question: "How much can I get for $40 per month?" In all seriousness, the tables below clearly demonstrate that $40 per month offers a wireless customer in the United States more services than in Canada. When taxes and surcharges such as the system access fee, other regulatory or network upgrade fees are included, Canadian rates are lower when the highest US tax rate used but higher when the lowest US tax rate is used (see third table for details).This comparison is not meant to serve as an authoritative and comprehensive analysis of the different pricing models used in Canada versus those used in the United States. The simple analysis demonstrates that we get about the same number of minutes per month as Americans, but not nearly as many text messages. In addition, we have to pay for features such as voice mail and caller ID, whereas our friends in the US don't. Michael Geist, Canada research chair in Internet and e-commerce law at the University of Ottawa and frequent telecom commentator, weighed into the wireless data pricing issue with his weekly column earlier this week. He wrote that wireless data prices here are significantly higher than other countries, particularly the United States. Geist singles out Rogers Wireless's $210 per month 500 MB plan and compares it to AT&T's US$20 per month for unlimited data on an iPhone plan. No matter how you twist, spin or analyze the numbers, wireless data services are more expensive here and the bang for your buck is better south of the border. Unless a new carrier comes onto the scene with a strict focus on data, we won't see unlimited data prices comparable to those offered by American carriers in the foreseeable future. So what is required to facilitate a radical wireless data pricing change here? In my opinion, the wireless pricing debate rages for one, simple reason: voice services have yet to be commoditized in Canada as they have been south of the border. Large buckets of minutes and free optional services are table stakes in the United States. Here, carriers still see growth in voice and optional services. Once these offerings become a commodity, carriers will have to push their data services more aggressively to make up for the earnings shortfall. Increased data revenue will come from higher usage, resulting from price decreases. It's only a matter of time before voice becomes a commodity here, ushering in lower wireless data prices. But a question remains: will new competitors push the voice pricing envelope, or will Canadians have to suffer through the slow and measured approach that our current providers are following? Only Industry Canada can answer that question and the sooner that happens the better. Minutes and Messages Comparison: Canada Bell MobilityTelus MobilityRogers WirelessBase price and included features$40 - 350 anytime minutes, unlimited evenings and weekends, call waiting and conference calling$40 - 350 minutes anytime, unlimited evening and weekends, call waiting and conference calling$40 - 350 weekday minutes, unlimited evenings and weekendsPrice for Extras$10 - call display, limited voicemail and 100 SMS outgoing$10 - call display, limited voicemail, 100 text, picture and video messages, unlimited browsing to 100 sites (only 100 minutes when in EvDO coverage), unlimited MyEmail and IM$12 - call display, voicemail, 125 outgoing SMSSource: Monthly rates taken from the companies' web sites. Note: Taxes and other surcharges not included. Minutes and Messages Comparison: United States T-MobileVerizon SprintBase price and included features$39.99 - 1,000 whenever minutes, unlimited evenings and weekends, call forwarding, call hold, call waiting and voicemail$39.99 - 450 minutes, unlimited evenings and weekends, three-way calling, caller ID, voicemail and unlimited IN calling$39.99 - 450 minutes, unlimited numeric paging, caller ID, voicemail, three-way calling, call hold, call waiting, unlimited nights and weekends starting at 7:00 p.m.Price for Extras$4.99 - 400 text, picture and video messages$10 - 500 text, picture and video messages to Verizon customers and another 500 to non-Verizon customers$5.00 - 300 text messagesSource: Monthly rates taken from the companies' web sites. Note: Taxes and other surcharges not included. Comparison of monthly bill: Telus versus T-Mobile Telus MobilityT-Mobile Base rate + features$50$44.98Surcharges - SAF, E911, USF$8.55$5.08Other charges $0.04Other charges $0.70Taxes$8.78$17.27Total $67.33$68.07Value in US Dollars$63.96$68.07Source: Figures used in calculation taken from the companies' web sites.Note: For the case of T-Mobile Verizon, tolls, taxes, surcharges, E911 and gross receipt charges vary between 4% and 34% depending on regions. For illustrative purposes, Report on Wireless used 34%. The total monthly bill for a T-Mobile customer would be $52.83 if the tax rate was 4%.

Do Canuck bucks go as far as greenbacks?

News | 07/25/2007 8:16 pm EDT

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