Canada criticized by OECD for high wireless prices, but numbers don’t tell the entire story

The Organisation for Economic Cooperation and Development (OECD) has given Canada’s wireless pricing a not-so-good grade, but a closer look at the numbers reveals that prices for mobile services aren’t that bad. The international economic and social policy organization released its 2009 Communications Outlook this week and proclaimed Canada to have some of the highest wireless prices among OECD nations. According to the 300-plus page report, Canada ranked 28th out of the 30 OECD countries for a medium usage plan, which consists of 780 minutes of voice calls, 600 text messages and eight multimedia messages per year. With an annual price tag of $500.63, this is more than three times the cost of medium usage services in the top five nations with the lowest prices (Netherlands, $131.44; Finland, $131.44; Sweden, $137.94; Denmark, $142.68; and Norway, $165.33).Canada faired better on the high- and low-usage plans, ranking 19 and 20 out of 30, respectively. Comparing wireless pricing from country to country isn’t necessarily an apples-to-apples exercise, though. The OECD report doesn’t include incoming minutes for the European countries because operators there have adopted a calling-party pays system where incoming minutes are free. In Canada users pay for both incoming and outgoing airtime. Mark Goldberg, of Mark H. Goldberg & Associates, gave a rather scathing indictment of the OECD report on his blog. “There are so many problems with the OECD study that I am troubled with where to begin. To start with, the OECD defines a light user as someone who uses their phone for one minute a day (30 minutes a month) and sends a text a day, plus an extra one each week. In OECD-land, a medium user is someone with 65 minutes per month and 12 texts per week while a heavy user is 140 minutes per month and 55 texts per month,” he wrote. The OECD stands by its comparisons even though member nations have different methods of calculating prices. “In 2005, there were an average of 3,776 minutes per year per subscriber in Canada. That works out to 315 minutes per month for all calls and we could assume half of those, 157, were outgoing. Even with this amount Canada has a slightly higher use than most of the OECD,” Taylor Reynolds from the OECD’s telecommunications and internet policy division writes in an email to Report on Wireless, noting that 2006 and 2007 data were unavailable. “I still believe it is fair to compare countries this way because the methodology isn’t perfect for any one country so a common benchmark is the fairest way.” The OECD report comes two years after a war of numbers over wireless pricing in Canada. Various parties lobbied the federal government on the rules for the Advanced Wireless Services spectrum auction. Reynolds notes higher mobile prices in Canada can also be affected by the high-rate of landline penetration as well as the low mobile usage on a per population basis. “Price is one aspect but so is coverage and calling areas,” he says. “Most countries in the OECD have nationwide operators which offer calls to all areas of the country at the same price.” Another reason for high mobile prices in Canada, according to the OECD, might result from the lack of competition among GSM-based carriers. “Competition among GSM networks has been a key reason many countries have excelled in mobile. Competition among GSM operators allows users to switch easily from one operator to another simply by swapping out a SIM card. Users in countries with both GSM and CDMA operators have to buy a new phone to switch – thus raising the barriers to switching and reducing some competitive effects,” Reynolds adds in an email. The debate over wireless pricing in Canada isn’t going to end, but the OECD figures do appear to put one issue to bed: Canadian wireless prices are lower than comparable plans in the US.

Canada criticized by OECD for high wireless prices, but numbers don’t tell the entire story

News | August 12, 2009

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