New entrants leading lower mobile phone and Internet prices, report says

Canadians are paying less, on average, for their mobile phone, home Internet and mobile Internet services than last year, a new report released by Wall Communications Inc. said. The annual report, commissioned by the CRTC and Industry Canada, released by Wall Communications Thursday, said mobile phone services are priced “significantly” lower than they were last year, with new entrant carriers leading the way. “Canadian mobile wireless prices declined significantly in 2013,” the report said. “The decline in prices in 2013 continues the general downward trend in mobile wireless prices over the last five years.” According to the report, mobile phone services that include features like call waiting and voicemail—but not data services—dropped 13 per cent on average in the last year, falling from $51 in 2012 to $45 in 2013. “Prices for mobile service packages including data decreased to a lesser extent, but are still about 5% lower relative to last year,” Gerry Wall, president of Wall Communications, said in a release. The average cost of higher-end mobile phone services was $94 in 2013, down from $98 in 2012 and nearly 15 per cent lower than the average 2010 cost of $110, according to the report. The average price of low-end packages, which include local and long distance calling services only, fell six per cent on the year, from $34 in 2012 to $31 in 2013, it added. New entrant carriers had cheaper prices than incumbent carriers for all three service tiers, the report said, with the greatest differential found on the higher-end packages. A new entrant package containing 1,200 voice minutes, 300 text messages and 1 GB of monthly data costs between $50.53 (in Toronto) and $69.95 (in Montreal) compared to similar packages offered by incumbents BCE Inc., Rogers Communications Inc., and Telus Corp., which had an average cost of about $95 across the country, the report said. It added that the difference between new entrant and incumbent prices for mid-level and low-end service packages “narrowed considerably” over the last year as the incumbent carriers lowered their prices. Industry Minister Christian Paradis said in a statement Thursday that Wall Communications’ findings demonstrate that the federal government has succeeded in lowering wireless prices by increasing competition. He traced falling wireless prices back to a 2008 wireless auction, when the government set aside spectrum specifically for new entrant players. “Based on Wall Communications’ results, wireless prices have decreased 18 percent since 2008,” Paradis said in a release. “This impressive decline shows that increased competition is keeping prices down while new technologies become available." Paradis, who last month rejected Telus’ application to acquire Mobilicity, has said the government wants to see a fourth wireless carrier to compete with the incumbents in each region of the country, and will use “any and every tool” at his disposal to support greater competition. Industry Canada released new rules last week to review carriers’ applications to transfer their spectrum holdings, which are used to carry mobile signals. “Our plan is working: important progress has been made and Canadian families are seeing the benefits,” he said. “We will not hesitate to use any and every tool at our disposal to protect consumers and promote competition in every region of the country.” Now in its sixth year, the annual report, titled “Price Comparisons of Wireline, Wireless and Internet Services in Canada and with Foreign Jurisdictions,” uses advertised telecom prices in Halifax, Montreal, Toronto, Regina and Vancouver to determine average home phone, mobile phone, home Internet and mobile Internet prices across the country. The latest iteration of the study examined services offered by incumbent cablecos and telcos BCE, Rogers, Telus, Shaw Communications Inc. and Videotron Ltd. (a Quebecor Media Inc. subsidiary that is considered a new entrant wireless carrier), as well as third-party provider Primus Telecommunications Group Inc. and new entrant carriers Wind Mobile (owned by Globalive Wireless Management Corp.), Public Mobile and Mobilicity (owned by Dave Wireless Inc.). The study also examines comparable service offerings in five other countries—including Australia, France, Japan, the U.K. and the U.S.—to determine how Canadian prices stack up against other jurisdictions. In the report released Thursday, Wall Communications said both the high-end and low-end mobile phone packages cost more in Canada in 2013 than they do in other countries. It noted that the $94 average cost of a high-end service package in Canada trailed the price of similar service packages in the U.S. ($146) and Japan ($125)—when adjusted for currency and consumer purchasing power—but was higher than in the U.K. ($64), France ($59), and Australia ($50). The $45 cost of a mid-tier package in Canada is comparable to each of the other countries except the U.S., the report said, where the adjusted cost is closer to $76 for similar services. “Canada’s relative mobile wireless service price ranking has not changed significantly between 2008 and 2013 with respect to the five surveyed foreign jurisdictions,” it said. “However, in the case of the service basket, the differential between Canadian rates and those in the countries with lower rates (i.e., the U.K., France and Australia) has grown in recent years.” The report said Canadians are also paying slightly less for mobile Internet services and home Internet services than they did a year ago. The cost of mobile Internet plans with 2 GB of monthly service fell by about 15 per cent, on average, from $53 in 2012 to $45 this year, it said, though the cost of mobile Internet plans with at least 5 GB of monthly data stood still at $65. As with mobile phone services, new entrants’ mobile Internet prices are “significantly lower” than the incumbents’ prices, the report said, and offer higher monthly data allowances. The $38.32 average cost of the new entrants’ higher-end packages is lower than the $45.13 average cost of the incumbents’ lower-end packages, according to the report. The cost of home Internet services in Canada fell slightly in 2013, falling 1 per cent for packages with 3 Mbps speeds or less, 6 per cent for packages with 4 Mbps to 15 Mbps of service, 4 per cent for packages with up to 40 Mbps of service, and 12 per cent for packages with speeds that top out over 40 Mbps, the report said. “While measured broadband prices had been rising previously … 2013 is the first year since 2009 in which measured Canadian broadband Internet prices declined,” it said. Wall Communications said Canadian prices “compare favourably” to other countries for the two lower-end home Internet service tiers but were higher than all except the U.S. for the upper two tiers. It said Canada’s low-end mobile Internet service prices “fall on the high-side” of the international comparison, while the price of plans with at least 5 GB of data is higher in Canada than in all five of the other countries. The report said consumers who buy multiple or “bundled” services from the same provider had relatively stable prices over the past year, except for those who subscribe to home phone, home Internet and TV services from the same provider without also subscribing to its mobile phone service. Those customers' bundle prices increased by roughly 5 per cent during the year, from $128 in 2012 to $134 in 2013. Canadian bundle rates compare “very favourably” to those in the U.S., the report said. It added that the average cost of wireline, or home phone, services in Canada increased again in 2013, following a five-year trend. It said average price increases of between two per cent and eight per cent for three different service levels were more “pronounced” than in previous years. —With reporting by Nicholas Kyonka and nkyonka@thewirereport.ca and editing by Anja Karadeglija at akarad@thewirereport.ca

New entrants leading lower mobile phone and Internet prices, report says

Broadcast | July 4, 2013

Unlock all the Canadian telecom, broadcasting and digital media news you need.

FREE TRIAL

SUBSCRIBE

Inside The Wire Report

Information

Hill Times Publishing

Get in Touch With Us