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  • Ted Woodhead

Internet and wireless prices in Canada are falling!

In a post on the Teksavvy Blog on March 22nd, Teksavvy's V.P. of Insight and Engagement wrote that "Statscan Telecom Data Paints A False Picture of Canadian Prices". He asserts that Statscan's views merely reflect the falling data costs globally and domestic promotions despite the fact that the Consumer Price Index more broadly increased 2.8% (down from 2.9% the previous month) year over year for other goods and services and Statscan attributes a significant part of the decline to wireless and internet price reductions.

Mr. Nowak's opinion is an interesting one, but unfortunately it is false. Canadian prices are falling for fixed internet and mobile wireless plans and Canadians are paying less, much less. Moreover, they are paying less for more and are benefitting from the competitive intensity of the market.

Statscan doesn't track global data pricing so I am not sure how Mr. Nowak draws that conclusion or even arrives at it. Statscan does actually receive "actual" data from domestic carriers or at least it did. He seems to infer that Statscan is not aware of actual market pricing. Statscan's view of the situation reflects what consumers are actually paying and they're paying less. Mr. Nowak views promotions as illegitimate in measuring what consumers are actually paying which might come as something of a surprise to every marketer I have ever met as they are used to stimulate the market, even out loading and can be particularly intense and low at certain periods of the year like holidays and black Friday sales periods. On the demand side, consumers pay keen attention to them for virtually every product and service.

Mr. Nowak points to the average revenue per user (ARPUs) remaining relatively flat year over year as proof that prices haven't fallen. He claims that ARPU as "an all important industry metric" - it isn't. ARPU is not a price measure for wireless or fixed internet pricing and is not synonymous with it. ARPU is more properly understood as a usage metric and does include optional items that some subscribers choose to take as add ons to their wireless and fixed internet plans. For example many customers still have fixed data allotment plans which attract fees for use when the allotment is exceeded. Mr. Nowak runs afoul of comparing apples to oranges. That does not exemplify using any rigour in the analysis. He points to a variety of sources to underpin his assertions None of those sources have access to actual pricing as Statscan does and most rely on web site scraping to gather advertised pricing at a specific point in time. Mr. Nowak should know that customers rarely pay the advertised price and receive double the data bonuses or free devices e.g., tablets as promotions. Surely these competitive inducements all accrue to the benefit of the consumer.

Mr. Nowak is a paid executive for the reseller Taksavvy which is currently engaged in the regulatory process that will set the terms, conditions and pricing for wholesale access to the facilities-based providers' networks. He has a vested interest in criticizing Canada's national statistical agency's conclusions on the consumer price index and the positive impacts on it of cellular and internet pricing declines. It is not helpful to the public policy debate and otherwise misleads Canadians.


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