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ITU report pours more fuel on telecom pricing fire

16 Oct

throne-speechThe International Telecommunications Union has released its latest report on global information communications technology, called Measuring the Information Society, and as usual, it contains some revealing numbers about Canada’s broadband and wireless prices.

The report is timely, given the Conservative government’s pending Throne Speech on Wednesday, which will focus on consumer issues – including what Canadians are paying for their telecom services. While it’s becoming fashionable among the so-called downtown elites to bash the government for taking such a populist pro-consumer stance, the ITU report once again highlights that Prime Minister Stephen Harper’s ventures into this area are not unwarranted.

Starting with broadband prices, Canada isn’t faring too well on a global level, as the chart below illustrates:

fixed-broadband

Canada ranks 23rd in terms of how much broadband internet access costs relative to gross national income. Broadband is cheapest in Macao, according to the ITU, where it only accounts for 0.2 per cent of GNI. The United States is very cheap too, coming in third at 0.4 per cent. Canada’s rank of 23rd, with 1.1 per cent of GNI, doesn’t look too bad out of the total list of 169 countries, but that shouldn’t be cause for celebration – most of the countries on the list are still developing.

Canada’s fixed broadband pricing actually sits at 14th out of the 34 developed countries in the Organization for Economic Co-operation and Development, and sixth in the G8. That’s not a terribly good showing. Moreover, the country looks particularly bad when purchasing power parity – or the relative ability of people in one country to buy the same basket of goods as in another country – is factored in. Looking at just the Americas, Canada sits at a woeful 14th place, behind the likes of Uruguay and Guatemala.

fixed-ppp

Things aren’t any better when it comes to mobile broadband. Canada ranks even worse overall, at 28th, in a measure of postpaid mobile data consisting of 500 megabytes. On the bright side, the country’s showing is slightly better among OECD peers, at 19th, and in the G8, at third:

mobile-500mb

The ITU’s other measure of mobile broadband is in computers, or plans with more data that aren’t necessarily tied to a monthly contract. In this 1 GB measure, Canada rates veritably woefully at 42nd, or 23rd in the OECD and sixth in the G8:

mobile-1gb

Combining the two measurements into a single overall mobile sub-basket, the ITU finds that Canada comes in 27th overall, 17th in the OECD and sixth in the G8 (and just behind the U.S.). While the results are not as woeful as those in the OECD’s own Communications Outlook published this summer, they are far from good.

mobile-basket

The ITU suggests that it’s not just rich countries that have cheap services – prices are also a reflection of the particular levels of competition within their respective industries:

The countries at the top of the mobile-broadband sub- basket (i.e. those with most affordable prices) are economies with high GNI p.c. levels from Europe and the Arab States – including Qatar, the United Kingdom, Germany, Kuwait and France. However, several countries with lower income levels, such as Estonia, Bahrain or Kazakhstan, also feature in the top 20 of the mobile-broadband sub-basket, with mobile- broadband prices below 1 per cent of monthly GNI p.c. This shows that although income matters (partly owing to the fact that it is inbuilt in the formula of the mobile-broadband sub-basket), other factors such as competition and regulation may play a relevant role in making mobile broadband affordable.

It’s an interesting point to keep in mind as the government issues its Throne Speech.
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Posted by on October 16, 2013 in telecommunications

 

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