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The reality of wireless bills in one simple chart

09 May

Further to my post yesterday about whether wireless bills have gone down… I got an email from Geoff White, counsel for the Public Interest Advocacy Centre, that hit the nail more closely on the head than the new report from J.D. Power has.

While that survey suggests that consumers are suffering from mass delusion, some simple reality checking shows that’s hardly the case. Here is PIAC’s comparison of basic smartphone plans from one of the big carriers from August 2012 and March 2014:

smartphone-plans

It’s true that subscribers are now getting more voice minutes, a faster network and a shorter amortization period on their subsidized phone (two years rather than three), but is that worth the big hike when the matching rise in the consumer price index over the same time was only 1.24 per cent?

As PIAC puts it: “In just two years the basic entry point into smartphone ownership (and with a bare minimum of data) has increased 46 per cent. This and similar price increases cannot be seen as positive for anyone except the service providers themselves.”

Unfortunately, that’s far closer to the reality consumers are experiencing than J.D. Power’s findings.

*PIAC’s data appears to have had an error in the overage calculation. The original chart above listed the pricing as “same” but has since been amended to indicate overage cost more in 2014.

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12 Comments

Posted by on May 9, 2014 in mobile, telecommunications

 

12 responses to “The reality of wireless bills in one simple chart

  1. Andrew

    May 9, 2014 at 11:23 am

    Peter, the math is incorrect on the data because in 2014 $0.05/MB is $25 for 500MB vs $10 in 2012 – this represents a huge spike in data costs
    i.e. A 1GB month (which is typical for data consumption) would cost $105 in 2014 vs only $64.70 in 2012 thats +62%

     
  2. Shorty

    May 10, 2014 at 6:16 pm

    Has anyone investigated whether it is costing providers more, or if their costs have actually decreased, in providing the service?

     
  3. mb

    May 15, 2014 at 12:42 pm

    One of the biggest justifications for this is the amortization cost of the devices being shortened from three years to two years. Unfortunately this is a completely fantastic number. Since it is nearly impossible to decouple the purchase of a mobile device from the carrier in this country, the carriers have made up these wildly fantastic “retail” prices for the mobile devices to justify the rates. The devices being sold on the Canadian market are “retail” priced at two or three times the price of equivalent hardware sold in open market environments where the hardware is not so tightly coupled to the carriers (ie. China), not to mention markets in Africa where mobile devices are sold for a small fraction of the price (often only a few dollars) of equivalent devices in Canada.

     
    • nickspacek

      May 20, 2014 at 12:34 pm

      Too true, I just bought a Nexus 5 16GB for $350 from the Canadian Play Store but Telus (and other carriers) lists it as $500.

       
    • Paul T

      May 20, 2014 at 12:59 pm

      What gets me is that there isn’t a “non subsidised” rate option. Even when I bring my own device, I pay the “subsidized” rates as if I got a shiny new device.

       
      • Anonymoose

        May 20, 2014 at 2:50 pm

        Actually Paul, there is now – buried in the websites of Rogers and Telus. But you would have to know, and ask for it. Or better yet, be an existing customer and threaten to leave. Although IIRC, the ‘Retentions’ departments have been severely curtailed since the new term contract regulations went in.

         
    • Mr Burns

      May 20, 2014 at 1:49 pm

      Almost all international brands (Iphone, Galaxy…etc) costs a lot more in China than in US. An Iphone 5s costs about $112. more in China compared to its cost in US/Canada.Hence your argument is invalid.
      PS: Home brands in China is cheap. But that is irrelevant as this argument is about phones available both in US and China.

       
    • Anonymoose

      May 20, 2014 at 2:48 pm

      …Really?

      It’s so impossible to decouple the purchase of a mobile device from the carrier that I could go to Expansys.com and buy any phone Rogers, Telus or Bell sell in 60 seconds flat. Or half a dozen other online mobile device retailers. or eBay.

      I haven’t used a carrier-locked device since Rogers rolled out their GSM network over 10 years ago. The fundamental problem here is actually *not* for once, entirely the fault of the carriers. It’s the laziness and greed of the consumer – the expectation of a shiny new ‘free’ phone for subscribing to service. In European markets, the vast majority of consumers expect to pay for a phone outright and do, and/or expect they can transfer their phone from one carrier to another, something that has been blocked both legally and technically in Canada until only a few years ago, when Telus and Bell upgraded their networks for LTE services, discarding incompatible CDMA services.

      The fact is, GSM and now LTE networks are compatible with a huge variety of devices- but if the Canadian consumer is too lazy to do their research and buy something on their own, and gets roped into another term contract then they get what they (literally) paid for.

      Here’s the facts: the latest, greatest iGadget or Galaxy-Nexus-Experia-Lumia costs a lot to design, build and advertise every year. If you think you’re entitled to it free, you’re mistaken and the carriers will gladly abuse you for that ‘privilege’. Carriers around the world don’t offer the latest, greatest gadget for pennies – they offer disposable, low-cost, low-performance devices as commodity devices. Go look at a site like GSMarena.com, or Phonescoop.com and see the DOZENS of devices released every month that are 2-3 years out of date from the featureset of the brand-name, bleeding-edge devices you all know and love. THESE are what carriers will offer you for ‘a fraction of the price’ because the R&D on these devices is pre-amortized by the time they hit the retail market – 3 year-old hardware in a shiny new case literally does cost pennies to make.

      Providing a monthly service costs pennies and the traffic costs essentially nothing- the carrier’s costs are in infrastructure hardware and labour to support it. Yet people think their equipment should be free, the service should subsidize it AND the service should be cheap too. You can’t have it both ways, because the carrier isn’t getting much discount on the bleeding-edge device either. How did you think Apple became the world’s most profitable company?

      If consumers weren’t so foolish and greedy to constantly commit to term contracts, carriers would be more fearful of *churn*- the industry term for changing carriers. No Canadian carrier cares, because they know they you’ll never switch. When you don’t have a device contract, you have *no* term contract on most carriers; I’m free to quit Rogers any time I like and I still have the same grandfathered data plan I ordered 6 years ago because service plans keep getting worse and worse for more and more money.

       
  4. stevecedrone

    May 20, 2014 at 11:52 am

    Another Smoke and Mirrors show brought you by the Harper Governments Action Plan… Dun Da Da Da!

     
  5. Anonymoose

    May 20, 2014 at 3:06 pm

    Peter –

    Another minor but noticeable point in general comparing cellular plans: Most providers have increased their airtime inclusions for plans, while increasing rates for data and features. Most users now have a lot more ‘minutes’, free or very low-cost long-distance, etc. This is all fine & dandy.. assuming you actually use your phone for talking to business associates, friends and relatives. Which statistically, most people *don’t* as much anymore, and the carriers know it.

    So while talk time has increased and consumer costs have decreased, the cost of data and data inclusions in standard packages keeps SHRINKING. Does anyone else remember how this is exactly what happened to land-line rates? In the 1970s, long-distance calls could be $2-3/minute. And then with the advent of digital connectivity, long-distance charges kept dropping, and dropping to the point of pennies.. but mysteriously, the costs of basic phone service- the privilege of having a phone at all kept going up. Eventually, Telus would even charge users a $5 monthly penalty fee for *NOT* making any long-distance phone calls.

    Likewise, with a digital LTE network all traffic is IP data; the network makes no functional differentiation between phone calls or email or web-browsing. So carriers know talk is cheap, literally. Which is why they continue to give it away while gouging you for the heavy content – surfing, watching video and listening to music, because these use far more data than a tiny voice call.

     
 
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