Rogers Telus Bell Comparison Essay

TORONTO — BCE Inc. and Telus Corp. said Thursday they netted big increases in their wireless subscriber base during the fourth quarter, when they bested Rogers Communications Inc. in a holiday season battle to sign customers in a postpaid plan price war.

BCE, the owner of Bell Mobility, Virgin Mobile and Lucky Mobile, had a total of 158,514 net wireless activations during the quarter, including 175,204 postpaid subscriptions — ahead of a consensus estimate of about 113,000.

Telus, which owns Koodo and Public Mobile in addition to its flagship Telus wireless brand, had 98,000 net additions including 121,000 postpaid subscriptions — which was ahead of a consensus estimate of just under 100,000.

In both cases, gains in postpaid subscriptions were partly offset by losses in prepaid accounts.

In contrast to the gains made by BCE and Telus, Rogers reported last month it had only 72,000 net additions in the fourth quarter — well below the 100,000 or so that analysts had expected.

The company experienced a technical problem with its price-adjustment system — limiting its ability to sign up customers and resulting in some prospective customers turning to its competitors.

BCE had been expected to do well during the fourth quarter, one of the most important times of the year for wireless carriers, but analysts expressed surprise that its postpaid additions were so much higher than their estimates.

Barclays Capital analyst Phillip Huang wrote in a note to clients that Bell seems to have taken "significant market share" during a five-day promo in mid-December — a period when Rogers suffered technical problems.

Telus seems to have held its own in wireless against Bell during the quarter in terms of market share.

"Based on the numbers that we have seen, we definitely did very well (during the quarter)," Telus chief financial officer Doug French said in an interview before the company's conference call.

2016 Price Comparison Study of Telecommunications Services in Canada and Select Foreign Jurisdictions

Prepared for: The Canadian Radio-television and Telecommunications Commission (CRTC)

Prepared by: NGL Nordicity Group Ltd. (Nordicity)

ISSN 2371-4212

Nordicity Group Limited

NOTE:The views expressed in this Study are solely those of Nordicity Group Limited and do not necessarily represent views of the Canadian Radio-television and Telecommunications Commission

Download this report in PDF.

Overview

This Study, commissioned by the Canadian Radio-television and Telecommunications Commission (CRTC) and prepared by Nordicity Group Limited, is the 9th (2016) edition of the annual telecommunications services price comparison Study. The purpose of this Study is to provide a detailed comparative price analysis of telecommunications services in Canada vis-à-vis the US and six other countries.

Key Parameters

As in previous years, the telecommunications services examined in this Study were classified in five main categories. Individual service baskets were defined according to increasing levels of service usage and feature availability under each category. The total number of service baskets under each category was based on distinct levels of service usage, the availability of feature offerings, as well as their associated prices. Prices were measured for different pre-defined service baskets under each category.

Service baskets used for each category of telecommunications services are listed below:

  • Fixed TelephonyFootnote 1: Level 1 to Level 3 – same as last year;
  • Mobile Wireless Telephony: Level 1 to Level 5 - same as last year. However, Level 6 was added this year to capture family share plans, referred to as ‘family basket’;
  • Fixed Broadband Internet: Level 1 to Level 4 - same as last year. However, Level 1 and Level 2 were re-defined (speeds increased) to reflect the current trends in available speed offerings;
  • Mobile Wireless InternetFootnote 2: Level 1 and Level 2 - same as last year. However, Level 3 was also added to capture higher data usage; and
  • Bundled Services: Level 1 to Level 3 - same as last year.

As in the previous year’s Study, country specific average prices in equivalent Canadian dollars were determined for the above service baskets, based on a survey of known service providers in principal cities of eight jurisdictions: Canada, the US and six other countries:

  1. Canada:Halifax (NS), Montreal (QC), Toronto (ON), Winnipeg (MB), Regina (SK) and Vancouver (BC)
  2. United States of America (US): Boston (MA), Kansas City (MO), Minneapolis (MN), and Seattle (WA)
  3. Australia:Sydney; United Kingdom (UK):London; France:Paris; Italy: Rome; Germany:Berlin and Japan: Tokyo

Key Findings

This section summarizes Nordicity’s key findings in each of the five categories of telecommunications services. For the purpose of comparing international price data, foreign currency prices were converted to Canadian dollars (CAD) using the Bank of Canada’s monthly average exchange for the month of February 2016. The prices were further adjusted for the purchasing power parity (PPP) differences between countries using the OECD’s PPP comparative price level indices for February, 2016.

  • Fixed Telephony: In the Fixed Telephony category, out of a total of 8 countries, Canada ranked amongst the least expensive (i.e. ranked sixth) in pricing in the Level 1 service basket. Australia was ranked 1st – the most expensive country in Level 1. Canada’s prices were 23.2% lower, relative to Australia’s prices, as indicated in the down arrow in the Table 1. Similarly, in the Level 2 and Level 3 service baskets, Canada also ranked amongst the least expensive (fifth from the highest) and its prices were 17.5% below those of Australia and 29.2% below those of Japan – the countries with the highest prices in Level 2 and Level 3, respectively.
CountryService Basket Level
Level 1: 400 Minutes with 10% LDLevel 2: 1,000 Minutes with 20% LDLevel 3: 1,600 Minutes with 30% LD
Canada$39.52$55.78$60.32
U.S.A.$42.036.0%$58.464.6%$77.0521.7%
Australia$51.4323.2%$67.5917.5%$72.2316.5%
U.K.$39.610.2%$50.59-10.3%$59.28-1.8%
France$37.61-5.1%n/an/a$57.41-5.1%
Italy$42.406.8%$45.81-21.8%$54.01-11.7%
Germany$42.937.9%$64.4913.5%$77.1121.8%
Japan$34.91-13.2%$57.462.9%$85.1729.2%
Canada's Rank, (from Highest)655
  • Mobile Wireless Telephony: In the Mobile Wireless Telephony category, Canada ranked the highest in pricing in the Level 1 service basket, third in the Level 2 service basket and second in the Level 3, 4, 5 and 6 service baskets.
CountryService Basket Level
Level 1: 150 MinutesLevel 2: 450 Minutes and 300 SMSLevel 3: 1,200 Minutes, 300 SMS and 1 GB Data
Canada$41.08$48.77$74.67
U.S.A.$27.00-52.1%$51.645.6%$73.00-2.3%
Australia$28.19-45.8%n/an/a$30.91-141.6%
U.K.$20.84-97.2%$25.79-89.1%$30.13-147.8%
France$22.49-82.7%$24.17-101.8%$38.08-96.1%
Italy$17.70-132.1%$24.41-99.8%$34.79-114.6%
Germany$17.15-139.6%$28.28-72.5%$56.20-32.9%
Japan$29.06-41.4%$48.780.0%$89.7216.8%
Canada's Rank, (from Highest)132
CountryService Basket Level
Level 4: Unlimited Minutes, 300 SMS and 2 GB DataLevel 5: Unlimited Minutes, SMS and 5 GB DataLevel 6: Unlimited Minutes, SMS and 10 GB Data with 3 Lines
Canada$81.05$96.55$231.99
U.S.A.$89.509.4%$117.3317.7%$206.19-12.5%
Australia$44.78-81.0%$66.67-44.8%$198.50-16.9%
U.K.$35.55-128.0%$42.22-128.7%$99.31-133.6%
France$61.60-31.6%$70.12-37.7%n/an/a
Italy$49.42-64.0%$61.02-58.2%n/an/a
Germany$68.12-19.0%$88.23-9.4%$284.1218.3%
Japann/an/an/an/an/an/a
Canada's Rank, (from Highest)222
  • Fixed Broadband Internet: In the Fixed Broadband Internet category, Canada ranked third highest in pricing in the Level 1 and Level 3 service baskets, fourth in the Level 2 service basket and second in the Level 4 and Level 5 service baskets.
CountryService Basket Level
Level 1: 3 to 9 MbpsLevel 2: 10 to 15 MbpsLevel 3: 16 to 40 Mbps
Canada$41.94$58.88$63.48
U.S.A.$79.6447.3%$83.8529.8%$97.5334.9%
Australia$58.3828.2%$54.49-8.1%$57.41-10.6%
U.K.n/an/an/an/a$40.43-57.0%
Francen/an/a$73.8320.3%n/an/a
Italyn/an/a$64.298.4%$41.77-52.0%
Germany$28.28-48.3%n/an/a$49.75-27.6%
Japann/an/a$51.75-13.8%$71.5211.2%
Canada's Rank, (from Highest)343
CountryService Basket Level
Level 4: 41 to 100 MbpsLevel 5: Over 100 Mbps
Canada$78.77$114.65
U.S.A.$112.3029.9%$127.6910.2%
Australia$71.03-10.9%n/an/a
U.K.$54.20-45.3%$57.56-99.2%
France$63.80-23.5%$70.54-62.5%
Italy$53.02-48.6%n/an/a
Germany$61.78-27.5%$56.57-102.7%
Japan$49.78-58.3%$71.36-60.7%
Canada's Rank, (from Highest)22
  • Mobile Wireless Internet: In the Mobile Wireless Internet category, Canada ranked third most expensive in all three service baskets.
CountryService Basket Level
Level 1: 2 GB to less than 5 GBLevel 2: 5 GB to less than 10 GBLevel 3: 10 GB and more
Canada$46.47$63.30$80.98
U.S.A.$50.688.3%$76.9317.7%$110.3826.6%
Australia$15.57-198.5%$29.67-113.3%$48.17-68.1%
U.K.$17.61-163.9%$21.07-200.4%$24.47-230.9%
France$14.98-210.1%$28.11-125.2%$63.45-27.6%
Italy$14.35-223.8%$21.71-191.6%$31.58-156.4%
Germany$23.56-97.3%$37.31-69.7%n/an/a
Japan$51.8110.3%$73.7414.2%$87.097.0%
Canada's Rank, (from Highest)333
  • Bundled Services: In the Bundled Services category, Canada ranked most expensive in the Level 1 service basket and third in the Level 2 and Level 3 service baskets.
CountryBundled Service Level
Level 1: Wireline, Wireless & Fixed BroadbandLevel 2: Wireline, Fixed Broadband & TVLevel 3: Wireline, Wireless, Fixed Broadband & TV
Canada$161.63$135.60$185.06
U.S.A.$141.40-14.3%$145.927.1%$196.705.9%
Australian/an/a$91.85-47.6%$142.45-29.9%
U.K.$67.19-140.5%$45.17-200.2%$65.27-183.5%
Francen/an/a$60.55-123.9%$98.63-87.6%
Italyn/an/a$66.94-102.6%$81.91-125.9%
Germany$116.68-38.5%$63.54-113.4%$127.15-45.6%
Japan$154.11-4.9%$151.0810.2%$198.546.8%
Canada's Rank, (from Highest)133

Caveats to the Interpretation of the Findings of this Study

As indicated above, the purpose of this Study is to provide a detailed comparative price analysis of telecommunications services in Canada vis-à-vis the US and six other countries. However, there are a number of caveats that should be taken into account by the reader in interpreting the findings of this and previous years’ Studies.

The price comparisons are based on price data collected through a survey conducted in January and February of this year. As prices for telecommunications services are constantly evolving, the prices cited in this Study represent a ‘snapshot’ of prices in time. Also, the price differentials found are highly sensitive to currency fluctuations.

The Canadian prices are based on a survey of service providers in 6 cities, the American prices on 4 cities and prices in the other 6 foreign jurisdictions are based on service providers found in their principal cities. Thus, the prices cited for Canada, US or the international jurisdictions are not meant to be statistically representative of the individual countries as a whole.

Prices in Canada and international jurisdictions are driven by a complex mix of a number of factors: cost of service, competitive positioning, technological advances, consumer behaviour and regulatory frameworks. As wireless technology is constantly improving and consumers demand ever more bandwidth and data caps, service providers are constantly increasing features. In the Study, these changes are reflected by the need to regularly update the definition of service baskets. Hence, price increases in those baskets may in part, simply reflect better service levels offered to consumers.

This Study did not take into account the network technologies deployed in the networks nor the speed or quality of service of those networks. Finally, this Study did not account for any cost of service or socio-economic factors that may be relevant for price differences across different domestic and international jurisdictions. Thus, factors such as population density, terrain and climate have significant impacts on the cost of service. Similarly, socio-economic factors such as affordability indicators (i.e. mobile prices in relation to disposable income), number of handsets per subscriber, number of minutes of usage per subscriber and other factors were not within the scope of this Study.

1. Introduction

This is the 9th (2016) edition of the annual telecommunications services price comparison Study since its inception in 2008. This Study was prepared by Nordicity for the CRTC. The purpose of this Study is to provide a detailed comparative price analysis of telecommunications services in Canada vis-à-vis the US and six other foreign jurisdictions.

As in previous years, telecommunications services in this Study are classified in five main categories, including:

  • Fixed Telephony;
  • Mobile Wireless TelephonyFootnote 3;
  • Fixed Broadband Internet;
  • Mobile Wireless Internet; and
  • Bundled Services.

Prices were measured for different pre-defined service baskets under each category. Individual service baskets were defined according to increasing level of service usage and feature availability under each category. The total number of service baskets under each category were established according to the availability of distinct levels of service usage and features offered as well as their associated prices.

In comparison to last year’s Study, no major changes were made with respect to the Study design or the scope of analysisFootnote 4. However, the following additions were made in this Study:

  1. Analysis to show the comparison between Bring Your Own Device (BYOD) and Mobile Wireless Term Contract options (see Section 4.3)
  2. Canadian Voice over Internet Protocol (VoIP) bundle (Voice + Internet) price comparison (see Section 8)
  3. Finally, the following new service providers were added to different service baskets:
    • Fixed Telephony
      • Canada
        • Teksavvy (Montreal, Toronto)
    • Mobile Wireless Telephony
      • Canada
        • Primus (Halifax, Winnipeg, Regina)
        • Chatr (Montreal)
        • Petro Canada (all cities)
        • 7-Eleven Speakout (all cities)
      • US
      • Foreign Jurisdictions
        • O2 (London and Berlin)
        • Three (London)
        • Bouygues Telecom (Paris)
    • Mobile Wireless Internet
      • US
      • Foreign Jurisdictions
        • O2 (London and Berlin)
        • Three (London)
        • Bouygues Telecom (Paris)
    • VoIP
      • Canada
        • Teksavvy (all cities)
        • Vonage (all cities)
        • Primus (all cities)

This Study is organized as follows: Section 2 describes the Study Design as well as the methodology behind both the practices of data collection and data analysis. Sections 3 to 7 are dedicated to each of the five service categories.

Sections 3 to 7 provide a detailed definition of the service baskets, a description of changes made between last year’s Study and this year’s Study, a list of service providers surveyed in different jurisdictions and a detailed price comparison amongst both Canadian cities as well as between Canada and international jurisdictions in each respective service category. Section 8 provides a comparative analysis of Canadian VoIP bundled services.

2. Methodology

2.1 Service Basket Design

The methodology for the service basket design and prices in this year’s Study has been kept consistent with that used in last year’s Study with the exception of some modifications to reflect the increasing level of consumer usage amongst telecommunications services. These modifications are described below in greater detail.

The price comparison methodology used in this Study is based on a service basket approach where separate telecommunications service baskets are defined on the basis of increasing levels of service usage, features and, where applicable, performance:

  • Level 1: Entry-level or low-volume usage
  • Level 2: Average or medium usage
  • Level 3: Above average or high-volume usage
  • Levels 4 and 5: Very high-volume or unlimited usage
  • Level 6: Ultra high-volume or unlimited usageFootnote 5

The number of defined service basket levels for each of the stand-alone telecom services considered in this Study varies from three to six.

  • Fixed Telephony: Basket Levels 1 to 3
  • Mobile Wireless Telephony: Basket Levels 1 to 6
  • Fixed Broadband Internet: Basket Levels 1 to 5
  • Mobile Wireless Internet: Basket Levels 1 to 3
  • Bundles Services: Basket Levels 1 to 3

Table 6 below summarizes the service baskets that have been considered in the 2016 Study vis-à-vis last year’s Study. Note that no changes were made in the service basket levels for the Fixed Telephony or Bundled Services.

Fixed TelephonyMobile Wireless TelephonyFixed Broadband InternetMobile Wireless InternetBundled Services
2015201620152016201520162015201620152016
Level 1Level 1Level 1Level 1Level 1Level 1Level 1Level 1Level 1Level 1
Level 2Level 2Level 2Level 2Level 2Level 2Level 2Level 2Level 2Level 2
Level 3Level 3Level 3Level 3Level 3Level 3Level 3Level 3Level 3
Level 4Level 4Level 4Level 4
Level 5Level 5Level 5
Level 6

The three levels of bundled services included were defined as follows:

  • Bundle 1: Fixed Telephony, Fixed Broadband Internet, and Mobile Wireless Telephony
  • Bundle 2: Fixed Telephony, Fixed Broadband, and Digital TV
  • Bundle 3: Fixed Telephony, Fixed Broadband, Mobile Wireless Telephony, and Digital TV

Consistent with last year’s Study, Level 2 stand-alone service baskets are generally used in each of the bundles. In some cases, however, there are restrictions on the specific service elements that are eligible for bundling discounts. In such cases, eligible service elements are included instead (which can involve including a Level 3 or 4 rather than Level 2 service element). For the Digital TV service component, a ‘basic’ digital television service packageFootnote 6 option is selected for inclusion in the applicable bundles.

The specific service elements included in each service basket are described in the following sections.

2.2 Canadian Price Data Collection

The Canadian price comparisons included in this year’s Study are based on the measurement of prices of pre-defined distinct service baskets, in six Canadian cities (Halifax, Montreal, Toronto, Winnipeg, Regina and Vancouver). Between two to seven services providers per service category were examined in each city, covering stand-alone and bundled service baskets, as applicable for each service provider.

The Canadian price data has been collected from a wide range of telecommunications service providers (TSPs) including incumbent telephone companies (for example: Bell Canada, MTS, SaskTel, and TELUS) and incumbent cable companies (for example: Eastlink, Videotron, Rogers, Shaw, and Cogeco). The Study also includes service price data from four service resellers, amongst them are Primus, PC Mobile, Petro-Canada Mobile and 7-Eleven Speakout. Furthermore, the Study includes services provided by flanker brands such as Koodo, Public Mobile, Chatr, Fido, Mobilicity and Virgin, as well as the ‘new’ (2008) entrants in the mobile market such as Videotron, Eastlink and WINDFootnote 7. Table A.1, in Appendix A provides a list of the Canadian service providers surveyed in this year's Study, broken down by city and by service basket.

City-specific prices for each of the stand-alone and bundled service baskets offered by the service providers listed in Table A.1 (Appendix A) were weighted according to each service provider’s respective estimated subscriber-based market share.Footnote 8 Similarly, in calculating Canada-wide market prices, city-specific prices were aggregated and weighted according to city population. Weighted average prices for each surveyed city and for Canada are provided in Appendix B for each of the service baskets and bundles included in this Study.

In order to maintain consistency with previous years' studies (2011 to 2015), the incumbents' flanker brand service prices were not included in the calculation of the aforementioned city-specific or national aggregate prices. However, Section 4.2 provides an additional analysis of the incumbents' flanker brand prices with incumbents' and new entrants' mobile wireless prices.

For the Mobile Wireless Telephony service analysis, this year’s Study also examined BYOD price discounts in contrast to the other device financing options available in the Canadian market.

The price data collected for this Study was drawn from the surveyed service providers’ websites and, where necessary, supplemented with further clarifications from consumer service representatives (CSRs).Footnote 9 The price data reflects currently advertised prices that are available to new consumers or existing consumers changing service plans. In all cases, the lowest available currently advertised regular or standard price was used to determine price of each service basket. Short-term promotional offers and prices were not taken into account.

2.3 International Price Data Collection

This year’s Study included seven foreign jurisdictions for the purpose of comparing telecommunications service prices with those offered in Canada. These seven jurisdictions included: the US, UK France, Germany, Italy, Japan and Australia. With the exception of the US, the price data was collected for the services available in each country’s largest city.

For the US, the following four cities were selected for collecting price data: Boston, MA; Kansas City, MO; Minneapolis, MN; Seattle, WA. In each case, price data was collected for the services provided by the major service providers in those cities.

Table A.2, in Appendix A provides a list of the international service providers included in the Study by city and service baskets.

To maintain consistency with last year’s Study, the US’s regional brand services prices were not included in the calculation of the US aggregate prices. Accordingly, this year’s Study has excluded the section pertaining to the US’s Incumbent and Regional Service Provider Prices.

For the remaining six jurisdictions, the collected price data corresponds to services provided by incumbent service providers.

For the purpose of comparing international price data, foreign currency prices were converted to Canadian dollars (CAD) using the Bank of Canada’s monthly average exchange for the month of February 2016Footnote 10. The prices were further adjusted for the purchasing power parity (PPP) differences between countries using the OECD’s PPP comparative price level indices for February, 2016.Footnote 11

2.4 Summary of Changes in Methodology

Relative to the previous year, the changes in methodology and updates made in this Study are outlined below:

  • Fixed Telephony: For this year’s Study, Teksavvy (reseller) was added (Montreal and Toronto only) to the list of Canadian Fixed Telephony service providers
  • Mobile Wireless Telephony
    • This year, Mobilicity (Rogers) and Public Mobile (TELUS) were included as flanker brands rather than new entrants.
    • Primus was added to the list of resellers for all Canadian cities.
    • This year’s Study was based on the least expensive lite devices available from each service operator rather than the premium devices included in last year’s Study.
    • New service Level 6 (Family Basket) was added.
    • US long distance cost, previously included in Levels 2 and 3 was removed.
    • Additional analysis on Bring Your Own Device (BYOD) added in this year’s Study.
  • Fixed Broadband Internet Service
    • Teksavvy was removed from Winnipeg and Regina.
    • Netago (broadband service provider) was added in analysis of rural markets of Canada.
    • Level 1 advertised download speed range increased from 1 - 3 Mbps to 3 – 9 Mbps.
    • Level 2 advertised download speed range increased from 3 - 10 Mbps to 10 – 15 Mbps.

Further details and the rationale with respect to above changes are provided in the respective sections of the five service categories.

3. Fixed Telephony Service

3.1 Fixed Telephony Service Baskets

Consistent with last year’s Study, the following service element charges were considered for Fixed Telephony service baskets:

  • Access line charges (including, as applicable, free calling allowances);
  • Local usage/calling charges (where applicable);
  • Long distance charges both domestic and international calls;
  • Optional feature charges (such as voicemail, call display, and other features); and
  • Other recurring charges, where applicable, such as 9-1-1, network access fees, and/or other surcharges or regulatory fees.

It should be noted that one-time service charges, such as installation and activation fees were excluded from the comparison.

Fixed Telephony service basket definitions in this year’s Study are identical to those used in last year’s Study with the exception of the removal of VoIP plans from our analysisFootnote 12. Accordingly, the three Fixed Telephony service baskets included in this Study were defined as below:

  • Level 1: 400 incoming and outgoing minutes per month, with 10% of outgoing minutes treated as long distance, and no optional features.
  • Level 2: 1,000 incoming and outgoing minutes per month, with 20% of outgoing minutes treated as long distance, and two optional features (voice mail and call display).
  • Level 3: 1,600 incoming and outgoing minutes per month, with 30% of outgoing minutes treated as long distance, and a full set of optional features.

Table B.1 in Appendix B provides a detailed summary of the service elements used for the fixed wireline telephony price comparison.

3.2 Canadian Fixed Telephony Service Prices

Figure 1 (Canadian Fixed Telephony Service Prices) below, provides an overview of the changes in Level 1, 2 and 3 service basket prices since 2015. On average, Fixed Telephony prices portray a decreasing trend - overall prices decreased by 2.8% (Level 1), 7.1% (Level 2), and, 6.2% (Level 3). The decreases are reflected in all surveyed cities, except Halifax (Levels 1-3), Vancouver (Level 1) and Winnipeg (Level 1).

Figure 2 below, provides a summary of the average Canadian monthly prices for each of the three Fixed Telephony service baskets for the period of 2011 to 2016. Detailed Fixed Telephony prices for the period of 2008 to 2016 by service basket and surveyed cities (i.e. Halifax, Montreal, Toronto, Winnipeg, Regina and Vancouver) are provided in Figure C.1 and Table C.1 in Appendix C.

Key trends in Canadian Fixed Telephony prices for three service baskets over the last six years are summarized below.

  • Level 1 prices decreased from $40.64 in 2015 to $39.52 in 2016, a decrease of 2.8%. Average 2016 Level 1 prices varied widely by city, ranging from as low as $24.50 in Regina to $45.52 in Toronto. Since 2008, Level 1 prices increased at an average annual rate of 3.1%.
  • Level 2 prices decreased from $59.44 in 2015 to $55.78 in 2016, a decrease of 6.2%. Average 2016 Level 2 prices also varied widely by city, ranging from $39.20 in Regina to $61.49 in Toronto. Over the period of 2008 to 2016, Level 2 prices have increased at average annual rate of 1.9%.
  • Lastly, Level 3 prices decreased from $64.96 in 2015 to $60.32 in 2016, a decrease of 7.1%. In this case, the lowest average Level 3 price was found in Vancouver at $45.98 and the highest price was in Halifax at $71.38. For Level 3 there has been no change in prices since 2008, on an annual rate basis.

3.3 International Fixed Telephony Service Prices

When comparing international prices for Fixed Telephony services, many pricing variables were taken into account. These variables are described below:

  • Price Structure: Wireline rate structures in many foreign jurisdictions differ significantly in comparison to Canada (as well as the US) where unlimited local calling is the norm. Local phone service rates in Europe, Japan and Australia are often set on a usage basis. In the case of local calls, per minute charges apply along with a per call set-up or connection fee, both of which can vary depending on the selected service plan.Footnote 13 Charges also vary depending on whether a call is made to a landline or mobile number (and can also vary by mobile service provider). Local and national per minute and per call rates are generally the same; as a result, there is typically no price difference between local and domestic long distance calling rates.Footnote 14 However, new service plans or add-ons are increasingly available in the examined foreign jurisdictions. Many of these plans offer unlimited national fixed and/or mobile calling options.
  • Integrated VoIP and Broadband Service: In some areas of Europe, Fixed VoIP Telephony service is not offered as a standalone service. Instead Fixed VoIP services are integrated with broadband services offerings. As part of broadband service offerings, such VoIP plans often include unlimited national calling to fixed and/or mobile lines as well as relatively low cost international calling plans.
  • Regulatory Fees: In the US, there are a number of unique regulatory fees and surcharges (other than sales taxes). These include, among other things, the federal subscriber line charge (SLC) and universal service fund (USF) charges. Collectively, these fees can add up to as much as $4 to $24 per month over and above a service provider’s local, long distance and feature charges. The range and magnitude of these charges, however, vary by state and municipality.Footnote 15 As in previous years' studies, the principal surcharges applied in the US, namely the SLC and USF, are included in the Study. In most of the surveyed countries, including the US, emergency 911 fees apply and, therefore, they are also included in the Study.

Figure 3 below, provides a year-over-year representation of changes in international Fixed Telephony prices from 2015 to 2016.

Level 1 service basket prices showed an increasing trend in the case of foreign jurisdictions with the exception of France. The major increases in Level 1 prices within the last year were in Japan (15%), Germany (11%) and the US (9%). Most of these price variations are attributable to differences in the currency exchange rates and PPP adjustment factors relative to the previous year. For example, in original currencies, the Level 1 price in Japan actually decreased by 2% and in Germany the increase was only 4% over the past year.

In the Level 2 and Level 3 service baskets, the trend in price change over the past year was mixed. For example, Level 2 prices increased in Germany (9%), UK (10%), and, Australia (5%) whereas Level 2 prices decreased in Italy (12%), US (9%) and Japan (1%). Level 3 prices increased in Germany (23%), France (21%), US (6%), and Australia (2%) whereas Level 3 prices decreased in Italy (19%), Japan (6%) and UK (1%). Level 2 and Level 3 price variations in foreign jurisdictions are also attributable to a difference in currency conversion rates and PPP adjustment factors relative to the previous year. For example, in original currency, prices in Germany only increased by 1.7% (Level 2) and 14.5% (Level 3).

Figure 4 below, provides a comparison of current average Fixed Telephony prices between Canada and the seven foreign jurisdictions for each of the three service baskets. All prices are expressed in PPP-adjusted Canadian dollars and exclude taxes (e.g., VAT or GST). Figure D.1 and Table D.1 in Appendix D provide detailed historical international wireline service basket information for the period of 2008 to 2016.

The key findings are outlined below:

  • For the Level 1 Fixed Telephony service basket, the average price paid by Canadians was $39.52 per month, which was 4% lower than the average of $41.31 of the eight surveyed countries. The average Level 1 price in Canada was 3rd least expensive, only higher than those of France and Japan.
  • For the Level 2 Fixed Telephony service basket, the average price paid by Canadian consumers was $55.78 per month, which was 2% lower than the average of $57.17 for the seven surveyed countriesFootnote 16. The average Level 2 price in Canada was 3rd least expensive, only higher than those of the UK and Italy.
  • For the Level 3 Fixed Telephony service basket, the average price paid by Canadian consumers was $60.32 per month, which was 11% lower than the average of $67.82 for the eight surveyed countries. The average Level 2 price in Canada was 4th least expensive, only higher than those of the UK, France, and Italy.
  • In summary, Canadian Fixed Telephony service prices were on the lower end of the group of surveyed countries in the Level 1, 2 and 3 service baskets.

4. Mobile Wireless Telephony Service

4.1 Mobile Wireless Telephony Service Baskets

For Mobile Wireless Telephony, this year’s Study included the following six service baskets:

  • Level 1: 150 incoming & outgoing minutes per month, with 10% of outgoing minutes treated as long distance, and no optional features.
  • Level 2: 450 incoming & outgoing minutes per month, with 10% of outgoing minutes treated as domestic long distance; two optional features including voice mail and call display; and 300 text messages.
  • Level 3: 1,200 incoming & outgoing minutes per month, with 15% of outgoing minutes treated as domestic long distance; more than two optional features, including voice mail and call display; 300 text messages; and 1 GB data usage per month.
  • Level 4: Unlimited nationwide talk and text (no international and US calling included); more than two optional features, including voice mail and call display; and 2 GB data usage per month.
  • Level 5: Unlimited nationwide talk and text (no international and US calling included); more than two optional features, including voice mail and call display; and 5 GB data usage per month.
  • Level 6: Newly added this year, ‘family basket’ - Unlimited nationwide talk and text (no international and US calling included); more than two optional features, including voice mail and call display; and 10 GB data usage per month.

In relation to the previous year, the following changes were introduced to the current Study:

  • Devices: This year’s Study was based on the least expensive lite devices available from each service operator rather than the premium devices included in last year’s Study.
  • Added family basket (Level 6):
    • The following Wireless Service Providers (WSP) offer a shared plan, referred to as a ‘family basket’ in this Study.
      • All incumbents (i.e. Rogers, Bell, and TELUS) offer shared plans in all cities and Eastlink in Halifax, NS.
      • All US service providers (i.e. AT&T, Verizon, T-Mobile) offer shared plans with a maximum number of additional lines ranging from six to ten.
      • In other international jurisdictions, share plans are also typically offered with a maximum of 10 additional lines.
      • These service providers offer consumers the sharing of additional lines and data by family members – as an add-on to their main account. While the number of lines ranged from two and nine additional lines, the majority offer up to a maximum of 5 lines with a data sharing plan ranging from 500MB to 15 GB.
  • Given that share plans are offered across all jurisdictions, the family basket (Level 6) was added to this Study, which is defined as below:
    • Service Plan: Additional lines may be added, in most cases, to any service plan within the definitions of Level 1 and Level 2, and in all Level 3 to Level 5 plans. For this Study we defined Family basket based on existing level 5 specifications, since it provides for maximum usage (10 GB data, unlimited minutes etc.) to be shared by the family members.
    • Family Size: As noted above, any number of additional lines up to maximum of 10 to 15 can be added, according to available offers. To be specific, we relied on Statistics Canada data to establish the average family size of ~2.9 people. Accordingly, we specified a total of three lines including one for the main account and two additional family members. We believe this represents an optimum number of lines for the family basket.
  • International Long Distance Calling: In the previous year’s Study, international long distance calling was not included in any of the five service baskets. For consistency, in this year’s Study, international long distance calling is also excluded from all service baskets.
  • US Long Distance Calling: In last year’s Study, US long distance was included in the price comparison. We believe US long distance calling between the jurisdictions included in the Study is not comparable. For example, long distance calling from London (UK) to Boston is classified as ‘International long distance’ whereas a call from Toronto to Boston is classified as ‘North American long distance’. For this reason, US long distance calling was also excluded from all six service baskets.Footnote 17 Effectively, this change materially impacted the Level 2 and Level 3 prices downwards, since these two levels had accounted for US long distance charges in previous years’ Studies.

In summary, the following Mobile Wireless Telephony service element charges, where applicable, are considered for price comparison purposes:

  • Network access/monthly plan charges, as applicable;
  • Additional calling charges, where applicable;
  • Optional feature charges, as applicable (e.g., voice mail, call display and others);
  • Domestic Long distance charges, where applicable;
  • Text message service (TMS), where applicable;
  • Data service charges, where applicable; and,
  • Any other applicable monthly service charges such as emergency, universal service and/or other regulatory fees.

The Study excludes several one-time charges such as activation fees, upfront handset or device costs, and roaming charges. However, section 4.3 provides a detailed analysis of BYOD (Bring Your Own Device) in contrast to the free device with term contract options available to consumers in Canada. Section 4.5 provides a detailed pricing comparison of roaming services available to Canadian and American consumers when travelling to the US and Canada, respectively.

Table B.2 provides a detailed summary of the service elements used for the ‘Mobile Wireless Telephony and text messaging’ service baskets as well as the usage assumptions.

For each of the six service baskets, prices are measured using standard mobile service plan rates offered by surveyed WSPs. This year’s Study was primarily based on post-paid plans. Pre-paid plans were only included in the comparison if post-paid price plans were not available for a particular service basket. In addition, among the pre-paid plans selected, monthly device costs were added in order to reflect the implicit device cost present in post-paid plans. This additional device cost was comparable to the particular service provider’s least expensive lite device amortized over a twenty-four-month periodFootnote 18.

Many WSPs offer post-paid plans on a no-contract or term-contract basis (the most common term being 24 months in the latter case). Term-contract service plans typically provide a means for subscribers to purchase a new handset or device at a discounted price. Such plans generally include an implicit or explicit handset cost recovery component in the service plan price. No-contract term, bring-your-own-device or SIM card only, service plans are also often available at lower price points given they do not include a handset cost recovery component. Consistent with previous years' studies, as applicable, the post-paid service plan prices collected for this Study are based on term-contract service plans.

4.2 Canadian Mobile Wireless Telephony and Prices

Figure 5 provides a historical view of the five Canadian Mobile Wireless Telephony service basketsFootnote 19.

Mobile Wireless Telephony prices showed mixed trends across Canadian cities. For example, Level 1 prices increased and Level 3 prices decreased in six cities within the past year. However, in Levels 2, 4 and 5 the trend was mixed: prices increased in some cities and decreased in others. Year-over-Year (YoY) average price changes in the six Canadian cities are presented in Figure 6 below.Footnote 20

Major price changes occurred in Regina and Montreal, where Regina’s Level 2 price decreased by 12.9% and its Level 5 price increased by 25.2%. Montreal’s prices significantly decreased for Level 3 (24.1%) and Level 5 (16.1%)Footnote 21.

Figure C.2 and Table C.2, in Appendix C, provide a detailed overview of the Canadian wireless telephony and TMS service baskets prices for 2008-2016. As illustrated in Table C.2, the trends by city are similar to that of the national average for Levels 1-4. In the case of Level 5, Regina showed a significant increase in price (25%). Since major cities - Toronto and Montreal showed a decrease of over 10%, the national average also decreased by 10.2%.

4.2.1 Comparison of Incumbent and New Entrant Prices

With respect to the price difference between Mobile Wireless Telephony incumbents and new entrant offerings, the trends were generally similar to those a year ago. Since no new entrants were found in Winnipeg and Regina and there is only one new entrant in remaining cities: Eastlink (Halifax), Videotron (Montreal) and Wind (Toronto and Vancouver), the new entrant prices represent a single service provider’s price.

This comparison is based on the unweighted average of the price offerings of the three incumbents (TELUS, Rogers and Bell) for each city. Table 7 below, provides a summary of the price differencesFootnote 22.

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