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Canada’s wireless industry: A reality check

According to the World Economic Forum, Canada has the world's soundest banking system. You wouldn't know it if you only listened to the bank-bashing that has been going on for perhaps as long as there have been banks in this country.

Similarly, Canada's major wireless service providers face strong criticism from commentators and advocacy groups.

Indeed, we keep hearing and reading from industry analysts, media columnists and so-called consumer advocates that Canada's wireless industry is years behind the U.S. or European countries in terms of technology deployment, and that prices are among the highest in the world. Most people seem to believe this is true.

Some of these critics clearly have an agenda. As is the case for so many other issues, they are trying to justify more bureaucratic meddling in the economy. If only government mandated it, prices would be lower, speeds would be higher, and services would be better.

The Canadian Radio-television Telecommunications Commission (CRTC), the country's telecom regulator, decided almost two decades ago that it did not need to specifically regulate the wireless industry, as it did with traditional telephones, because it was already competitive enough. It has recently revisited that decision and should soon announce what it will do.

Is it really the case that Canadian consumers are at such a disadvantage compared with those of other developed countries?

Yves Rabeau, a Montreal economics professor and expert in telecom issues, looked at the available studies that compared various aspects of the wireless industry.

Using different scenarios of call and texting usage, he found that in four out of six scenarios, prices were higher than the world average, but still lower than in the U.S. In the scenario with the most calls and text messages, Canadian prices were the 5th least expensive of 34 developed countries.

Concerned about high roaming fees? Those of Canadian providers are indeed more expensive than elsewhere if you compare small usage for a short period. But the OECD again used various scenarios and compared prices in the least expensive destination for each country. Looking at 20 MB download in 20 sessions over one month, Canada has the 7th least expensive fees out of 34 countries.

Wall Communications compares telephone packages every year for the CRTC. It found that prices for packages above basic service are lower in Canada than in the U.S. and comparable to the average of a set of other rich countries.

In short, Canada is neither among the best, nor among the worst, when it comes to prices. But you have to look at the overall picture to conclude this, and not just at the parts of the data that are negative, as critics often do.

We also have some of the most advanced networks in the world. Three of the 98 LTE networks – the latest in terms of technology – in service in 49 countries and territories around the world are in Canada.

Not surprisingly, smartphones are proliferating, while data transmission on mobile devices has more than doubled from 2010 to 2011.

Whichever factor you look at, Canada is right up there with other industrialized countries – weaker in some areas, stronger in others. And don't forget that covering a country the size of Canada with a wireless network costs way more than connecting Belgium or Germany.

This industry is doing reasonably well. The CRTC would also do well to let it develop without additional bureaucratic impediments.

Michel Kelly-Gagnon est président et directeur général de l'Institut économique de Montréal. Il signe ce texte à titre personnel.
* Cette chronique est publiée dans les journaux de Sun Media, tant dans ses quotidiens présents dans plusieurs des marchés urbains canadiens les plus importants (Toronto, Ottawa, Calgary, Edmonton, Winnipeg et London) que dans ses 28 quotidiens régionaux
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