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Business in Vancouver

Canadians now pay the highest cellphone bills in the world

by  Alan Zisman (c) 2010 First published in Business in Vancouver September 21-27, 2010 issue #1091 High Tech Office column

Here are two sets of statistics about the cost of mobile phone plans – one from the U.S., the second worldwide.

First, a report from the U.S. Government Accountability Office (GAO) (http://tinyurl.com/257v63g) reported that over the past decade, the U.S. has seen increased “consolidation among wireless carriers” together with “increased use of wireless services by consumers.”

By the end of the period studied, four carriers accounted for 90% of the U.S. wireless market. Less competition equals higher prices, right? Not this time. According to the GAO’s figures, 2008 prices were half of their 1999 equivalent (after accounting for inflation).

Is the same true in Canada?

Here, despite the recent entrance of a few more competitors, the three major players – Rogers/Fido, Telus and Bell – also have the bulk of the market.

While U.S. (and I assume Canadian) wireless prices have dropped, consumers – U.S. and Canadian – are, as the GAO reported, making much heavier use of wireless services, both voice and data. The GAO reports average monthly minutes used rose from about 250 in 2000 to about 700 in 2009.

As a result, even if rates have fallen, your bill may in the end be the same or higher. And the GAO’s data supports that – a chart shows average revenue per user dropping for voice services, but rising for data services.

The end result is that revenue per user has held steady over the 2000 to 2009 period.

And that brings us to the second set of data, which was reported in August by Wirelessnorth.ca (http://wirelessnorth.ca/?p=963). It looked at Q1 2010 data from the Bank of America Merrill Lynch that included more than 50 countries. Charting average revenue per user (US$/month) we’re No. 1, though paying the most per user may not be something to boast about.

Averaging about US$55, Canadian mobile users barely beat out Japan. U.S. users were in third place (paying just under US$50).

Korea, Singapore and various European users were in the middle of the pack, with average monthly per-user costs between US$30 and US$40; consumers in China, Russia and India were at the bottom, averaging under US$10.

As the mobile networks often point out, Canada is a huge country with vast empty spaces.

But so is Russia, and a large percentage of the Canadian population lives in a relatively small swath in the lower 150 kilometres of the country.

These figures didn’t include taxes and other government charges that may be tacked onto the bills, but do include voice and data charges.
Apparently, Canadians pay a bit less for a minute of data, on average, than Americans (US$0.10 versus $0.11); Canadians, however, are charged more miscellaneous fees, which drives up the final monthly total.

Look at what percentage of the population has mobile accounts and the picture gets more complex.

Canada (with the highest average costs), India and China (with some of the lowest average costs) have some of the lowest penetration rates – ranging from about 45% to 70%. Greece is No. 1 with over 200% - more than two mobile phones per person – followed by Portugal and Russia. At around 85%, the U.S. bests Canada, but is still in the bottom third of the pack.

According to Wirelessnorth.ca, Canada has some of the fastest 3G+ data networks in the world.

That’s a good thing.

We also lead the world with three-year contract lengths, perhaps less of a good thing.

Putting all this data together prices – per minute of voice use or per megabyte of data – have fallen over the past decade or so, but what each of us is paying at the end of each month has been relatively stable.

And relative to other countries, we’re paying more – and are locked in longer.

Wirelessnorth.ca’s conclusion: “it’s 2010 and Canadians pay the highest cellphone bills in the world.” 

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