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The CWTA Response

By Michael Geist

Yesterday I posted a link to the Canadian Wireless Telecommunications Association's letter to the editor responding to my recent text-message column.  The letter claims that my comment that "consumers pay more, but get less" is inaccurate.  Yet consider the claims made in the letter:

"recent figures from Merrill Lynch confirm that Canadians' wireless talk time continues to increase, and continued growth in wireless data usage now accounts for approximately 40 per cent of the average monthly cellphone bill."

In actual fact, the Merrill Lynch study says that 12.4 percent of revenues come from data in Canada.  By comparison, in the U.S. it is 18 percent, in the UK it is 25.5 percent, and in Japan it is 32 percent.  Canadians use far less data than consumers in most other developed countries because our prices are higher.

"the average revenue per user has remained relatively static."

The Merrill Lynch study finds that ARPU increased in Canada by 3.7 percent. Among developed countries, only Sweden had a higher increase, with 17 of 23 countries surveyed showing a decrease in ARPU (signs of a competitive market).  Moreover, Canada has the second highest ARPU in the world (only Ireland has higher) and Canada has by-far the highest wireless profit margin in the developed world.

None of it will come as a surprise to Canadian consumers who experience the effects of one of the world's least competitive wireless markets every month.  Indeed, it does not come as a surprise to Merrill Lynch either, who note in their report that "price competition has been concentrated in the mid-market and corporate segments more than at the entry level (where it would help to increase affordability for the entry-level consumer)."

Full post as published by Michael Geist on August 13, 2008 (boomark / email).