Telus recently hired NERA Economic Consulting to conduct their own study to better accurately compare Canadian wireless prices versus the world, in response to the Canadian government’s own reports conducted by Wall Communications and NGL Nordicity Group.
Both Wall and Nordicity reports have claimed year after year Canadian wireless prices are some of the highest in the world, which Telus says is not accurate, which is why their 61-page NERA report aims to “examine the accuracy, or lack thereof, of the Wall/Nordicity Study and second to conduct an economically sound price comparison for the same countries.”
According to University of Ottawa Law Professor, Michael Geist, he has provided a full breakdown of the Telus-funded NERA report. Geist says the report “cherry-picked” factors to conclude other countries would have the same wireless prices as Canada, if similar marketplace conditions existed.
The NERA report says it has two “overarching conclusions”:
(1) The Study’s findings of high prices in Canada relative to other countries is false because it is the result of a poorly designed study and incorrect data interpretation; and (2) a properly designed and executed study methodology reveals that the existing prices for communications services in Canada are cheaper than the prices that foreign providers would charge in Canada for the same service plans.
As a result, the Telus report says “observing absolute prices is meaningless” when it comes to comparing Canada’s wireless costs versus the world. As Geist writes:
In fact, the Telus backed study acknowledges that the Canadian wireless plans may leave consumers paying more, yet it argues that those “absolute costs” are meaningless:
although a Canadian plan might be more expensive in absolute terms (i.e., the monthly out-of-pocket expenses incurred by a subscriber) than a plan abroad, or vice versa, observing absolute prices is meaningless as it fails to recognize that the plans are not identical. The regression methodology adjusts (normalizes) for differences in plans and thus compares identical plans, offered on identical networks, in identical countries.
The study therefore rejects comparing actual prices for similar plans (ie. the way a consumer would compare wireless costs and affordability), opting instead to estimate what foreign carriers would charge for the same plans once a selective group of additional factors are taken into account. In doing so, it tries to incorporate the Telus view that indicia such as geography, labour costs, and the weather should be factored into a “normalized” cost for wireless services.
At the end of the day, “Given that Canadian consumers pay actual bills – not normalized ones subject to regression analysis – the data from the vast majority of studies that point to Canadians facing some of the highest wireless prices in the world still stands,” concludes Geist.
You can read Dr. Geist’s full response countering the NERA report and its methodology here.