Just like cable-TV, broadband is still way too expensive in Canada

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Point Topic releases 2014-Q1 global survey of broadband prices

Research consultancy Point Topic has another set of broadband data to add to the dismal news about Canada. Using USD adjusted by the purchasing power parity formula (PPP), they find that of the 90 countries surveyed, Canada ranks in 58th place on the price for a monthly standalone broadband subscription. We’re just under the global mean of $76.61, one step ahead of Mexico.

The clipping above is cut off at Serbia; here’s the bottom end of the list:

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These international comparisons may be imperfect (as defenders of the status quo love to point out), but they usually point to reliable trends… unlike some Canadian politicians I could mention.

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PT has two major plot points in this report about high broadband prices. One is that territories with fewer competitors tend to be saddled with higher prices, not exactly a shocker. The other concerns platform technologies: telco DSL over twisted copper pair provides much less value than either cable or FTTx, as the next Point Topic graph indicates:

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Source: Point Topic Q1-2014 Broadband Report

In dollars per megabit, DSL is 7 or 8 times more expensive than either cable or fiber – and over the last four years, DSL has dropped in retail price less than 20%, compared to cable, which has dropped about 50%, and fiber, which has dropped as much as 100%. (Point Topic counts VDSL with fiber connections.)

Our fiber deficit

Apart from Canada’s inordinately high prices, we are also near the bottom of the barrel when national infrastructure is measured in terms of fiber as a proportion of all residential broadband lines. As of June 2013, the OECD reports that Canada stood 9th from the bottom of the 34 OECD countries in fiber penetration, as shown below (from OECD Broadband Portal, spreadsheet 1L). That rank derives from Canada’s total fiber penetration (among all broadband subscriptions) of 2.02%. The OECD average is 15.75%.

oecd-fiber-bb-june2013Source: OECD Broadband Portal

You can’t have a digital strategy when bandwidth is a scarce commodity

And here’s a third piece of bad news. PT also found that across the 90 countries it surveyed, the average residential speed works out to 55 Mbps. Even though I assume that’s based on advertised speeds, not actuals, this finding makes a further mockery of our current government’s bold plan to push Canada to a minimum broadband speed of 5 Mbps – by 2017!

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Excessive cable-TV prices are of a piece with excessive prices for Internet use

In my previous post, on the CRTC’s TV proceeding, I argued that the excessive concern with cultural policy in our system is harmful to consumer welfare. In an email yesterday, a colleague remarked that my post gave short shrift to cultural policy generally.” If it did, it was by way of trying to compensate for a regime under which culture has become a convenient abstraction that plays into the hands of the vertically integrated conglomerates, which use faux patriotism to bolster their market power and collect rents from their TV and broadband subscribers. (This scoundrel’s last refuge has even popped up in the interrogatories filed by Bell last week in connection with the Klass complaint on Mobile TV; by giving preference to Cancon, Bell is apparently doing sacred work and should be forgiven. More on that some other time.)

The other point I stressed last time was that the CRTC is finally becoming bolder about pointing to problems that affect consumer welfare. Here’s a key passage I quoted from the TV hearing notice (para 27):

“Cable subscription fees have increased faster than the Consumer Price Index in recent years. In 2012, the average amount Canadians spent on cable and satellite TV services increased by 5%, when inflation rose by just 1.5%. Canadian households spend an average of $52 a month on television services—before factoring in telephone, Internet and wireless services. Added up together, these services cost on average $185 a month or over $2,200 annually. This represents the sixth largest expense for most families.”

A few short years ago, no one with any sense would have argued to the Ottawa establishment that the average Canadian family should not be taxed any further to support the creation of Canadian content (for some background, see my discussion from June 2011 on the Peter Grant proposal to levy Internet access fees in order to guarantee online “shelf space” for Cancon).

It’s therefore great to see that the Blais CRTC now seems unwilling to follow the blind logic of cultural sovereignty, without taking at least some account of the costs of cultural policy to ordinary Canadians. If it holds true to this approach, our regulator might eventually persuade some parties that cultural products of every kind will find a much happier home on networks that Canadians can actually afford and that they are encouraged to use.

D.E.