This is one of the astonishing findings that emerge from the compilation carried out by The Press of the consumer price index. Since 2002, the first year Statistics Canada introduced the price of “internet access services” into its household spending basket, Canadians have paid 24.3% more for their internet. Ontario is in the good average with an increase of 22.6%. The hardest hit in this regard are households in Alberta (+83.3%) and British Columbia (+85.2%).
In Quebec ? In terms of the price index, which takes into account inflation and the evolution of packages, the cost of the Internet has fallen by 25.9% since 2002. It is from 2010 that the difference really started to widen with the other provinces.
Unable to identify a determining element. Four years earlier, Maxime Bernier, Minister of Industry in the Harper government, had issued a directive to the Canadian Radio-television and Telecommunications Commission (CRTC) which today is considered not conducive to competition. It promoted “market forces” and infrastructure investment.
Methodology to defend
The finding leaves Pierre Larouche, professor of competition law at the University of Montreal and keen observer of the telecommunications industry, somewhat perplexed. He wonders about the reliability of comparisons of internet packages, which have evolved enormously since 2002. Unusual fact, Statistics Canada has published a 14-page document summarizing in detail its methodology for establishing the prices of access services to Internet1. We defend the exercise, based on a complex methodology for monitoring packages from one month to another.
“The size of the sample is not fixed and is automatically adjusted according to the entry of new packages and the exit of old ones”, explains a spokesperson for Statistics Canada by email.
An overview of the internet prices offered on the sites of the main providers confirms this: we often do not pay the same price from one province to another. Thus, as of March 20, the regular rate for Bell’s Fibe Gigabit 3.0 package in Ontario is $135 per month. In Quebec, it is $90. It was not possible to obtain explanations from Bell.
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Two identical packages displayed on the Bell site, depending on whether you live in Ontario (above) or Quebec (below)
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Convergence to the rescue
For Pierre Larouche, this could be another illustration of “aggressive” competition from Videotron in Quebec, the effects of which are well known for wireless service, and which leads to price wars. The Quebecor-owned company has been an internet provider since 1995. Why did the gap only start to widen in 2010? And why haven’t the other provinces where cable is present also benefited from competition between two major providers?
Two possible clues: it was in 2010 that Videotron launched two major products, IllicoWeb and, above all, its wireless service.
“It’s hard to say,” replies Mr. Larouche. I wonder if the answer is not to be found in content strategies. »
In Quebec, we have two competitors that have content; it gives a rather serious competition between two suppliers.
Pierre Larouche, professor of competition law at the University of Montreal and keen observer of the telecommunications industry
According to its 2022 annual report, Bell Media has 66 specialty, general or pay TV channels and 109 radio stations in Canada. Quebecor, concentrated in Quebec, notably includes the largest television broadcaster in the province, TVA, seven specialty channels, film and audiovisual production services and the Club Illico video-on-demand service. Both generally offer their internet service combined with other services.
The convergence strategy as practiced by Bell and Quebecor has nevertheless lost feathers elsewhere in the world, particularly in Europe, is surprised Pierre Larouche. “I have always thought that the convergence strategy still works in Canada, whereas it has failed elsewhere. I wonder if, in a way, we are more advanced in this phenomenon in English Canada, where there is less vertical integration […]. That would be a clue. It would contradict my analysis a little, but it does not matter, it is the facts which speak. »
Quebec also seems to have seen the birth of many more independent internet providers than in the other provinces. A comparison taken from the PlanHub.ca site, without scientific pretension, illustrates this.
And yet they go up…
The consumer price index does not say everything. This attempts to compare similar plans over time, but does not take into account what households actually pay for their internet service. However, in Quebec as in the other provinces, consumers have been paying more for their internet since 2010, the first year of availability of this data in the Household Spending Survey conducted by Statistics Canada.
From $358 per year in 2010, expenses for connecting to the Internet have climbed to $620 in Quebec. However, the increase is less marked than in the other provinces.
How can this increase in spending be justified when the consumer price index indicates a drop? The paradox is only apparent. It is that consumers, Quebec and Canadian, consume more data and seek higher speeds, recalls Nadir Marcos, CEO of PlanHub.ca, a tool for comparing the prices of telecommunications services. A bit like taking advantage of lower gas prices to switch from a Corolla to a Dodge RAM. The same phenomenon has been noted for wireless services. “Even if the speeds offered by the suppliers are higher, that does not mean that we really need them, he recalls. Go back to basics, do a shopping exercise, you can’t go wrong with that. »