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In a world of shrinking products – from smaller candy bars to fewer chips in a bag – Canada’s telecom industry is moving against the tide. While shrinkflation provides consumers with less bang for their buck, Canada’s telecommunications providers are delivering more data, faster speeds, and broader coverage, all at lower prices.

Shrinkflation

Shrinkflation is a tactic where companies reduce the size or weight of their products without a corresponding reduction in price. For example, a 2kg package of sugar is reduced to 1.5kg, or a box of tissues contains less tissues, without the price being reduced. Sometimes more expensive ingredients are replaced with cheaper ingredients of lesser quality.

Canadians have not taken kindly to the practice. In a recent Ipsos poll of consumers in 33 countries, 64% of Canadians surveyed called the practice unacceptable, a figure that is 16% higher than the global country average and trails only France and Turkey.

Telecom: The Exception to the Rule

In a world of shrinkflation, Canada’s telecom sector stands apart.

• Lower prices – more data

  While prices for most things have increased, prices for both home internet and wireless services are declining. According to Statistics Canada, overall consumer price inflation has risen by 18.5% over the last five years, but prices for cellular services have decreased by an average of over 47% and prices for internet access services have decreased by an average of nearly 8% during the same period.

  For example, according to the Government of Canada’s annual telecom price study, in 2019 the average price of a wireless plan that offered 1GB of data (and 1200 call minutes and 300 texts) was approximately $65 per month (or approximately $75 in today’s dollars). Today, for $65, a consumer can get a plan that offers 75GB of 5G data and unlimited talk and text Canada-wide, with no overage fees. This amounts to a 98.6% decline in price per GB (without factoring in additional savings attributable to unlimited talk and text and zero overage charges). Smaller data plans are also available, like 30GB wireless plans for $34 and $50 for 60GB, which offer more data at lower prices than what was available just a few years ago.

• Faster Speeds

  If you check the label on your favourite packaged good you may find that one or more ingredients have been switched for a cheaper and lower quality ingredient. The opposite is the case in telecom. Though prices are declining, the quality of service has steadily increased. For example, the average mobile data download speeds in Canada have increased by 90% over 5 years¹ and fixed broadband download speeds by nearly 400%². With faster speeds, Canadians can stream movies, play games online, and join video conferences while on the go.

• More coverage.

  While other industries are shrinking the size of their products, Canada’s telecom providers are steadily expanding the coverage of their wireless and fixed networks, with the vast majority of Canadians now having access to mobile wireless and high-speed internet services. And with investments being made in new innovations like cellular-to-satellite communications, Canadians will soon be able to connect from even the most remote parts of Canada.

Why is the Canadian telecommunications sector different?

• Intense competition

  The fierce battle for subscribers keeps telecom providers on their toes. Consumers have choices, and vote with their wallets. If a provider does not offer the best value to its customers, they will move to a provider that does. In fact, last year millions of Canadians switched to a different service provider or changed their plan with their existing service provider.

• The latest technology

  Unlike industries that are reducing the size or quality of their products, competition within the telecom sector requires service providers to constantly invest in the latest technological advancements. Whether it is moving from 3G to 4G to 5G technology in wireless or investing in fibre and next generation cable in fixed broadband, Canada’s telecom sector invests billions of dollars each year to maintain Canada’s status as having among the best telecom networks in the world.

• Consumer demand

  While eating more chips and chocolate bars will add inches to your waistline, consuming more mobile and internet data is calorie free. And Canadians are indulging. The average Canadian subscriber is consuming close to 30% more mobile and internet data each year, and the telecom sector is meeting this demand without increasing prices.

The Bottom Line

While other industries are shrinking their products, the telecom sector is giving more, not less. By investing billions each year, it is providing Canadians with more data, faster speeds, and wider coverage, all at lower prices.

So, the next time you sip your coffee from a smaller cup or unwrap a shrunken candy bar, remember this: Telecom isn’t playing the shrinkflation game.

¹ Open Signal, State of Mobile Networks from Aug 2019 to Aug 23
² CRTC, Communications Market Report, Open Data — Retail fixed Internet