Canada’s Wireless Industry Delivers Increased Value and Lower Prices, According to New Report
Survey reveals consumers receive an average of $948 per month in consumer surplus from their mobile wireless services
OTTAWA, ON – October 6th – Canadians continue to receive increasing value from their mobile wireless services, according to a new PwC Canada report commissioned by the Canadian Wireless Telecommunications Association. This value is largely due to the billions of dollars that Canadian wireless network providers invest each year in advanced wireless networks. These continuing investments have resulted in increasing network performance, lower prices per GB of data, and increasing functionality of connected devices that replace the need to buy separate products and services.
Key findings of the report:
Data consumption and price trends:
- From 2015 to 2019, Canadians almost tripled their average data usage, growing at 27% compound annual growth rate (CAGR). This trend is forecasted to accelerate due to the widespread launch of unlimited data plans in 2019.
- Despite this growth in consumption, Average Revenue per User (ARPU) has remained relatively flat for wireless service providers, increasing at just 1.9% CAGR from $64 to $69 between 2015 and 2019.
- The average cost to consumers per 1 GB of mobile data has dropped from almost $28 to $10, a 64% decrease, from 2015 to 2019. Notably, consumers can now purchase plans with unlimited data for less than $3 per GB of high speed data.
Consumer surplus – ‘Willingness to Accept survey’:
To determine the value, or consumer surplus, that Canadians attribute to their mobile wireless services, the Canadian participants were surveyed using a “Willingness to Accept” approach. With this method, respondents were asked to indicate what monthly monetary amount they would be willing to accept in exchange for giving up their smartphones for a year. This amount was in addition to what they would save from not having a monthly service plan bill. Key survey findings include:
- The average amount required to give up their smartphone was $948 per month, or $11,376 per year.
- 17% of respondents would not accept less than $2,500 per month, or $30,000 per year.
- 59% of respondents said they would accept no less than $150 per month, or $1800 per year, to give up their smartphone.
- The average consumer surplus of $948 per month is 158 times the industry surplus (Free Cash Flow) of $6 per month per wireless subscriber.
Increasing functionality of wireless services and devices leads to savings from reduced spending on goods and services (including landline, photo, video, audio and printed materials) that can be replaced by wireless services and devices:
- As Canadians increase their consumption of mobile wireless services, any increase in expenditures on wireless is mostly offset by decreases in spending on wireless substituted categories; and
- Expenditures on wireless and wireless substituted categories as a percent of income have declined by 2.2% CAGR, effectively increasing discretionary income for Canadians to save or spend on other household expenditures.
“For most Canadians, smartphones and wireless services have become an integral part of their everyday lives. With this report we are now able to quantify how much value Canadians attribute to their mobile wireless services relative to what they pay for such services,” said Robert Ghiz, President and CEO and Canadian Wireless Telecommunications Association. “This report also shows how crucial continued investment in wireless networks is to delivering increasing value at lower prices.”
This report also assesses the benefits that Canadian wireless consumers will receive as Canada transitions to 5G networks. Previous studies commissioned by the CWTA determined that 5G wireless networks will contribute as much as $40 billion annually to Canada’s economy by 2026, while creating 250,000 jobs. This will largely come through the adoption of use cases in the digital economy, primarily from technology innovation across automation, Artificial Intelligence, Internet of Things (IoT) platforms, smart sensors and more.
“With 5G networks enabling the increased adoption of the digital economy, Canadians can expect to receive significant economic, social and environmental benefits,” said Chris Mar, Partner at PwC Canada. “These benefits go beyond the consumer surplus calculated. For example, advances in remote healthcare will create social benefits by providing better quality services for those in rural communities. 5G networks mature and inspire new innovation for the digital economy.”
A copy of the report, entitled, “Understanding the increasing value of wireless services for Canadians” can be found here.
The Canadian Wireless Telecommunications Association (CWTA) is the authority on wireless issues, developments and trends in Canada. It represents companies that provide services and products across the wireless sector. CWTA and its members are dedicated to maintaining Canada’s leadership in wireless communications and ensuring that all Canadians can enjoy the benefits of advanced wireless connectivity. CWTA administers a number of initiatives on behalf of its members, including corporate social responsibility programs and the national common short codes program.