Why Canadians are spending more on wireless and internet services

Consumers are spending more on communication services but they aren't getting any more for their money, according to a prominent critic of the telecom industry, who says the spending increases are due to a lack of competition, especially in the wireless and internet sectors.

"We see spending going up at over three times the rate of inflation, which some Canadians may be scratching their heads over," said Josh Tabish, of OpenMedia.ca, a non-profit advocacy group based in Vancouver.  

Average household spends $203/month

A CRTC report released this week says Canadian households spent an average of $203 per month on communications services  in 2014. That's an increase of nearly $12 a month or 6.2 per cent from 2013.  

The jump in spending on wireless and internet services specifically was even higher, up by 14 and 10 per cent respectively.

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"The decisions Canadians are making as consumers, including choosing the packages that best suit their needs, are contributing to how much they spend on their communication services," the CRTC report says.

"In many cases, they are opting for faster and larger internet packages, as well as using more data on their wireless devices."

The Netflix effect

That may be because more Canadians are using online video services.  

Netflix subscription rates among 18-34 year old Anglophone Canadians rose from 29 per cent in 2013 to 58 per cent in 2014. Over the same period, subscription rates for Francophone Canadians rose from seven per cent to 24 per cent.

But the CRTC report also notes the Canadian market is heavily concentrated, with only a few large entities holding dominant positions. The top five broadcasting and telecommunications companies (Bell, Rogers, TELUS, Shaw and Quebecor) account for about 84 per cent of total industry revenues. And that figure is growing, up one per cent from 2014.

"So the kind of efforts to bring new entrants into the market seem to be backfiring slightly," said Tabish, referring to efforts by the Conservative government to entice smaller companies into the wireless and internet sector.

Digital divide

Tabish said the CRTC report shows prices in Canada are contributing to a growing gap between low and high income earners when it comes to access to digital services.  

Just 59 per cent of the lowest income households have internet access compared with 98 per cent of the highest income households.  

"Right now, two-thirds of our lowest income earners have cellphones, compared with nearly 96 per cent of our highest income earners," he said.  

"We can all imagine how difficult that is to gain employment, to be connected in our social world without these affordable devices in our hands. So that growing gap is concerning. Especially as more and more Canadians are finding themselves trying to find jobs in the so-called digital or information economy."

More for your money?

Canadians aren't getting more or better services in return for the higher prices, Tabish said.

"Canada is one of the only OECD (Organization for Economic Co-operation and Development) countries in the world that still uses data caps on wired internet connections, we continue to hear from our community about bad customer service, so no, I don't think Canadians are getting anything more for their money at this point."

CBC News asked each of the Big Five telcos about the spending increases outlined in the CRTC report.

Rogers was the only one that was able to respond by publication time.

"Internet use has skyrocketed 700 per cent since 2009, and is expected to grow another 400 per cent over the next four years as Canadians stream more and more video entertainment," said Aaron Lazarus, senior director of public affairs for Rogers.

"Because each Canadian has different needs, we offer a wide variety of options so people can choose a plan that makes sense for their own use. We're focused on building value into our plans, including unlimited internet and Share Everything plans," Lazarus said.

The CRTC report says overall revenue generated by the communications industry grew from $61.9 billion in 2013 to $63.2 billion in 2014, a year-over-year increase of 2.1 per cent.