Canadian cellphone rates among world's worst

The average Canadian cellphone user is paying among the highest bills in the developed world, according to a new international study.

Using a comparison package of 780 calls made, 600 text messages and eight multimedia messages sent per year, the Organization for Economic Co-operation and Development found that Canada has the third-highest wireless rates among developed countries. The United States had the highest rates for this "medium-usage" package, followed by Spain.

Canadians falling into this usage category shelled out an average of $500 US a year for their cellphone service, compared with $635 for Americans and $508 for Spaniards. Dutch users had the cheapest rates, with an annual expenditure of only $131 for the sample plan.

Canadians who were light or heavy users ranked slightly better in the OECD's annual Communications Outlook, released Tuesday. Light users, defined as those making 360 calls a year and sending 396 text messages and eight multimedia messages, spent $195 US a year on average — the 11th-most expensive among the 30 OECD member countries.

Heavy users, those making 1,680 calls a year and sending 660 text messages and 12 multimedia messages, spent $563, which ranked near the middle of the pack at 12th.

The poor showing was not surprising — the Canadian government has acknowledged that rates are too high and are contributing to lagging cellphone usage. Canada now ranks last for cellphone users per capita in the OECD, having been surpassed by Mexico since the organization's previous study.

In late 2007, the then industry minister, Jim Prentice, moved to encourage competition by reserving airwaves for new cellphone carriers. A trio of new companies — Public Mobile, Globalive and DAVE Wireless — are expected to begin offering services by the end of this year or early in 2010.

The Canadian Wireless Telecommunications Association, the cellphone industry's lobby group, did not return a request for comment.

Skewed usage patterns

Canadian wireless carriers have in the past questioned the OECD's methods and said it is difficult to compare cellphone plans across countries because of the variables involved. For one, Canadian and U.S. carriers also charge customers for incoming calls, a practice not common in many European and Asian countries, where only the calling party pays. Incoming minutes aren't tallied. 

This has skewed usage patterns in North America, with Canadians and Americans using significantly more airtime than customers in other parts of the world.

Taylor Reynolds, communication analyst and economist for the Paris-based OECD, acknowledged such differences do make it difficult to get true comparisons.

"North Americans do tend to make a lot more calls than in other countries," he said. "This is a challenge when we have to define a 'typical' consumption pattern for all OECD countries. The number of calls are too low for some countries and too high for others."

The OECD's findings are in line with the CBC's iPhone iNdex, which was compiled last year when Rogers Communications released Apple's iPhone 3G. The iNdex compared the total cost of the device across 21 countries and found that Canada was the second-most expensive, next to Italy.

The total cost of ownership of high-end devices such as the iPhone has also been considerably higher because Canada is the only OECD country to require three-year contracts. Most countries have two-year limits on contracts. Canadian carriers have recently begun offering such devices without contracts, albeit with hefty up-front fees.