Giganomics Consulting Inc.

Once again, the OECD’s prices for broadband internet services have been cited in the press with little regard to how these prices were measured. 

The Globe and Mail has an article under the header “Canada: Land of high-priced web access” which states that the price of high-speed internet access in Canada is $87.32 per month – second most expensive among the 30 OECD countries.  

International price comparisons can be informative, but in this case, they are highly misleading.  The price for high-speed internet service in Canada is more affordable than the OECD data indicates.

The chart shown in the article was taken from the OECD’s Communications Outlook report for 2009.  Specifically, Figure 7.18 which is a listing of high-speed connections offering advertised download speeds of between 12 and 32 Mbps.

As noted on this website in the observation for August 20, 2009, the OECD’s methodology for calculating the price of broadband internet services does not provide reliable results for Canada.  The OECD’s reported average prices for Canada are based on only a few price points for services and calculated a simple average without weighting the services according to actual subscription levels. 

In the case of the quoted $87.32 for high-speed, the OECD relied on just two service prices: Bell’s Total Internet Max and Shaw’s Nitro.  The price information was gathered more than a year ago and does not reflect current prices nor the range of services in the Canadian market that offer speeds of between 12 and 32 Mbps. 

The current information on prices for services with those speeds is shown in the chart below, after converting these to U.S. purchasing power parity values as done by the OECD.  The most recent values are available from the OECD.

Based on information filed on August 31, 2009 in the CRTC proceeding Telecom Notice of Consultation 2009-261 and company websites. Numbers in brackets indicate the advertised download speeds.

The average price for service is $50.51, based on the advertised offers of the six major service providers in Canada with services in the range of 12 to 32 Mbps downloads.  This is a simple average of six offers since the companies do not publish the subscription levels for these specific classes of high-speed internet services.  If each company’s price was weighted based on its share of the six companies' internet subscribers, the average price would only increase by 4%.

Compared to the other OECD countries, an average price of $50 would rank Canada in 10^th place, not 29^th as the OECD chart suggests, for the lowest priced internet service capable of providing 12 to 32 Mbps.