2013/11/07

'the canadian wireless rip off ..'

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Ben Klass



Wireless service is so expensive in Canada because the cost of doing business isn’t cheap, or so the argument goes. “Canada’s vast and challenging geography” is the big communication companies’ go-to talking point for explaining why this is so. Proponents of this view point to figures like capital intensity to justify this claim, which shows that Canadian wireless companies’ capital-spending-to-revenue ratio is about on par with similar companies in other countries.
Okay, so Canada’s wireless providers are about as productive as the rest of the world, even if it is more expensive to put up a tower in 40 below. We’ve all got LTE in our ice fishing shacks and canoes, so what’s there to complain about? Well, as it turns out, lots.
Capital intensity doesn’t tell the whole story of why our prices are so high; as you might know, the path from revenue to prices is long and winding. So let’s look at another way of measuring how well a company’s doing. According to Jeffrey Church of the University of Calgary’s School of Public Policy, when assessing profits and market power we need to be mindful of one indicator in particular: a company’s internal rate of return.


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