Assessing Fixed Broadband Price Market Competitiveness in Canada

The Situation

The importance of fixed broadband services in today’s interconnected world cannot be overstated, as they play a crucial role in shaping the economy, fostering human capital, and driving innovation. The differentiation of broadband plan prices across countries is influenced by a range of factors including each country’s specific supply, cost, and demand structure. Moreover, the diverse needs of consumers lead to variations in the plans offered by service providers across different countries. To make an economically sound cross-country marketplace comparison, one needs to adjust country-level costs that are likely to affect prices and to account for observable differences in broadband plan characteristics across countries. 

NERA's Role

A NERA team led by Senior Managing Director Dr. Christian Dippon, Consultant Dr. Erdem Yenerdag, and Analyst Blaine Helleloid was retained by TELUS Communications Inc. to conduct a study examining the fixed broadband market in Canada relative to other countries. Over the summer and fall of 2022, the data on fixed broadband plans and prices were collected from 30 providers across eight countries: Australia, Canada, France, Germany, Italy, New Zealand, the United Kingdom, and the United States. The database comprised 1,675 retail plans, accompanied by 82 plan attributes including monthly recurring charges, discounts, and download and upload speeds, among others. Additionally, country-level data on characteristics such as GNI per capita and terrain ruggedness were collected. These data were utilized in a hedonic multilevel random coefficient model to assess the competitiveness of the Canadian fixed broadband market. The model allows for a proper international comparison by accounting for differences in Internet plan attributes, network quality, and the cost of building networks. This effectively estimates what the average Canadian consumer would expect to pay for fixed broadband services in each country if those countries had similar supply and demand characteristics as Canada. Using the hedonic regression model, NERA fixed eight standardized plans, predicted the price of each plan, and subsequently created a ranking of the predicted prices in the eight countries included in the study. 

The Result

The analysis demonstrates that, contrary to prevailing perceptions, Canada consistently ranks as the third least-expensive country for fixed broadband services among the eight countries included in the study. The comprehensive ranking, from least to most expensive, is: Italy, New Zealand, Canada, France, the UK, Germany, Australia, and the US.