Telus Makes Misleading Speed Claims

Following a hearing with the CRTC, Canada’s mobile regulator, on whether new regulations on the sale of wholesale mobile service would stimulate competition, MNO Telus issued a press release arguing against the regulations. The operator stated that Canada’s relatively high prices are merited and ultimately provide consumers with much better value. “Canadians enjoy wireless data speeds that are the second fastest in the world,” the release said, adding that Canada has “three times the average speeds offered in the U.S. and France, and nine times faster than the U.K.”

There was, however, a significant problem with the statistics that Telus cited, which was instantly flagged by Canadian media and industry watchdogs: They are based on the operator’s advertised maximum download speeds and not its real-world performance. As a warning against this type of usage, the OECD report from which Telus’ numbers were pulled stated, “Operators in some countries advertise faster speeds closer to the theoretical maximum which are rarely achieved in real usage.” As an example of how different these numbers can be, Akamai Technologies’ State of the Internet report for Q2 2014 states that Canada’s average download speeds were 7 Mbps compared with 6.1 Mbps in the U.K., not the nine times faster that Telus reported. 

We generally concur with Telus in terms of the broader argument that many of the European regulatory measures aimed at keeping costs down for consumers have inadvertently created a perverse set of incentives for operators in which maintaining current prices takes precedence over building next-generation networks. However, Telus’ tactics in this case have been almost comically poor. Due to MNOs’ large size and bureaucratic culture, many journalists and consumer advocacy groups are inclined to paint them as enemies of the consumer that consistently prefer “profits over people.” By manipulating the data in what appears to be the most translucent manner possible (there are multiple well-known and free sources for average download speed), Telus has validated all the fears of MNO cynics and moved popular opinion in the exact opposite direction to that which it intended. As this debate over competition continues in countries around the world, MNOs and their supporters would be well advised to not overreach in the way Telus just did. 

“Consumers tend to have little ability to evaluate network speeds. Most do not know how many megabits there are in a five-minute video. Instead of just listing theoretical maximum speeds, operators should differentiate their plans by describing speeds in practical and concrete terms, for example: ‘Now you can watch Game of Thrones anywhere; on our LTE network, 70 percent of videos stream with no lag.’ This strategy can help operators upsell consumers to higher-speed data packages and strengthen the brand’s association with reliable and fast data performance.”

Will Watts, Program Manager at Tarifica

The above item appeared in a recent issue of The Tarifica Alert, a weekly resource that analyzes noteworthy developments in the telecoms industry from around the world. To access all of the latest articles and issues:  http://www.tarifica.com/TarificaAlert.aspx