What is ‘Affordability’?

Written by Gina Roberts

Affordability is perceived of differently depending on who you are – and more importantly, where you are. Not where in space, but where on the economic ladder.  It’s not easily defined, but PIAC has made the effort to identify what ‘affordability’ can mean to Canadians.

In a recently released report by PIAC, “No Consumer Left Behind: A Canadian Affordability Framework for Communications Services in a Digital Age”, it is shown that Canada lacks a clear definition of ‘affordability’ when it comes to communications services. PIAC’s report looks into what ‘affordability’ means to low-income Canadians and produced some possible answers for a definition of affordability, in the hopes of eventually achieving affordable communications for all.

Communications services are crucially important in the digital age; they keep people connected – to government services, health care, education and to the digital economy – as we bank, shop and sell products and services.  Communications provide access to information that often exists only online, providing it often instantly and on demand at low cost and keeps people informed about their local area as well as Canadian society and our place in the world.

Some low-income families have difficulty affording these services. Some Canadians are now spending up to 8% of household budgets on communications services.   That can be upwards of $200 a month.

Managing to pay for a services does not necessarily mean that they are affordable to a household.  Communications services are highly valued by Canadians – to the point where they will sacrifice other necessities to retain phone, internet and TV service.  In economics, this is called “inelastic demand”.  People will try to pay what it takes to retain service.  PIAC’s report argues that the subjective aspect of affordability – not just managing to pay for the service but not having to sacrifice other essentials to do so – is a better measure of affordability of service.

However, PIAC’s research also indicated that a large part of the subjective aspect of affordability was the individual’s sense of control of the expenditure.  We also noted that the form of service best suited to one’s individual situation was nearly as important as control of the expense.  Therefore, freedom of choice was identified as an important part of ‘affordability’ – one often overlooked by lawmakers, regulators and policymakers.

Both these parts of affordability (choice, control) first assume that there is access to communications services. Access means there are service options available in the customer’s area and at that they are of sufficient quality to “do the job”. Access has always been an important part of many services, and communications has proven no different. But accessibility is not ‘affordability’.  It’s a precondition.

Fortunately, the CRTC, Canada’s communications regulator, has taken note of the need for accessible and affordable communications in Canada.  The CRTC recently announced a consultation which will examine which telecommunications services Canadians require to participate meaningfully in the digital economy and the Commission’s role in ensuring the availability of affordable basic telecommunications services to all Canadians.

If you would like to comment on the need for accessible and affordable communications in Canada, please take the time to Submit an intervention or view related documents to the CRTC.  You have two opportunities, one by 14 July 2015 and one again at a future date the CRTC will announce in the fall of 2015.

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