Wirelessnorth.ca

This is the other face of new competition in Canadian Telecom. We’ve been hearing rumblings this would happen for a while now. Rogers is leaning-down and girding for the coming price war.

These winds of change (so to speak) come blowing not only from the impending entry of new entrants (Tony Clement’s particular Windy conundrum notwithstanding) but even more so from a MUCH more competitive landscape amongst the big boys now that Bell and Telus have gotten their HSPA on.

This next bit will come as some cold consolation to those laid off today. However, a newly competitive telecom sector will, in time, bring broad benefits to nearly every other sector of the Canadian economy. In the new and evermore digital economy, innovation is driven by connectivity. A faster pace of innovation as evidenced by falling prices and much greater availability of leading edge wireless devices and services (as has been a strong trend for the last 1-2 years) is at least one encouraging sign for driving economic growth in the years ahead.

LINK: Rogers laying off 900 as part of cost cuts

Previously on WirelessNorth.ca: Where oh where your wireless bill goes (as with soylent green it’s mostly people. And profits. At least circa 1998 it was)

^{ps. As always, WirelessNorth.ca is hiring aspiring telcom pundits and snarks (or any combination of the two). The pay, not so good though.}

I just moved to Vancouver from Europe where I spent many years working in the wireless industry. When it comes to wireless, Canada seems to be quite removed from Europe in a number of ways.

What strikes me is that Canadian wireless carriers are mainly looking at each other in search of best practices. The iPhone offerings, for example, are almost identical between the three carriers, with identical handset pricing and only slight variances in the plans and contract durations. Most of the plan differences are in the small print hardly picked up by the average consumer, and the minutes and SMS included in the different plans vary only slightly. In terms of contract duration, all carriers offer a 3-year contract term and only Telus also a 0-year option. Nobody offers a 1- or 2-year option while I’m sure there is a market for it: Many frequent iPhone users will want to replace their phone much earlier than after 3 years – and I think most of the early iPhone adoptors will agree with this.

Compare with Europe. Most European carriers have the policy of “higher value customer equals higher handset subsidy”, meaning that both the duration of the contract and the level of monthly commitment determine the subsidy and thus the price of the handset at sign-up. Canadian carriers only vary the subsidy with contract duration and do not reward customers for committing to a higher monthly fee: If you sign up for a 2-year contract it doesn’t matter if you take a $50 plan or a $100 plan, you pay the same for your handset even though your “customer lifetime value” might be twice as high. The difference in the total 2-year commitment in this case is $1200, a number that dwarfs the maximum subsidy levels of around $500 that I see in the market.

The first carrier to break this cycle will be a winner: they will be able to attract the high-value customers by offering them lower handset prices, while improving profitability at the same time. Research in Europe suggests that for most consumers consumers the price of the handset is more important than the price of the monthly plan when they sign up for service. This makes it likely that consumers will even agree to a higher commitment in return for a better handset price.

An added bonus for the carrier that picks up on this idea: they will be able to advertise even lower “from” handset prices and eye a more attractive offering for all customers, since this minimum price will be based on the highest subsidy level that is only provided to the most valuable customers.

An enhanced subsidy can take consumers more effort to decide what’s the best for their situation, but in return for that they will get a handset at the price they deserve, so I think that little extra effort is a fair price to pay.

Bart Venlet is a telecom professional who spent the last 14 years working for Vodafone in various roles in Europe and Japan, and is currently looking for a job.

Got other ideas how Canadian carriers and consumers could one day kick their collective heroin habit of handset subsidies and world record contract lengths? Short of, ahem, regulation? jump in the comments. – ed

You may hear from time to time this story of the scarcity of wireless spectrum. Wireless data usage is skyrocketing, wireless broadband connections are expected to cross over the number of fixed broadband connections as early as 2010. You might have also noticed that in Canada’s recent spectrum auction, the going rate for a mere 10Mhz of spectrum coast to coast in Canada (out of the several thousands of total arguably “useful” space in the EM spectrum) was being auctioned for upwards of 500 million dollars. Billions in fact taxed out to the industry on “scarce” spectrum before even the first dollar spent on actual useful infrastructure like say towers or terminals.

You might have noticed that short of owning precious spectrum licenses, neither you yourself nor any of your entrepreneurialy minded friends, are not allowed at all to set up any kind of radio tower of your own with a range any greater than a home wifi router. Why is that again?

Ladies and gentlemen, the other side of the story:

Michael Calabresse – The myth of spectrum scarcity:

“the only thing that’s scarce is government permission to use the airwaves”

Link: The Wireless Bandwidth Crunch: Where Will We Find More Spectrum?
Link: Ecom America 2009 Video: The Myth of Spectrum Scarcity (Michael Calabrese)

After Industry Canada spent over a million dollars trying and failing to launch a cell phone comparison tool for Canada, someone has gone and done it for free. That someone is J Ben Benjamin in partnership with web shop einfiniteweb.com. While not so much yet the world’s prettiest website, it’s gets the job done. You can compare voice minutes by time of day and incoming vs outgoing, data and text and a slew of other options (tip: look for data under “advanced search” took us a while to find that).

This is commendable work. Despite some progress the carriers have made recently towards simplifying plans, overall rate structures remain highly obfuscated in Canada. Therefore tools like this one that can bring any additional transparency are of great value.

A few caveats though, there are a few things the calculator does not take into consideration. On the cost side remember that all minutes are not created equal and nor are all “evenings”. On Rogers, for example, a minute can be one second long and an evening minute may start hours later than on a seemingly identical Fido plan.

The other factor not considered here is quality or value for service. A cheap plan isn’t much good if the network coverage doesn’t reach you or if all the handsets available are ancient crap (here’s looking at you flanker brands).

Some fun games you might be able to play with this tool: Check out the price discrimination by province! Find the best plans for the rather short list of specific phones actually worth buying: BBerry, Droids, Iphone, Pre etc. (once they all come out). Sounds like fodder for future articles.

LINK: www.cellphoneratecalculator.com