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As of 2010, Canadians pay the highest mobile bills in the entire world. Released earlier this summer, WirelessNorth.ca got our hands on the latest global telecom report from BofA Merril Lynch. The report itself (with data from Q1 2010) is a blockbuster, wealth of information on wireless carriers around the world and we’d encourage you, and especially the good folks at Industry Canada to take a look.

Surveying more that 50 developed and developing countries where information is available, one country comes out on top when it comes to the most revenue extracted per subscriber on a monthly basis. And that country is of course Canada. What you are looking at here are the world rankings of mobile ARPU (Average Revenue per User). To you and me ARPU is your monthly bill, before GST/PST/HST etc. (through taxes and high spectrum license fees, our government is culprit here too)

This data is total bill including both voice and data. Canada does not have the highest proportion of data to voice charges though data usage in Canada is growing fast (we’re finally catching up after a late roll-out of 3G compared to many countries). Interestingly, Canadians are estimate to pay slightly less per minute of voice (10 cents vs 11 cents) on average than our nearest neightbour the U.S.. What is really driving bills in Canada over the top are the egregious fees like system access fees (the fees many plans still pay whether you access the system or not in a month), and especially “value pack” fees like 15$ a month for the luxury of call display and handful of voice mails.

Now don’t get us wrong. We at WirelessNorth.ca are ardent technophiles and capitalists. We’d love to see every Canadian tech company besting the world at making money and being successful. But telecom itself is a special case. There are enormous positive economic externalities to every other sector of the economy that come from having ubiquitous, high quality and affordable access to telecommunication services.

Wireless subscriptions are nothing less than the basic infrastructure, the plumbing, roads and bridges that drive the digital economy. And this is exactly where high, unaffordable-to-many wireless services will hurt Canadians and hurt the rest of Canada’s innovation economy:

While we’ve seen a ton of improvement in wireless services over the last few years, we still suck at penetration. High costs of both basic and advanced services are keeping many Canadians un-connected. Taking one more look at the data, we can scale our USD ARPU data by relative USD GDP per capita to get a better perspective on shape of the demand curve for mobile services:

What you see above is that as average affordability improves, penetration increases significantly. Countries with perhaps poorer land-line telecom tend to cluster above the curve (less alternatives to wireless) and developed countries below. It’s interesting to see the U.S. with just slightly better affordability and significantly higher penetration.

One final comment is that there are many countries with similar or worse relative affordability than Canada that have better adoption. These gaps could indicate that other factors like digital literacy are also a factor.

So what have Canadian Carriers been doing with all this excess revenue? One thing is reinvesting it in marketing (not so helpful) by launching a barrage of new national flwanker brands. Another is reinvesting in networks (more helpful). Canada now boast several of the fastest 3G+ networks in the world (faster than even the so-called 4G networks in the U.S.).

What hasn’t changed are Canadian Carrier’s world-leading 3 year contract lengths. But, of late we are seeing evidence of price wars for new client acquisition with more and more aggressive discounts on high-end phone subsidies (very helpful, death to crappy feature phones – so long as you do the math and the teaser pricing followed by 3 years of contract pricing don’t bankrupt you faster than a US homeowner).

This fall, the new entrant carriers are finally hitting full stream, so consumers could benefit if we see an accelerated price war. But even those new entrants have some very expensive spectrum bills to pay off (that’s another whole story).

In the meantime, don’t let the trade associations, or any other industry-fed wags fool you.

It’s 2010 and Canadians pay the highest (%#%@!) cell phone bills in the world.

If you look at it one way, no matter how you get your next smartphone, the the monthly charges are going to cost you approximately the same for the next three years. At a typical $90/month that’s $3000 over three years. You have two choices, you can pay $3000 over three years at the big carriers (maybe somewhat less at Wind or Mobilicity) AND pay for an expensive unlocked phone ($779 for that lovely 32GB iPhone4, and something equally speedy for the next top-end BBerry or Android), or you can save $500 and lock in to a 3 year contract.

The sad fact is that there are no special deals for anyone who opts out of the 3-yr contract and phone subsidy game. If you take service from the big three, you are paying for everyone else’s hefty handset subsidies whether you sign a contract or not.

The contract doesn’t lock you in to using the same phone for 3 years. At least it doesn’t cost you any more to upgrade more often than every three years, and locked phones have nearly the same resale value as unlocked.

It is fun and handy to have a SIM-swappable unlocked phone. But is that worth forgoing $500 in free hardware every three years? For some people, especially frequent travelers, an unlocked phone can be a lifesaver in roaming fees. But then you could get that contract phone anyway and root/jailbreak or trade it in on eBay.

Canada may be renown as the world leader in contract length, but that shouldn’t stop you from taking back what meager compensation you can each time that clock finally does come up. Right?…

Discuss.

Koodo, the garish-colored discount flogger of Telus’ cheap hand-me-down “feature” phones, just got even cheaper. According to MobileSyrup Koodo cut prices on all their entire lineup from $25 to $50. We may not like the ads, but around here, we do give Koodo credit for the lowest entry-prices for cellular services and their reasonably innovative “tab”. The tab works a bit like Fido dollars in reverse, get the phone in your hand now, and rent to own it through your plan.

But sadly, great phones these are not. The price cut could be sign of competition heating up in the low end (thanks Wind) or it could be a sign of something better. Last decade’s crap talk-and-text-CDMA have got to go. Koodo has yet to launch any HSPA devices, let’s hope this cut is them taking out the trash in preparation for launching something better.

The mobile industry needs right now more creative financing options for making smart(er) phones financially accessible to a greater number of Canadians.

The Canadian wireless industry has come a long way in just 3 years. From the world’s crap hand-me-down phones, years behind the curve on 3G, and worse pricing on data than some 3rd world countries to…

• From zero to not one, not two but 4 (and soon to be more) national 3.5G HSPA GSM-standard networks in Canada
• New price plans from Wind, DAVE and Public shaking up the landscape.
• Fiercer competition between the major carriers now that they are all on the same network technology with all the same devices
• FAST 3G networks at 21MBs (and 4 of em!) that’s faster than any 3g network in the US
• Suddenly great deals on rocket sticks everywhere. And tethering that works and portable hotspots and other fun things.
• ATT&T is not in Canada, count your lucky stars
• Unlike on ATT&T, a 30% rate of call dropping New York or 100% anytime at SXSW in Austin, is not considered normal
• Not one but 3 choices of carrier for the iPhone, and more choices for the latest Androids and Blackberries
• Number portability, at last it was mandated and it gives consumers more power to switch
• Wireless penetration rates rising rapidly, and the appetite for smartphones by consumers that is taking even the carriers by surprise
• SIM cards on every network. (the market for unlocked phones is coming to Canada). Just wait for the Google phone store to get to Canada, unraveling the relationship between carriers and devices, sometime this year we can hope. And if we ever get Google voice, be ready for the perfect storm of telco disruption.
• And skype is starting to work well on mobiles, just to turn the screws on the legacy telcos a little more

If I were a carrier, I’d be a little stressed out by this heightened level of competition in the sleepy old wireless north (aka Canada). For anyone else working with mobile, it’s a great time to be Canadian. Call it pent up demand, leap-frogging, or sweet redemption for years spent at the back of the pack, but suddenly Canada is looking good at wireless. Expect big things this decade.

Agree, disagree or flame away.

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

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

Telus has announced it’s iPhone launch for November 5th of this year, at the same time they are announcing their half of the new 21MB HSPA+ (same speed as Rogers) network they’ve been rolling out with Bell. Telus is calling it “Canada’s largest 3G+ network“. We have no idea what that is supposed to mean.

What we do know, is that things are looking up in Canada Wireless-wise. Compared, for instance, with our poor American neighbours to the south we now have not one but three (and soon to be more) offering the latest 3G standards all of whom offer, generally, far better reliability than the US’s largest GSM carrier AT&T.

On top of which we now have three carriers offering the iPhone 3GS as well as, we trust, some very nice next-generation androids and blackberries (9700′s) any day now.

It’s going to be a very good Christmas to look for smartphones and broadband sticks in your stockings.

From the WirelessNorth submission engine, Andreas writes:

Subject: Incoming Calls are paid(??!!!)

I just arrived in Vancouver from Europe only to find out that in this part of the world you have to actually pay for your incoming calls! And on top of that you get to pay over $30 for a mere 100 min. I thought it was a joke but it turned out it is true.

It is important because people should know that is not the way it is done in developed countries since 1997.

Not only that Andreas but some carriers will charge you long distance fees on top of that even for incoming calls.

Why is this? Well our understanding (but internet please correct us we’ve got this wrong) is that the difference in europe is that carriers pay to each other (and earn) termination fees for incoming calls landing on each other’s network whearas in North America this doesn’t happen (due to the legacy of free local calling on POTS. So in europe the carriers have incentive to encourage incoming calls while in North America it would just be lost revenue opportunity to give away incoming. That being said, a lot of the carriers do offer some kind of free calling plans to numbers on the same network, or some clever folks out there hang on to legacy plans that do offer unlimited incoming.

Hint: free incoming, if you can get it, is a great thing to combine with a service like Jajah that acts as a clever middleman to turn all your calls into a local incoming callback.

We’re at a very interesting time for the wireless industry in Canada. We’re on the eve of new entrants into the industry but already the landscape looks a lot different and already a lot more competitive than just a few years ago. Here’s a snapshot, form our perspective [your perspective may vary] of the state of wireless in Canada. Stay tuned for where we go from here….

Originally presented at FITC Mobile 2009 in Toronto.

A recent trip to Italy really drove home the point of how useless our fancy mobile phone are the minute we step across a border. At the going rates from our carriers of $2/min, $1/sms, $12-$30/MB + GST/PST etc. you really have to want to use that phone to make it worthwhile. Or your company is paying the charges which in turn works out to a hell of a productivity tax on Canadian companies trying to do business globally.

But just think of mobile apps for a minute. LBA or location based apps have been hyped as some kind of a big deal. The problem is, and a lot of people seem to miss this point, if you are anywhere near home you probably already have a fairly good idea of things around you. At least the interesting things. And you know how to read the signs and how to find your way around.

It’s when you are out of your home range however that mobile location-based-apps can be enormously valuable. Google maps are a lifesaver when trying to find directions abroad. On top of maps there’s a wealth of apps that can help you find good restaurants, interesting sights, hotel deals etc. In an ancient city like Rome, the place is absolutely soaking in history and it absolutely cries out for augmented reality applications to let you visualize or at least understand more about the history and architecture of almost anyplace you might be standing.

As it stands now, this market, for Canadians doesn’t exist. At current roaming rates it’s quite literally cheaper to buy your phone a seat on AirCanada and fly it return back to Canada than it is to share or stream a mere 25MB of data to your friends (say 10 digital pictures or a couple minutes of streaming qik video). And buying a local SIM is little help when the vast majority of phones are sold locked (or CDMA for that matter).

For services this valuable it makes sense to charge a little for it. We pay $30 for a month of data in Canada, it wouldn’t be unreasonable to charge another $30/week for the convenience of data on the road. In reality though, actual roaming rates are a thousand times higher than this.

It’s time for this to change.

addendum: How do we fix it? Well at best Canadian carrier policies or anything Canadian regulators could do covers only half the problem. It may take cross-border co-operation or regulation (as in the EU), or perhaps competition from other technologies (global standards on open spectrum anyone?).