Canadian Wireless Costs, Redux

10 Jul ’07

A few months after Tom set the house on fire with his post on Canadian wireless data rates (and got flooded with comments and traffic), Research in Motion, Google, and well regarded telecom analyst (and brother of my undergrad roommate, but that’s another blog post) Lawrence Surtees took shots at carriers for, variously, high data rates and a lack of competition.

The backdrop for the discussion is the 2008 auction for new wireless spectrum, recently summed up by Michael. Gist: new entrants think that to spur competition there ought to be spectrum set aside for them. Incumbents, protecting their turf, think everything is peachy-keen, and respond to the set aside with a “what’s next, Kommissar?”, even though they had similar advantages when they were getting off the ground.

This is, of course, nothing new – we last visited with the fiction that Canadian wireless is competitive when the Industry responded to the CRTC’s initial insistence (foiled again!) of early wireless number portability with talking points around the idea that everything is, well, peachy-keen.

Michael now looks at the numbers again in the context of AT&T’s iPhone plans. Gist:

In other words, a plan from Rogers (Rogers plan in C$, AT&T in US$ but currencies now nearly at par) that offers less than AT&T – the Canadian version does not have unlimited data, does not offer rolled over minutes, and has only 10 percent of the night and weekend minutes – currently runs $295 per month (there is a Blackberry data plan that offers 200 MB for $100 with a three year contract but each additional MB costs $5). The barrier to the iPhone in Canada is not Apple. Rather, it is the lack of wireless competition that, as now RIM and Google both note, leads to pricing that places Canadians at a significant disadvantage compared with other developed countries. Is it any wonder there is a petition calling on Rogers to introduce a more competitive iPhone data plan?

I was very surprised at RIM’s public position on data rate costs, mainly because I’ve always thought that Blackberry plans were particularly expensive, and assumed this was a core part of RIM’s pricing strategy. Assuming that’s true, it’s perhaps even more remarkable that RIM is going public: lack of competition among carriers is inflicting such a toll on market penetration that even the high cost provider is complaining. In any event, with RIM reaching out to a broader consumer market with its new devices, Apple doing the same thing with the iPhone and new spectrum appearing on the horizon, we finally seem to be at a time when forces are aligning for a shakeup in Canadian wireless. It’s about time.

Previous post:

Next post: