June 17 2008 by Ellen Roseman
We all know cellphones are costly in Canada, especially when used for long-distance calling or data transmission. Recently, I talked about the high prices we pay for wireless on CBC radio (the Business Network and the Sunday Edition).
Many people agreed with me. But Julie Smithers, a spokeswoman for Telus Mobility, had a more positive spin on the story. Here’s her response.
It is true that Canadians have embraced wireless – in fact, we LOVE to talk, and are at the head of the pack for minutes of use. What’s more, when you look at those who could actually use the services (i.e. not children, very old individuals and people living in extremely remote areas), the real penetration rate is well above 80 per cent.
In countries that appear to have higher penetration rates (for instance, Italy and most European countries), these figures are badly distorted due to the common practice of carrying multiple SIM cards to avoid hefty roaming fees. In Canada, users do not pay roaming fees when travelling within the country.
In Canada, competition for wireless subscribers is fierce, with more than two dozen carriers duking it out day-by-day to bring consumers the newest phones, best rates and fastest network technology available in the world. TELUS alone invests close to half a billion in the average year into our wireless business to make sure it is industry leading.
This year’s figure will be much higher, as we are currently in the bidding for advanced wireless spectrum to ensure that Canadians continue to get all the cool wireless services they want. Despite the obvious challenges of massive geography and low population density, Canadians were amongst the first in the world to benefit from a nationwide 3G network.
Some of the 3G applications that Canadians have been enjoying for years now include cellphone based GPS navigation, streaming XM radio and live TV broadcasts, to name a few. For convenience, these value added features can be charged directly to your cellphone bill, but are totally optional and independent of the voice and text use of a cellphone.
In the Merrill Lynch Q1 ’08 report on the Global wireless industry, you will see that Canadians are actually getting a great deal for their wireless service – just look at Revenue Per Minute, one of the best indicators of actual price. It shows Canadians are actually paying LESS than the average price in developed countries and most emerging markets. And our prices on the decline. In fact, since 2001, wireless prices have plummeted 45 per cent!
Smithers sent me a copy of the 190-page Merrill Lynch report. I found an interesting nugget inside, showing that Canadian wireless carriers have a high Average Revenue Per User of $61 (Canadian). Only Ireland is ahead of us at $63 (U.S.).
The ARPU leaders include Norway ($59 U.S.), Switzerland ($55 U.S.), Japan ($52 U.S.), the United States ($52 U.S.) and France ($49 U.S.). Hong Kong is the developed country market with the lowest ARPU ($22 U.S.).
The SeaBoard Group, a telecommunications consulting firm, published a terrific report last year, Lament for a Wireless Nation, A Cross-National Survey of Wireless Service Prices: Canada, the United States and Europe. You can find a summary online. It argues that Canada’s high cellphone prices have inhibited demand for wireless services.
The current auction of wireless spectrum will open the market to new players. But any new national carrier — Globalive seems the likely winner — will have to grab significant market share from the expensive, feature-packed offerings that Bell, Telus and Rogers provide.
Let’s hope that competition will result in lower wireless rates or even, dare I say, a price war. Meanwhile, we all wait breathlessly to hear if Rogers will drop its wireless data prices when it introduces the Apple iPhone on July 11.