||Lessons For Canada: Wireless Pricing-
A Cross-National Survey: U.S. Canada, and Europe [SPECIAL DOUBLE ISSUE]
July 2005 - IGB
Grant 514-849-3508 Brian Sharwood 416-413-9381 & Alicia Wanless 416-413-1636
Canadian wireless penetration is among the lowest in the industrialized
world. Canada places 3rd last amongst the top 30 OECD countries. This
paper sets out to assess whether Canadian wireless and wireline pricing
is a factor. The research encompassed
three separate customer profiles, as well as prepaid and wireline services
in four cities in
Canada, three in the U.S. and three in Europe. We look at three or four
offerings in each market.
- The average wireless customer in Canada pays
60% more than if they had used a U.S. plan. The average
Canadian wireless customer also pays a 19% premium when compared
with customers of European carriers when
profiles are priced and adjusted for purchasing power parity.
- While Canada offers plans at parity rates for prepaid and low-end
user profiles, Canada is significantly more expensive than the U.S.
that cover more than just ‘glove compartment usage’.
- For phone-a-holics there is no doubt – move to the U.S.
U.S. carriers offer plans at significant discounts to plans crafted
to meet identical profiles in either Canada or Europe. We note that U.S.
company shareholders may well be leaving
money on the table, but, still … Canadians pay a significant
premium for the sound of Canadian wireless dialtone.
- For low-usage customers,
London and Berlin carriers offered services for less then even
the incumbent phone companies prices for wired service.
Wireless for less – who
- Low-cost access to wireless services has driven adoption in the
past. But the cost of the
alternative access, the wireline phone, is changing too. Wireline
prices in both Europe and the
U.S. have come down dramatically over the last three years. We believe
the high wireline prices
had been a driver for wireless penetration growth. The recent drops
in wireline prices may
provoke movement back to wireline services and this trend to wireline
alternatives will be
exacerbated by introduction of VoIP services which will make the
wireline price advantages ever
more compelling – especially in Canada and Europe due to expensive
mobile LD plans.
- Within the prepaid market, Virgin Mobile Canada seems to be
an anomaly among the Virgin
mobile companies. Virgin’s Canadian prices are in the mid-range
of market offerings, while in both LA and London, Virgin is a price
leader –well below market
- Rogers, with its Fido brand, has the most compelling Canadian
strategy of having both the
least expensive prepaid product in the market, while the primary
Rogers brand, with its
broader access reach, remains a higher price, higher value product.
and U.S. carriers all include “features” within
plans. A move we counsel to Canadian
carriers. Including customer-friendly and customer-empowering features,
such as voice mail, call
waiting and 3-way calling, makes the mobile phone more useful.
It generates more revenue
through increased usage. Virgin Mobile Canada deserves credit as
the only Canadian carrier
surveyed to adopt the strategy.
- Canadian carriers need to encourage their customers to use their
phones – not
for use – and look to the U.S.; provide Canadians with less complex
maximum pricing, add-in the features and guess what? – usage
will go up, our reliance on the
mobile phones will increase, and migration from landline will take
- Worry less about the financial analysts. They really are a small
market. They will be convinced by
results – they can be trained to overcome their ARPU fixations.
Grow your customer base. We
have another 55% or more market penetration to achieve. The money
- Long Distance in the wired world is creeping closer to
free. Get with the programme. As the
mobile phone becomes the key personal accessory reinforce the pattern.
Stop penalizing users
with long distance charges. Embrace the trend to free – include ‘long
distance’ minutes in the
general minute bucket. If your network architecture costs you too
much, replace it with an IP
fabric – but take the marketing high road.
- For Rogers this is
particularly compelling as long distance minutes moved to wireless
pocket of their biggest competitors, Bell and Telus.