Other (tbaytel, Ice Wireless, etc…) Wireless Competition versus the Big 3 – Rogers, Bell & Telus

    • Wireless Competition versus the Big 3 – Rogers, Bell & Telus
  • According to Wikipedia (click) Canada has 11 Mobile network operators (large and small), 16 Mobile networks and 29 Mobile virtual network operators (MVNO).

    Only one or two countries actually have 4 major carriers. Take for example; France has 2 major carriers (73%) and 2 medium (27%), Germany 3 with 84%, Mexico 2 with 88%, China 1 major (63%) and 2 medium (37%) Japan has 3 with 93%, India 3 with 78%, Indonesia 3 with 75%. (See below for Wikipedia links)

    I’m not saying that Canada doesn’t need more competition for better rates, what I’m showing is that almost every country in the world only has only a handful of wireless carriers. And why is that? More than likely the capital needed to build and sustain the wireless network prevents having so many major carriers.
    Consider that in the last 2 years Canadian wireless carriers have spent somewhere near $7 billion for the licenses for spectrum and that doesn’t count the cost of actually building and maintain the networks. However despite these factors, Canadian consumers still believe that they pay too much for wireless services.

    Even WIND mobility initially forecasted that it would take them at least a decade before they started to profit from their venture in Canada, despite having the ability to rent the lines of other carriers while it builds its network. Since Rogers was one of the first wireless networks in Canada and had to build its own network, it took them something like 15 years before they started to turn a profit from their investments into build a national network.

    We Canadians love to compare prices with our American neighbors, which has Verizon and AT&T controlling close to 70% of the market and Sprint and T-Mobile about 29% but they have ten times the population of Canada (US List Click). The New York metropolitan area alone has 20.1 million people, which is nearly 60% of Canada.

    There was an article in the Toronto Star (Click )about private investors looking to buy wireless towers for profit from North American carriers, it mentions that the US’s largest carrier AT&T (117.6 million customers) has about 10,000 towers and Canada’s largest carrier Rogers (9.5 million customers) has about 5,200 towers.

    Yet the research reports from investment groups like Scotiabank (click) point to the fact that Canadian price plans (up until 2013 at least) are lower than the US price plans.

    Wikipedia World Wide Mobile Network Lists:
    List of mobile network operators of the Americas
    List of mobile network operators of Europe
    List of mobile network operators of the Asia Pacific region
    List of mobile network operators of the Middle East and Africa

  • ShinraCorp
    Member

    I’d like to know how Russia’s doing in the wireless pricing field since they’re bigger than us… I wonder if they charge more than the Big 3 here 😛

  • <cite>@playforfun123 said:</cite>
    According to Wikipedia (click) Canada has 11 Mobile network operators (large and small), 16 Mobile networks and 29 Mobile virtual network operators (MVNO).</quote>

    I’ve long used this list for Canadian MVNOs: http://www.mvnodynamics.com/mvno-companies/north-american-mvno-companies/canadian-mvno-companies/ Not sure if it is any more up to date than Wikipedia or not, but I’ve found it to be reliable.

    <quote>Only one or two countries actually have 4 major carriers. Take for example; France has 2 major carriers (73%) and 2 medium (27%), Germany 3 with 84%, Mexico 2 with 88%, China 1 major (63%) and 2 medium (37%) Japan has 3 with 93%, India 3 with 78%, Indonesia 3 with 75%. (See below for Wikipedia links)</quote>

    Agree, and disagree. We effectively have only two big networks here, with Bellus running a joint HSPA/LTE network (and Rogers being the other one).

    <quote>I’m not saying that Canada doesn’t need more competition for better rates, what I’m showing is that almost every country in the world only has only a handful of wireless carriers. And why is that? More than likely the capital needed to build and sustain the wireless network prevents having so many major carriers.
    Consider that in the last 2 years Canadian wireless carriers have spent somewhere near $7 billion for the licenses for spectrum and that doesn’t count the cost of actually building and maintain the networks. However despite these factors, Canadian consumers still believe that they pay too much for wireless services.</quote>

    Network build-outs are genuinely hideously expensive, true. Canada’s got to be one of the worst countries in the world to build a network for, with a low population density and a gigantic country.

    But there has been rapid appreciation recently in costs. It’s hard not to sympathize with someone in Alberta having to pay dramatically more than their neighbours a few kilometres away in Saskatchewan. Is Alberta that much harder to cover? No, it’s that an additional player (Sasktel) has forced a level of competition that is lacking in Alberta. A level of competition that Wind hasn’t been able to provide for Albertans.

    <quote>Even WIND mobility initially forecasted that it would take them at least a decade before they started to profit from their venture in Canada, despite having the ability to rent the lines of other carriers while it builds its network. Since Rogers was one of the first wireless networks in Canada and had to build its own network, it took them something like 15 years before they started to turn a profit from their investments into build a national network.</quote>

    The reality is that no wireless-only venture has ever succeeded in Canadian history. Not ClearNET. Not Microcell (Fido). Not Public Mobile. Not Mobilicity. Yet the ones that were also terrestrial phone companies (Telus, Sasktel, MTS, TBayTell, Bell) have succeeded, as have those who’re also cable companies (Rogers, Videotron, Eastlink). Having existing customers to market to, the option to bundle with other services, and existing infrastructure to utilize, is an insurmountable advantage, honestly. I think that’s a big part of why it’s such a long-term play for Wind to maybe, possibly, some day turn a profit.

    <quote>We Canadians love to compare prices with our American neighbors, which has Verizon and AT&T controlling close to 70% of the market and Sprint and T-Mobile about 29% but they have ten times the population of Canada (US List Click). The New York metropolitan area alone has 20.1 million people, which is nearly 60% of Canada.</quote>

    I don’t expect the same pricing as the U.S., but I’d like the same options. I note with interest that you can’t get unlimited data at any price on the big 3, despite our lower population and high spectrum allotment meaning that they should be able to better avoid capacity issues. I note with interest that the big 3 refuse to offer reasonable domestic roaming rates (what Rogers was charging Wind was insane, $1000/GB according to regulatory filings).

    <quote>There was an article in the Toronto Star (Click )about private investors looking to buy wireless towers for profit from North American carriers, it mentions that the US’s largest carrier AT&T (117.6 million customers) has about 10,000 towers and Canada’s largest carrier Rogers (9.5 million customers) has about 5,200 towers.</quote>

    Wow, that’s crazy. AT&T has twice as many cell sites for ten times the customer base? That’s brutal. It’s what I might have expected, but still brutal.

    <quote>Yet the research reports from investment groups like Scotiabank (click) point to the fact that Canadian price plans (up until 2013 at least) are lower than the US price plans.</quote>

    For talk and text. Canadian carriers are not cheaper when data is added to the mix. And prices have risen since 2013 in Canada, and prices have dropped sharply in the U.S. since 2013. So that info is old enough to be essentially irrelevant, IMO. And I don’t agree that it’s all about the switch from three year contracts to two year contracts, as some providers who were already on two year contracts (Fido, for example) also raised prices.

  • @ Steven

    Thanks for the reply. At least there is someone else out there that is at least considering that there is a lot of things that going into the pricing of wireless plans. And nice find on the MVNOs.

    With respect to “I note with interest that you can’t get unlimited data at any price on the big 3, despite our lower population and high spectrum allotment meaning that they should be able to better avoid capacity issues.”

    Wireless carriers are constantly having to upgrade their networks to meet the insatiable appetite Canadians have for internet use as it is exponentially demanding more and faster. I read somewhere that Canada is the second highest data users through their wireless devices and it will increase even more as people as using their wireless devices a lot more than their traditional computers. Buying the amount of spectrum is to ensure that they can keep up with the future demands.

    Again, I agree that more competition for lower prices would be great, as I’m a consumer as well. When comparing Canada to other countries other things things that also take into account are employee costs (EI, CPP, Insurances), corporate taxation and regulation (fees and such) and the ever increasing costs of electricity. As there is a big difference with this in Canada versus the US.

    From what I understand Rogers and maybe Telus have all their call center customer service agents in Canada (heard Bell has some but a lot out of country but not sure) and the other wireless carriers don’t. And AT&T and Verizon do use out of country call center support with some in country.

    Apparently Rogers spent $1.94 billion in 2013 in salaries and benefits, about 15% of its revenue. (Link) And Bell Canada spent about $4.28 billion in labor costs or about 23% of its revenue in 2013. (Link)

    If I’m reading correctly AT&T Annual Financial 2013 Report, they paid out about $11 billion in salaries and benefits or about 8.5% of it’s revenue. So there is a difference there.

    There is no doubts that price plans have done up since 2013, what I guess should be looked at is the ARPU (Average revenue per unit) to compare Canada versus the US if the above factors don’t matter to some.

    Rogers ARPU went up 1.9% to $58.75 CDN in 2014 (less than inflation) (Link), while Bell went up to $5.3% to $60.83 CDN in 2014 (Link)

    AT&T in ARPU in Q2 2014 was $64.40 US or $78.30 CDN (I wasn’t able to find it in their Annual 2014 Report but it can’t be that far off ~ Link) Verizon can’t be measured the same way as they moved to the Average revenue per account (ARPA) so you can’t break out how much revenue per wireless unit that they have.

  • Rogers has also moved to ARPA, so you could use that for a point of comparison.

    AT&T and Verizon show stronger ARPU/ARPA because their accounts, especially on the low-end, are transitioning strongly to MVNOs. Cricket and MetroPCS are growing in leaps and bounds. MetroPCS offers unlimited talk, text, and 1GB of data for $30 USD (and that even includes fees and taxes, which largely negates the ).

    Another important difference between Canada and the U.S., overage is largely going away in the U.S. Entry-priced Canadian plans still don’t offer unlimited talk & text, whereas they typically do in the U.S. (see the above-mentioned MetroPCS plan for example). On a growing number of U.S. plans, you not only have unlimited talk and text, if you go over in data then your speed gets throttled to 2G speeds rather than being charged overage. This is a customer-positive solution, as it gives them a signal that they know they probably ought to up their plan to the next tier up, and they find out via slow speeds rather than a bigger phone bill. That’s a customer-positive solution. I understand that profit in this industry has long been focused on customers going over and paying surcharges, or staying well under and not using all the services that they’re paying for. With the recent price increases, perhaps that extra profit has been built into the plans themselves and it’s now time to start using throttling to do away with overage and underage. Of course, carriers would have to move to unlimited talk & SMS across the board first, as is now de rigeur in the U.S.

    On a personal level I’m unlikely to be willing to pay more to get unlimited data. Heck, most months I struggle I’m not even suggesting unlimited data should be as cheap as in the U.S. But not even offer it for $300/month? Rogers’ Share Everything plans (which I’ve been looking at lately) stop at 30GB for $230 (BYOD), for example. There’s *no* level where you’d offer unlimited? Not even $400/month? Not even $500? It seems crazy to not have an unlimited level, it’s just a matter of charging what it’s worth it seems to me.

    I get that Canada has different economies of scale and different challenges than other countries. That still doesn’t explain the dramatic change between 2013 and now, if you ask me.

  • @ Steven Hurdle

    Again thanks for the reply, thoughts and discussions.
    I agree with you in that when it comes to entry level price plans they should all be unlimited calling and SMS.
    And I would even agree that for their data plans, all carriers should have a better price plan rates; especially when you BYOD.

    I’m sure you remember the promotional $60 price plans for MY10, 200 Weekday and 6GB on the 3 year terms that all the carriers had? Generally speaking the carrier would subsidize about $500-$550 over a 36 months period for hardware costs or $13.89-$15.28 a month our of the $60. Of course you had to add a ‘value’ plan of about $14 (used to be $11) a month to cover voice mail, caller ID and SMS.

    For me it would have easily covered my talk time, as I’m not a talker but a texter but most Canadians however use nearly 350 minutes a month. That’s when the MY10 would normally kick in for my spouse. That would put both phones in at a cost of ($60+$14) * two = $148 a month, which if you took out hardware costs at $15.28/mth would make the revenue they are collecting on the plans $117.44.

    Current in-market two-year terms for sharing 10GB for the main line at $145 and the 2nd at $60 for the same hardware subsidization as the three-year terms for spread over two years. That works out to about $20.83-$22.92 for a $500-$550 ‘hardware tab’. Take the price plans total of $205 – $45.84 = $159.16 of revenue they are now collecting on the plans for less data but more voice. And voice is cheaper.

    Clearly you are right. Wireless companies now cost more than they did in previous years.

  • @PlayForFun, your link suggested that at that time AT&T had 10K “towers”. Are they actually just talking about towers specifically, not cell sites generally? That distinction is sometimes made because towers are usually more expensive than a cell site on an existing structure. I’m pretty sure AT&T had *way* more than just 10K cell sites at that time.

  • Ryakani
    Member

    Even watching as an MTS customer, MTS phone plans have had unlimited CAD calling and data, but recently they have changed their plans to be more expensive, for less stuff. No longer can you can unlimited CAD data, unless you are a business customer.

    Smaller companys with good plans have begun to become a more expensive plan for less stuff. This is very frustrating a consumer because you are getting less bang for your buck. AHHHCK!

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