Every Monday, the Telus Corp. “marketing intelligence” team gathers with executives to review the latest news in the cellphone industry.
They look at new promotions and rate plan adjustments by their rivals, and will change Telus offerings wherever they feel they're losing the competitive edge.
“There were probably 30 price reductions on Monday in terms of rate plans, promotions and handset pricing,” said John Watson, Telus's president of consumer solutions. “That keeps us hopping.”
“The norm is that when you have strong, capable competitors, when they drop their prices, we tend to match pretty quickly,” Mr. Watson added.
To the fast-growing wireless industry, the Monday meetings at Telus are a clear sign of cutthroat competition and corporate nimbleness.
But to a large number of critics and consumers, the industry is more comfortable than cutthroat. Similar rate plans, relatively high prices for high-volume users and no independent competitors to rock the boat are just a few of the reasons why Canada lags much of the industrial world in wireless development.
Just over half the Canadian population had cellphone service in 2005 — the U.S. and Europe hit that level years earlier. The Canadian sector, however, is among the most profitable anywhere. On the key benchmark of average revenue per minute, Canadian carriers make 11 cents (U.S.), according to Merrill Lynch. In the U.S., it's 6 cents.
“The American pricing is extremely aggressive,” said Peter Barnes, president of the Canadian Wireless Telecommunications Association (CWTA). “I can't deny that. Particularly, in the last couple of years. They have their own market, they react to their own market.... It's a lot less expensive market to serve in.”
For investors, there's been little to quibble with. Bell Canada, Rogers Communications Inc. and Telus relied on wireless to juice earnings in the most recent quarter, helped by “disciplined” pricing strategies.
Rate plans can be strikingly similar, with prices often less than $1 apart from one monthly plan to another. When one carrier changes the definition of “evening” so that it starts at 9 p.m. instead of 6 p.m., others follow.
But as wireless becomes a dominant feature in Canadian life, many are looking to other countries and wondering if Canadian consumers are paying too much for too little.
The lack of reduced pricing for the “big bucket” plans of 1,000 minutes or more has been viewed skeptically by those who believe the big phone carriers don't want to cannibalize their land-line businesses.
Most notably, the U.S. market features more than 180 carriers. Canada has about 20, including six national brands controlled by three network operators.
“They go after each other with long, sharp knives,” analyst Roger Entner says of the U.S. market. “Consumers in Canada are worse off than consumers in the U.S. because the Canadian carriers don't have the same intensive desire to win,” adds the vice-president of wireless telecoms at research firm Ovum.
The U.S. is described by many as the most cutthroat wireless market in the world. Carriers keep adding more minutes for each plan, and don't charge extra for long-distance calls in the U.S.
Does pricing in Canada have to be so different from that in the U.S.? The carriers say yes.
They must build their networks across a similarly sized territory, but with only a 10th of the population to serve. And they insist there's better service quality in Canada, including fewer dropped calls. They also point out that revenue per minute has dropped 43 per cent since 2001, and rates are lower than in other countries such as Japan, France and Germany.
There have been other changes, too, such as plans that let family members share minutes, and unlimited calls on evenings and weekends.
Maybe Canadian prices should be even higher, ventures Wade Oosterman, president of Bell Mobility. “The fact we have some of the lowest rates in the world speaks to the incredible competitive nature of our industry here.
