Canada Competes

Wireless service a bad connection for business

OTTAWA — The Globe and Mail

Oscar A. Jofre Jr., president and ceo of Boardsuite, handles a lot of his work at Starbucks (this location is Queens Quay West near York St. in Toronto) coffee shops where they have free WiFi. Canada, United States or internationally, he can find a location using the Starbucks app on his mobile device. The free WiFi is in contrast to the heavy fees he may have to pay with his Canadian telecom account. (Fred Lum/The Globe and Mail)

When Oscar Jofre plans a business trip to the United States, he wants to know three things: “I want to know where I’m going, where I’m staying, and where the Starbucks are,” he says.

The chief executive officer of Toronto startup BoardSuite Corp., an online portal for corporate directors, isn’t addicted to the coffee, but the free WiFi offered at every Starbucks. For a cost-conscious entrepreneur, it’s an oasis where he can make calls, check e-mail and download documents for free – and not have to pay the exorbitant costs charged by his Canadian carrier, Rogers Communications Inc. “I try to book appointments in coffee shops. I host meetings in Starbucks,” he said. Two months ago, while he wore his headphones in a Manhattan Starbucks for a voice-over-Internet call, he noticed four others in the café doing the same thing. They were all Canadians.

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Less than three years after a host of new wireless players entered the Canadian marketplace, incumbents Bell, Rogers and Telus say competition is thriving and everyone is well served. It’s true that service, choice and prices have improved. But ask any Canadian business traveller just how competitive the domestic wireless providers are, and the answers are almost always the same: Rates are too high, roaming charges are obscene and the carriers don’t seem to have a plan that suits their needs.

“You find yourself in this mindset where you’re monitoring your usage in a different way,” said Elliot Fishman, chief executive officer of Catapult, a Vancouver-based information technology professional services firm.

Some rush to buy a new phone or SIM card as soon as they touch down in Asia because it’s cheaper than using their home carrier. They’re loath to use the phone or download documents on the fly. With every call comes a choice: Do you interrupt the flow of a productive conversation and run to a land line? Or do you bite the bullet, let the discussion unfold, and break the bank? Everyone has heard horror stories about the time they racked up $700 on roaming or overage fees during a business trip.

“It takes away from your freedom to do business the way you want to,” said Craig Rowe, president and chief executive officer of ClearRisk Inc., a St. John’s-based insurance software provider. “It comes at a cost of productivity, and that’s not ideal.”

Business travellers can pay a small fortune to buy add-on roaming plans, but the minimum is for one month – a waste if the trip is only a week long. To them it’s one more reminder that as long as Canada remains the last OECD country to maintain foreign ownership restrictions in the telecommunications sector, they’ll have to put up with inferior service. They envy U.S. counterparts who seem to breeze through Canada and use their mobile devices at will because they have better North America-wide plans and smaller roaming fees.

For many business travellers, it’s a throwback to the 2000s, when consolidation left Canada with three big players. According to telecom consultancy Seaboard Group, average revenue per user in Canada rose 25 per cent from 2001 to 2008 while it dropped 7 per cent in the United States. Prices moved in lockstep. The cost for data in June, 2007, topped $2,000 per gigabyte of data at Bell and Telus, before falling to just $100 a few months later. Consequently, while Americans almost tripled their use of mobile phones over the period, the average Canadian’s usage rose at barely one-third of that level. No wonder Canada remains today the OECD country with the fewest number of wireless users per capita.

And the Canadian industry is not as robust as it may seem. Some of the newcomers are struggling. While Ottawa has opened the door for foreign interests to take over smaller wireless providers with less than 10 per cent market share, many fear that won’t be enough to fend off another wave of consolidation. Canadian customers still put up with 36-month contracts when the norm elsewhere is 24, and the fact they can’t unlock their phones and switch carriers easily, as U.S. customers can do after 90 days.

“We’ve studied foreign ownership and restrictions for too long,” Seaboard analyst Amit Kaminer said. “What are we afraid of? The rest of the world has moved on; Canada didn’t.”

Some Canadians are moving on. Vancouver startup Roam Mobility and Wind Mobile now offer roaming packages for travel abroad that are both cheaper and better tailored to the needs of business travellers. Roam CEO Emir Abulhosn said his company, has over 10,000 customers after just five months and is adding 200 a day. “There really is no valid reason to be paying excessive roaming fees,” he said. “If you could make Canadian carriers fight harder to keep their business, you’d find an overall reduction in cost and customer service would increase.”

Pricing out a wireless plan for the ambitious entrepreneur

It’s difficult to make an apples-to-apples comparison between wireless plans in the U.S. and Canada, but The Globe and Mail simulated an account of a busy entrepreneur who travels a lot between Canada and the U.S. and relies on a mobile phone as a heavily used business tool. Posing as an entrepreneur looking for a single-line plan, we went shopping for plans that gave a single user 1,350 minutes of calling, 1 gigabyte GB of data and unlimited texting in either Canada or the U.S. per month. Roaming charges, where applicable, were calculated based on an assumption of 350 minutes of calling in the U.S. per month.

Excluding taxes, surcharges and handset costs, here’s how four carriers measure up:

  • Rogers – North American One Rate (Canada): $367.35
  • Bell – Small Business Promotional Plan (Canada):$235
  • Verizon – Nationwide Plus Canada (U.S) $154.99
  • AT&T – Individual Plus Canada (U.S.) $149.99

The conclusion? It would appear to be a lot cheaper for such a person to get a U.S. address and join one of the mobile service providers south of the border.

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