A Blackberry smartphone on the Rogers wireless network is seen in Montreal, October 26, 2010. BCE?s Bell Canada, Rogers Communications and Telus Corp -- Canada?s ?Big Three? telecoms -- command profit margins that are the envy of the industry.SHAUN BEST/Reuters
Unlimited wireless data plans are almost unknown in Canada, and that's a strategy telecom carriers elsewhere are starting to emulate as they look for ways to cope with booming demand and capacity limits.
BCE's Bell Canada, Rogers Communications and Telus Corp - Canada's "Big Three" telecoms - command profit margins that are the envy of the industry. They have an historical advantage over their peers because Canadians accept that they have to pay for as much capacity as they use.
"Conceptually, the idea that mobile data should always be capped or usage-based has been a mainstay in Canada for a long time," says Glen Campbell, lead analyst at Bank of America Merrill Lynch's global wireless report. "The United States has moved in this direction but it's not all the way there yet."
AT&T , flustered by the strain that its exclusive carriage of Apple's iPhone has put on its U.S. network, is weaning users off unlimited data plans. Verizon Wireless , the U.S. market leader, is also planning to offer tiered pricing.
New entrants that gained access to the Canadian market through a 2008 government sale of spectrum have helped lower voice rates, and offer variations on unlimited data. But their limited geographic scope and immature networks make an imminent price war on data unlikely, analysts say.
"The pressure for incumbents to lower data pricing is not as immediate," said Phillip Huang, a telecom analyst at UBS in Toronto. "It'll be a more gradual process compared to voice."
Canadians will likely pay an average of $56.46 (U.S.) a month for wireless service in 2010, more than in any other developed market, according to a Bank of America Merrill Lynch study. The investment bank expects customer service costs to remain world-beating in 2012 despite a $2 average reduction.
"The idea that you'll be paying $1 a gigabyte in 2015 - that can't happen," said Duncan Stewart, Deloitte Canada's director of research for technology, media and telecom.
One gigabyte equals about four hours of streaming video or 16 hours of audio, and in Canada that costs about $40.
COMPLAINTS, CONTENT
The Big Three have long heard complaints about excessive rates, restrictive zoning and add-on fees. They disagree, of course, and point to savings to be had by signing up for bundles of their services, including fixed-line voice and Internet, cable or Internet-based television, and wireless.
"The current value proposition in Canada is probably lower than it should be and represents an incredible value for consumers," said Wade Oosterman, who heads Bell's mobile unit.
Increasingly, that bundled offering also includes the provision of content, as telecom companies buy media properties and cable companies launch wireless services.
Bell is seeking regulatory approval to buy CTV, Canada's biggest private broadcaster, and is already offering CTV's specialty business channel to its wireless customers.
Bell has launched three TV-for-mobile packages at $5 for 10 hours of viewing, another added charge, but one that analysts say is sharply lower than what it charges on average for data. It is more likely to be the exception than the rule.
"The expectation that in 2015 Canadian and U.S pricing is going to look much more like each other is almost certainly accurate," Deloitte's Stewart said. "The sad bit is that their prices are probably going to move toward ours rather than ours move toward theirs."