Freedom Mobile’s network still lags behind Canada’s three largest national carriers in speed, reliability, coverage and subscriber numbers, but the company is poised to become a bigger threat.Mark Blinch/The Globe and Mail
Freedom Mobile says it will offer the newest iPhones to customers for no money down with certain service plans, going against a trend among Canadian carriers to subsidize some but not all of the up-front costs of the most advanced – and expensive – smartphones.
Shaw Communications Inc.'s wireless division – which operates in British Columbia, Alberta and Ontario and was previously known as Wind Mobile – only recently reached an agreement with Apple Inc. to sell its iconic device directly to Freedom Mobile customers.
The company announced the agreement on its fourth-quarter earnings call last month, and on Wednesday, it revealed the details of its plans to sell the iPhone X, as well as the iPhone 8 and 8 Plus models, with preorders starting on Friday, lining up with the busy Black Friday shopping period.
Freedom's pricing of the new devices is notable because it includes options that require customers to pay nothing up front for the device if they sign up for two-year contracts on certain service plans that include 10 gigabytes of data a month. It's a similar model to one commonly seen in the United States, where most carriers offer customers financing for the entire cost of pricey smartphones.
T-Mobile U.S. Inc. has disrupted the U.S. wireless market in recent years, winning subscribers away from the dominant players and forcing AT&T Inc. and Verizon Communications Inc. to follow its lead on certain consumer-friendly offerings.
In contrast, Canada's three national carriers – Rogers Communications Inc., Telus Corp. and BCE Inc. – have repeatedly said they are comfortable with their model of offering up-front subsidies that cover some but not all of the device prices on the newest and most expensive handsets.
The Big Three are not eager to finance the full cost of devices, as that would require them to spend more up front to win or keep customers, driving up their operating expenses.
After Apple unveiled its latest devices in September, Staples Canada Inc. said it would offer financing on iPhone 8 models, offering unlocked smartphones on 24-month payment plans with $0 down. But Canada's biggest carriers have generally not faced the same pressure to offer device financing such as that seen in the U.S.
Before Shaw acquired Wind, the startup carrier lacked the capital to invest in better-quality networks necessary to take on the big incumbents. In recent months, however, Shaw has indicated it plans to get more aggressive with its wireless strategy, selling a U.S. data-centre business to finance the purchase of mobile airwaves, committing more capital to the business and also using its existing spectrum in new ways to open up LTE (fourth-generation) service to consumers with almost all popular devices currently on the market, including older iPhones and Samsung Galaxy models.
Freedom's network still lags behind the Big Three in speed, reliability and coverage, and it has not attracted anywhere close to the number of subscribers the incumbents have in recent quarters. But as the company invests in network improvements and broadens its customer appeal with $0-down offers on the most buzzed-about devices, it could pose a bigger threat in three of Canada's biggest provinces.
For an example of Freedom's pricing, it says the iPhone X with 256 GB of storage will be available for $0 down on a monthly contract of $60 for service, plus a monthly payment of $50 for the device, or $110 in total. By the end of a two-year contract, the subscriber would have paid $1,200 for the smartphone, a discount of $329 off the outright cost to buy the device, which is $1,529.
Freedom says it will offer the iPhone X and 8 models in stores across its coverage footprint on Dec. 8. It will also offer older iPhone models for sale in Western Canada stores at that time and at some point in early 2018 in Ontario (the company is still working on changes to its LTE network to support the older models in Ontario).