Canadians are flocking to lower-cost cellphone services and cutting their land-line cords as aggressive entrants quickly take market share in the increasingly competitive wireless industry.
New players such as Wind Mobile and Mobilicity are offering cellphone plan prices more than 60 per cent lower than the large incumbents, which have been forced to cut prices to defend their customer base.
"There's material change in this country, and there's a trend line," says Brahm Eiley, a principal with Convergence Consulting Group Ltd., which has released a report on the telecommunications landscape.
At the end of 2010, new wireless companies - such as Wind, Mobilicity, Public Mobile and Quebecor Inc.'s Vidéotron Ltée - were responsible for 30 per cent of all net subscriber additions, up from almost nothing in 2009. By the end of 2011, that number will be close to 50 per cent and is expected to climb to 63 per cent in 2013, the report states.
The federal government allowed new competitors to bid for wireless licences in 2008, when wireless usage was only about 60 per 100 people. That number has climbed to 72.5 per cent, and is set to climb to 93 per cent by the end of 2014, the report says. (In several European countries, mobile use in effect exceeds 100 per cent because consumers use multiple SIM cards in one handset.)
The surge of new competitors has clearly had a big impact on price. Last week, Public Mobile, which offers a discount cellphone service in Ontario and Quebec, dropped prices further, offering an all-you-can talk plan for $15 a month. Such prices were unheard of when the market was controlled by BCE Inc., Telus Corp. and Rogers Communications Inc.
That affordability is enticing Canadians to snip their home phone lines. The report forecasts the number of wireless-only households will double to 22 per cent between the end of 2010 and 2013.
"We will see wireline replacement accelerate," agrees Anthony Lacavera, the chairman of Globalive Communications Corp., which owns both the new entrant wireless provider Wind Mobile and the Yak brand of land-line VoIP phone service.
Like larger rivals BCE and Telus, both of which are bleeding land-line phone and long-distance revenues, Mr. Lacavera is planning to ramp up discounts for bundles of services, which help keep subscribers from cutting their lines by offering discounts if a household subscribes to multiple telecom services.
At the same time, Bell and Telus are both pushing out high-end Internet protocol TV (IPTV) products. These new TV services are making headway, and Mr. Eiley's firm forecasts that 2011 will be the first year since 2003 that their cable company rivals will actually lose subscribers, though market share numbers for IPTV will remain relatively small at 8 per cent by the end of 2011.
"Telephone lines can no longer can be seen as the pivot for the telcos," Mr. Eiley says. "But they have stepped up with the TV offering. It's historic."
Editor's note: This story contains clarified information from a previous online and print version regarding subscriber additions.Report Typo/Error
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