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Goldberg vs. Saunders on Wireless Pricing |
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Friday July 27, 2007
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I've said my fair share on Canadian wireless pricing, but it is worth pointing to postings from Mark Goldberg and Alec Saunders on the issue. I obviously side with Alec in this particular debate as I simply don't see how the Canadian wireless prices are defensible when contrasted with many other countries. Moreover, the private reaction to this week's column was revealing as I received numerous emails from developers of online games, financial services, and other mobile products who all lamented that the Canadian market simply cannot support their services based on current pricing models.
Comments (7)
Justin
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... You are being too kind Dr Geist towards Goldberg. Goldberg's comments were totally dishonest in regards to you. It's a pathetic attempt at a strawman. He really should be ashamed of himself. What a shrill. |
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Their Spectrum, My Device Buried in Goldberg's comments is this little remark... "Europeans typically receive no subsidy for their phones. Would the Gazette also want each of us to pay upwards of $150 more for our phones as well?" ...so I will point to my comments to Industry Canada on the spectrum auction. [ link ] ... where I use minimal bandwidth (only 9KB!) to suggest that new spectrum should come with a requirement that consumers be allowed to attach their own devices. Often, part of the justification of the high pricing on data plans is the requirement to pay back the high cost of the devices that can use it. Meanwhile, most Canadian cellphones that are purchased by consumers were first purchased by carriers, who have a quite different set of ideas about what would be a good phone. Although you can get your phone outside of a carrier, there is no real market - even moreso for CDMA carriers. There are any number of examples - either nice phones that the carriers won't offer you, or phones with nice features - often data features - that are disabled by the carriers. Carriers licenced the *spectrum*, not the exclusive right to sell devices for it. |
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... With all due respect Dr. Geist, the OECD study was very clear in it's assessment of Canadian wireless prices being on par or slightly lower cost than the OECD average, including the U.S. I don't see how you can dismiss the analysis of a truly independent international body in favour of your own research. I think we should be proud of how well our wireless pricing fares relative to the OECD considering that we have pretty reliable service across the most massive country in the OECD. There was a wireless carrier (Microcell) in Canada a few years ago who tried to offer deeply discounted cell phone service and they went bankrupt - they couldn't generate enough cash to pay the salaries of their employees to provide the service. I suspect Canadian salaries and costs are a bit higher than Tanzania which you have held up as an example of superior services. |
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OECD? Where\'d That Come From? @Marshall; The key point in this discussion is wireless *data* pricing, not voice wireless pricing. Here's the basic comparison - AT&T is offering unlimited data for $69 for the iPhone. That price won't get you more than about 30 megabytes in Canada. (Never mind that you get 10 times as many minutes - 5000 vs 500 - on AT&T plan.) If you want to address Mr Geist's comments on the OECD report, then at least go back to that posting ... [ link ] ...and see what he has to say about it. And, fair warning - he doesn't find *voice* wireless pricing in Canada to be as divergent from the U.S. It's also worth noting that the OECD comparison baskets for mobile only go as far as voice, SMS, and MMS. They don't even touch the question of wireless data pricing. The closest they come is to note the growth of flat-rate pricing - and on that score, Canada falls flat. Nobody is offering flat-rate data in Canada, at ANY price. When it comes to wireless data pricing comparisons, the OECD report basically doesn't address it. |
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T3j8y Chris, The incorrect conclusion that so many seem to be jumping to in this debate is that the iPhone's arrival in Canada will be tied to existing data rates. When AT&T introduced the iPhone plan, they created a custom rate plan specifically for that service. That rate plan did not exist prior to the iPhone. I would suspect that other wireless carriers would follow a similar strategy of building a custom rate plan for it. That practice has already been in effect in Canada for several years with customer rate plans for wireless entertainment services being the norm. For example, Bell has a movie download service that bills by the movie rather than by the bit. TELUS has an unlimited streaming TV service that is billed by the month rather than by the bit. If you were to do the math, you could download many gigs of data for $15 per month which is pretty darned cheap for data. They also have an unlimited music download service (their version of wireless iTunes) for $20 per month that includes the music and the data. I can't imagine Apple ever offering unlimited downloads from iTunes for $20/month! I hope you see the point I am trying to make. If and when Apple decides to introduce the iPhone in Canada, it will likely be on a custom rate plan. Please note that Apple has not introduced the iPhone to any other country in the world outside of the US, including some of those African countries that presumably have lower data plan rates. Apple is driving the roll out, not the wireless carriers. |
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iPhone is the spotlight, not the issue If AT&T created a special rate plan for the iPhone, that would suggest that the same rate plan does not exist elsewhere. Hmmm. I went and checked the pricing for data plans at the other major U.S. carriers. I selected wireless data cards, on the logic that these are most likely to be used for general-purpose internet access, and likely used heavily. A small phone with a tiny screen may never really put stress on the data connection, but a wireless card in a laptop almost certainly will. I found that most of the major U.S. carriers offer wireless data plans, and they offer unlimited wireless data plans. AT&T/Cingular: $79.99 T-Mobile: $49.99 Nextel/Sprint: $59.99 Verizon: $59.99 AllTel: $59.99 By comparison, a similar search of unlimited data plans in Canada: Bell Mobility: not available Rogers Wireless: not available Telus Mobility: not available Of course, since none of those U.S. packages are for the iPhone, I'm hard pressed to see how the iPhone makes a big difference. Everyone in the U.S. offers unlimited data plans -- nobody in Canada offers unlimited data plans. The iPhone is only highlighting an issue that already exists. Take the iPhone away, and the issue still exists. Canadians are getting very poor service from their wireless carriers compared to our southern neighbours. If the Canadian carriers really can deliver data at low prices (as per your examples) then they need to make that same service available as data plans, not just in packaged solutions. Otherwise, it's analagous to a gasoline company offering you all the gas you want for $15 dollars a month if you will only drive on specific streets, but gas is still $1 a litre to drive where you want. |
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... Chris Smith, The global telecommunications industry has been an a trajectory for convergence of all telecom and entertainment services onto common networks for more than a decade. With this convergence will come some challenges in how to price applications in ways that consumers will understand and find somewhat familiar. Consumers are already accustomed to buying services instead of network capacity. For example, consumers buy cable or satellite TV with specific channel options for a fixed monthly rate. Same goes for telephone, a fixed price for a fixed bundle of services. Consumers would likely find buying their entertainment and communications services by the megabyte to be too much of a change and very confusing. I think the point Marshall was trying to make was that consumers are already able to purchase wireless communications and entertainment services for fixed monthly rates regardless of usage. You seem to be very focussed on the cost of wireless data plans which are not likely to be relevent to mainstream consumers. |
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