The National Post had a good editorial today, peppered with some interesting comments about the cellular service gap between the U.S. and Canada. Surely, the wireline story this side of the border is good - here in Canada we enjoy good, reliable service at very reasonable rates. But on the wireless front, the story is totally different. Currently, we only have three options as far as mobile operators are concerned: Bell Mobility (NYSE:BCE), Rogers Wireless (NYSE:RCN) and Telus (NYSE:TU).
The editorial made some fine points (I suspect that both techie reporters from the National Post - Mark Evans and Kevin Restivo contributed to the article). One of the main themes was the fact that the Canadian wireless market is in fact more of an oligopoly in comparison to the highly competitive U.S. mobile communications environment. One of the reasons mentioned was the fact that Canada is in fact a small market, so the subscribers up here do not benefit from the highly competitive pressures of other markets such as the U.S., Europe and Asia/Pacific. As a result, features are lacking and prices tend to be higher.
One example that I can mention is voice mail: all major U.S. wireless operators offer voice mail for free for any customer signing a two or three year plan. By contrast, in Canada, all long-term deals from Bell, Telus or Rogers only offer free voice mail for a few months, and after that, users have to pay a monthly fee for the service (usually in the $3 to $4 range).
The article's example is pretty compelling - Cingular Wireless' offering of 1,000 "anytime" minutes for US$39.99 a month, including long-distance, within the continental U.S. simply cannot be matched in Canada, with the closest deal being $35 per month for 310 local minutes during peak business hours and unlimited evening and weekend calling, with extra charges applying for long distance.
Other differences in the Canadian versus U.S. plans include billing (per minute versus per second billing) and the lack of "rollover" minutes (in the U.S. unused minutes from one month could be added to the next month). Another factor that reduces the competitive pressures in Canada is the lack of Wireless Number Portability (WNP). Americans can switch their mobile carriers without needing to change their cellular numbers. Canadian operators, fearing that WNP would allow subscribers to lower their fees by playing one company off against others, have thus far not offered this important feature.
From my own perspective, I can also add a few insights on this subject. First, Rogers' acquisition of Microcell effectively took out the most price competitive offering in the marketplace. Rogers (which beat out Telus on that acquisition) claims that it will keep the Fido brand, but obviously, it will not keep the Fido prices (note that the CP story was picked up by the Telus site). So the only other alternative player that might offer slightly more competitive prices could potentially be Virgin Mobile, although relying on the Bell network might leave Virgin little room to maneuver its price.
Second, from my personal experience, it seems that Canadian operators seem to offer new customers better deals than their existing ones - which is interesting, given the low churn rates of our wireless industry. Case in point: my own contract with Bell Mobility recently expired, and I had gotten a very tempting offer from Rogers, but in the end, after some negotiating and "social engineering" with the Bell call center agent, she matched the deal and I stayed with Bell (the tie breaker being the "one bill" bundle). Contract expiry time seems to be the only time when subscribers get a bit of leverage to negotiate better deals. But VM still costs me an extra $4 per month...