God Bless our National Carriers… but!

What a beautiful, reliable network we have! Our carriers have put together one of the best communication networks on the planet and we’re taking advantage of it by spending around $40 Billion a year. So, what’s not to like? Perhaps it’s the oligopoly and we’re charged way too much for service.

I admit I’m somewhat negative of our carriers even though, compared to other countries, we’re pretty advanced:

• Canada has the highest wireline penetration (99%) among OECD member countries[1]
• We have 25,086,000 Internet users which represents 74.9% of the population[2]
• 74.3% of Canadian households subscribe to wireless services with over 99% of Canadians having access to wireless services [2]
• Approximately 8% of Canadian households reported having a cell phone but no landline in 2008. This is a more than six-fold increase from 1.2% in 2001.[3]
• From 2001 to 2009 overall telecom services price increases were below CPI (around 1.9% per year).

So why am I negative? For starters, the carriers pay lip service to low business prices. They say prices haven’t escalated much over the last decade. They forget to mention that prices have plummeted elsewhere. It’s not just the Canadian charges- it’s how they charge outside of Canada for U.S. and International calling. When I’m down in the States, I see business people being able to call anywhere in the U.S. without roaming- the same for data. Well, as a Canadian business traveler to the States, I’m gouged for voice roaming and data roaming charges are ridiculous- I often wonder how they get away with this. For international travel, it’s worse (thank goodness for hereiam™). Another alternative is actually buying a SIM card for International use to keep prices down.

There’s a lot of talk about competition that will bring down prices- but don’t count huge discounts yet. The new wireless entrants (Wind, Mobilicity, etc.) will take market share from the Big 3 with reduced pricing, but the competition is focused on the consumer market. And these new incumbents will be competing against the Big 3 counter-punch with revamped prices on Bell’s Solo, Rogers Chatr, TELUS’ Koodo (and another offering soon).

It’s a bit tongue in cheek to complain about prices while also knowing we have a rock solid network. An interesting report from professional services firm Deloitte[4] highlight two key trends for Canadian companies- i) we want to access data anywhere, anytime, and on any screen but want it economically and ii) we want the traditional five-nines (99.999%) tech and telecom reliability to move to quality levels on a per-application or per-process level for economies of scale. Even though our network is the envy of even tier 1 countries- how we trade off reliability and performance for cost savings will be interesting indeed. Our Canadian oligopoly is being squeezed harder now than ever before- how will they move down is the question.

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[1] CRTC Stats, 2008

[2] as of September, 2009 according to ITU

[3] CRTC, Communications Monitoring Report 2009

[4] Deloitte 2010 TMT Predictions