Friday, September 07, 2007

Why Canada Has the Highest Wireless Costs

A few months ago this graph was published in an article called Canada Worse than 3rd World Countries when it comes to Mobile Data Access. It compares the cost of transferring 500MB of data in several wireless plans. The Comments quibble over the details, but the upshot is that Canadian wireless plans are way more expensive than other countries - and Canadian wireless prices are rising sharply. (Here's a similar graph comparing 1GB of data.)

Don Morrison, COO of RIM (the Waterloo-based maker of the BlackBerry), tells a similar story: Canadian wireless plans are too expensive, and the cost is only hurting wireless service providers by keeping national adoption relatively low.

The situation affects my company as well. Also based in Waterloo, we develop database and synchronization software for developers of wireless applications. Like RIM, we don't do much business in Canada.

Why are Canadian wireless costs so high? These seem to be the contributing factors:

1. Bad business decisions by wireless service providers - bad in that they're hurting themselves as well as their customers.

2. Too little competition. There are three providers - Rogers (which owns Fido), Telus and Bell. And Telus and Bell share infrastructure.

3. Lack of regulation. For some reason, the CRTC doesn't regulate wireless services.

4. Population density. Our population density is 3.2 people/km^2. This is 1/10th the population density of the US, and nearly 1/100th Britain's. Low density isn't as important as it might seem, because 95% of the Canadian population lives within 100 miles of the US border and more than half live in our six biggest cities. Plus, once the infrastructure is in place, the providers could recoup their expenses better by attracting more customers. Also, Australia has a population density even lower than ours (2.6) and they have cheaper plans.

5. Canadians don't demand a better deal.

Update: Jake Billo


1 comment:

macadavy said...

We're going to see more and more community non-profit nets like Fredricton's and the one the Saskatchewan government recently set up - serves 'em right!