John Morrissy
Sun
Photograph by : AFP/Getty Images
OTTAWA – The end of Canada‘s wireless spectrum auction and its promise of increased competition comes on a day when new data shows Canadians, who pay some of the highest cellphone rates in the world, lag much of the world in mobile phone use.
According to a global study by market research firm TNS, 60 per cent of Canadians between ages 16 and 60 use a cellphone, a point “significantly below” the global average of 80 per cent.
This gap exists not only between Canada and other developed nations, but also against several in the developing world, said the TNS study of consumers in 30 countries, which was released Monday.
rate lower, but Canadians who don’t use cellphones are among the most averse in the world to joining the club, and rank only ahead of Mexico and Vietnam among the group known as “rejecters.”
“Canadians do not have the same attachment to and reliance on mobile phones as the rest of the world does,” said Michael Ennamorato, a senior vice-president at TNS Canadian Facts, a division of TNS.
The reason for that is price, says telecommunications analyst Eamon Hoey, who argues that high rates in Canada have caused cellphone use here to top out.
With rates in Canada higher than every other developed country, Hoey said, “Canadians have had it with the pricing.”
As an example, he cites the consumer revolt that Rogers was met with when it announced rates to be charged on its IPhone service.
This tough environment, and the high costs associated with building out new national networks, makes Hoey skeptical about the potential benefits to consumers of the wireless spectrum auction, which ended Monday with $4.25 billion in sales.
While analysts suggested the outcome will deliver between two and five new cellphone companies to choose from, Hey said the costs to the newcomers will be huge, in the rage of at least a billion dollars before they have acquired even a single customer.
The new players will have a tough row to hoe if they don’t do enough to differentiate themselves in terms of innovation and don’t get away from the long-term contracts consumers have come to dislike, Hoey said.
“If these newcomers are not innovative in price and service – i.e., in their value propositions – and they’re not strategic in how they answer this market, it may very well be a nothing at the end of the day.”
© Canwest News Service 2008