Rogers and the iPhone

davidcrow kissing his iPhone

Jay Goldman and I picked up iPhones while at Mix08 and SxSWi. I think we have different experiences with the phones, but generally both are very positive and the key differentiator between a great experience and a good experience appears to be your dependency on Exchange support. Basically Jay runs iCal, Mail.app to connect to IMAP accounts and Google Calenders. I work at Microsoft and I rely on Exchange Server 2007 on my PCs, my Macs with Office 2008 and Entourage and on my Palm 750 on Rogers.

The question continues to come up as to why we haven’t seen the iPhone picked up by one of the Canadian carriers. The conversation can focus on the third world have cheaper data than Canada. It can be about the pricing of contracts or devices in Canada. It comes down to some very simple business considerations:

  • Cell phone market penetration is high
  • High fees and high ARPU
    • Canadians cell bills are double that of Americans
    • ARPU = Average Revenue Per User
    • Canadian Wireless providers in 2007 had an ARPU of $56 which is high when compared to other countries
  • Apple’s outrageous (good on ‘em) ARPU share
    • The relationship between AT&T and Apple has been described as an ”$18/month ARPU share)
    • Canadian non-voice ARPU is currently less than 10% of existing ARPU meaning Canadian wireless providers see this as an opportunity to increase the ARPU
    • Canadian non-voice services at 10% of ARPU is lower than the US non-voice ARPU which has been reported in the low to mid teens
  • AT&T plans are lower than most Canadian plans
    • AT&T plans start at $59.99/month and work up to a true unlimited plan at $119.99/month
    • As an example, my current Windows Mobile plan on Rogers is $80 for 500Mb + $25 for 250 minutes + $8 Every Call Value Pack includes Voice Mail and Call Display + $6.95 systems access fee = $119.95/month + taxes. And this doesn’t cover long distance across Canada, and it certainly doesn’t cover roaming or roaming data when I’m in the US.
    • Given the Canadian dollar is at parity, I’m paying approximately double for less service than the $59.99/month AT&T plan

So the market is saturated, or at least very close to being saturated in urban centres. Let’s make some assumptions that all of the high value long time customers already have data plans and long-term contracts. These users switch phones on a regular basis because they derive status from the latest, greatest device. They probably don’t need or want to switch carriers. Coupled with the ARPU is the highest in North America. Data and non-voice services are currently less than 10% of the ARPU number and expected to grow. What advantage would Rogers have for negotiating a deal with Apple?

Unlike AT&T with aggressive rates to entice and retain existing customer, Rogers and other Canadian carriers are entrenched. Churn rates are around 2% and I wonder what churn looks like in higher value, higher spend customers. Canadian carriers have the highest ARPU around. Apple has been insistent on changing the wireless model by removing hardware subsidies and driving rates down on necessary data services. What part makes you think that Rogers, Telus or Bell is going to give up $10-18/month of ARPU and drive the overall service costs down?

Particularly when people like me and Jay Goldman are just buying iPhones in the US and running ZiPhone and upping our plans to handle more data. Well we might see an iPhone in Canada, but it won’t be for a while, after the carriers have milked additional ARPU out of the current set of non-voice services.

It makes me wonder where the CRTC is in all of this?

  • Matthew

    <p>Welcome to the club!*</p><br />
    <br />
    <p>* It's exclusive, it's expensive, but as I'm sure you're seeing now, I think it's well worth it every time I pull out that damn shiny thing.</p>

  • Jon Lax

    <p>Rogers has the keys to the kingdom by being the only GSM carrier. Apple has to come through them to get to the Canadian market so until Apple is ready to play ball with Rogers there isn't much business incentive. </p><br />
    <br />
    <p>As you noted Rogers is benefiting from the data plans now with unlocked phones. They don't need to give any of it to Apple further disincenting them to 'officially' sell it.</p><br />
    <br />
    <p>If TELUS moves to GSM, as they have suggested they may, the iPhone would become an important differentiator in the market. </p><br />
    <br />
    <p>As for the CRTC, they are as ineffective and irrelevant as always. RIM probably has enough pull in government to make this a non issue.</p>

  • David Crow

    <p>Does this fall under the auspices of the CRTC or the <a href="http://www.competitionbureau.gc.ca/epic/site/cb-bc.nsf/Intro&quot; target="_blank">Competition Bureau</a> ? </p><br />
    <br />
    <p>I don't know and apparently it's a <a href="http://www.crtc.gc.ca/eng/publications/reports/crtc_com.htm&quot; target="_blank">little unclear depending on legal arguments</a>.</p><br />
    <br />
    <blockquote><br />
    <p>'The CRTC will continue to deal with issues related to interconnection and access.'</p><br />
    </blockquote><br />
    <br />
    <blockquote><br />
    <p>'The Bureau will deal with price fixing, bid rigging and price maintenance.'</p><br />
    </blockquote><br />
    <br />
    <p>So it depends, is this an access issue or one of pricing?</p>

  • James Blair

    <p>As ridiculous as I think the situation is at the moment (Thomas Purves' mobile data graph is just enraging), it is only getting worse. It is clear that the Internet/web is going mobile. When it does, where will Canada be? Behind.</p>

  • Les Muise

    <p>Wireless on any level is not where the market wants it to be in Canada. The reality of business travel in this country is that even in the small territories its impossible to function without a cell phone and any corporate system that relies on its sales force having real time on the road access is paying ridiculous rates for mediocre service. </p><br />
    <br />
    <p>Reliability & access in rural areas is questionable at best. In Atlantic Canada the main corridor (better know as the Trans Canada Highway) connecting the key cities is not bad but if you have to travel off the beaten path you better by a client of Bell Aliant if you want any connection.</p><br />
    <br />
    <p>We have a way to go before the concept of wireless everywhere is a reality. </p><br />
    <br />
    <p>As far as the iPhone & Rogers . its time for Rogers (hear me Bill Linton, CFO Rogers) to get off their ass and get on with making that deal.</p>

  • Scott

    <p>I didn't see any mention of Comwave here which is another stumbling block for Apple since they own the legal rights to the name 'iPhone' in Canada. If there's any real movement coming on bringing the iPhone (the real one) to us Canucks, Apple needs to get that sorted out first. Any deals they make with Rogers are essentially meaningless until that issue is resolved.</p><br />
    <br />
    <p>Personally, I'm tired of having to hack my iPhone and deal with the hassles involved in keeping it sync'd up in terms of software releases. I've got better things to do with my time & like writing apps for the platform now that the SDK is out, not monkeying around with keeping my phone working. It would be nice to be able to use the data part of my monthly plan without the fear of unreasonable bills too.</p>

  • http://www.sortakinda.ca Matthew

    Welcome to the club!*

    * It's exclusive, it's expensive, but as I'm sure you're seeing now, I think it's well worth it every time I pull out that damn shiny thing.

  • http://www.teehanlax.com Jon Lax

    Rogers has the keys to the kingdom by being the only GSM carrier. Apple has to come through them to get to the Canadian market so until Apple is ready to play ball with Rogers there isn't much business incentive.

    As you noted Rogers is benefiting from the data plans now with unlocked phones. They don't need to give any of it to Apple further disincenting them to 'officially' sell it.

    If TELUS moves to GSM, as they have suggested they may, the iPhone would become an important differentiator in the market.

    As for the CRTC, they are as ineffective and irrelevant as always. RIM probably has enough pull in government to make this a non issue.

  • http://davidcrow.ca/ David Crow

    Does this fall under the auspices of the CRTC or the Competition Bureau ?

    I don't know and apparently it's a little unclear depending on legal arguments.

    'The CRTC will continue to deal with issues related to interconnection and access.'

    'The Bureau will deal with price fixing, bid rigging and price maintenance.'

    So it depends, is this an access issue or one of pricing?

  • James Blair

    As ridiculous as I think the situation is at the moment (Thomas Purves' mobile data graph is just enraging), it is only getting worse. It is clear that the Internet/web is going mobile. When it does, where will Canada be? Behind.

  • http://lesmuise.wordpress.com Les Muise

    Wireless on any level is not where the market wants it to be in Canada. The reality of business travel in this country is that even in the small territories its impossible to function without a cell phone and any corporate system that relies on its sales force having real time on the road access is paying ridiculous rates for mediocre service.

    Reliability & access in rural areas is questionable at best. In Atlantic Canada the main corridor (better know as the Trans Canada Highway) connecting the key cities is not bad but if you have to travel off the beaten path you better by a client of Bell Aliant if you want any connection.

    We have a way to go before the concept of wireless everywhere is a reality.

    As far as the iPhone & Rogers . its time for Rogers (hear me Bill Linton, CFO Rogers) to get off their ass and get on with making that deal.

  • http://www.wishingline.com Scott

    I didn't see any mention of Comwave here which is another stumbling block for Apple since they own the legal rights to the name 'iPhone' in Canada. If there's any real movement coming on bringing the iPhone (the real one) to us Canucks, Apple needs to get that sorted out first. Any deals they make with Rogers are essentially meaningless until that issue is resolved.

    Personally, I'm tired of having to hack my iPhone and deal with the hassles involved in keeping it sync'd up in terms of software releases. I've got better things to do with my time & like writing apps for the platform now that the SDK is out, not monkeying around with keeping my phone working. It would be nice to be able to use the data part of my monthly plan without the fear of unreasonable bills too.

  • Farhan Thawar

    <p>Why are you paying $80 for 200MB when you can be paying $65 for a gig?</p>

  • Farhan Thawar

    Why are you paying $80 for 200MB when you can be paying $65 for a gig?

  • Thomas Purves

    <p>My theory for the iPhone in canada here: <a href="http://wirelessnorth.ca/2008/02/28/i-phone-in-canada-expect-it-as-early-as-this-summer/</p><br />
    " target="_blank"><a href="http://wirelessnorth.ca/2008/02/28/i-phone-in-canada-expect-it-as-early-as-this-summer/</p>&quot; target="_blank">http://wirelessnorth.ca/2008/02/28/i-phone-in-canada-expect-it-as-early-as-this-summer/</p></a&gt; </a> <br />
    <p>Canada will come after iPhone2 is out. No Canadian carrier has much clout with global equipment makers, our National carriers are too small. China Mobile or even T-mobile globally, moves more devices in a week than Rogers does in a year.</p><br />
    <br />
    <p>It all comes down to high prices, low competition, low penetration.</p><br />
    <br />
    <p>In the UK average penetration is 1.6 phones per consumer, in Italy 2.0, in Canada more like 0.7</p>

  • Jim Murphy

    <p>Imagine yourself as the guy @ apple responsible for rolling out iPhone globally. Even Apple has limited resources which means planning needs to be prioritized. </p><br />
    <br />
    <p>After the US you make a quick list of international markets:</p><br />
    <br />
    <p>China<br />India<br />EU<br />UK<br />Russia/Eastern Europe<br />Brazil<br />Chile<br />Mexico<br />Rest of South America<br />South East Asia<br />Japan<br />Australia<br />..<br />..<br />Canada</p><br />
    <br />
    <p>Point is & we're small and we're complicated. Thast makes making a deal here a pain in the ass. Why bother. I'd go after other markets first too. Its our loss. There should be MUCH more discontent about status quo. But I get the feeling Canadians like the abuse.</p>

  • http://wirelessnorth.ca Thomas Purves

    My theory for the iPhone in canada here: http://wirelessnorth.ca/2008/02/28/i-phone-in-canada-expect-it-as-early-as-this-summer/

    Canada will come after iPhone2 is out. No Canadian carrier has much clout with global equipment makers, our National carriers are too small. China Mobile or even T-mobile globally, moves more devices in a week than Rogers does in a year.

    It all comes down to high prices, low competition, low penetration.

    In the UK average penetration is 1.6 phones per consumer, in Italy 2.0, in Canada more like 0.7

  • http://www.wattf.com/wp/ Jim Murphy

    Imagine yourself as the guy @ apple responsible for rolling out iPhone globally. Even Apple has limited resources which means planning needs to be prioritized.

    After the US you make a quick list of international markets:

    China
    India
    EU
    UK
    Russia/Eastern Europe
    Brazil
    Chile
    Mexico
    Rest of South America
    South East Asia
    Japan
    Australia
    ..
    ..
    Canada

    Point is & we're small and we're complicated. Thast makes making a deal here a pain in the ass. Why bother. I'd go after other markets first too. Its our loss. There should be MUCH more discontent about status quo. But I get the feeling Canadians like the abuse.

  • P Kayne

    <p>Congrats on finally getting an iPhone. I have had one since October and have been happily been using it at home and around the city. I use Bell’s $35/service wifi service while I am out and about and my own wifi at home. </p> <p>I also have it unlocked with AnySim. So when I am travelling for work, I just get a sim card at the airport when I land and I am instantly up and running. I certainly can’t go back to life without my little buddy. </p> <p>The State of wireless and communications in Canada has sucked since its inception and most notably since the proliferation of mobile phones. </p> <p>The problem is that Canadians don’t stand up for their rights and don’t complain. I have been in Europe, across North America and even in Latin America and the Caribbean. Everywhere else rates are competitive and when you ask how they are so low, the answer is most often that the local public demand is very vocal and have demanded that regulators open up the market to allow more local and international competition. </p> <p>CRTC can not be changed if Canadians don’t demand change. CRTC protecting these Canadian monopolies has done nothing for us. And frankly, now with these prohibitive rates, they are now starting to inhibit the growth of mobile technologies and the mobile internet. </p> <p>One other thing, I don’t agree with the view that owning an iPhone is an exclusive club. Because of the nature of the technology, this <br />is type of device that can and will be readily adopted by all. And associating a cache or being an iPhone flasher is somewhat pathetic. Save that for the Crackberry cowboys.</p>

  • P Kayne

    Congrats on finally getting an iPhone. I have had one since October and have been happily been using it at home and around the city. I use Bell’s $35/service wifi service while I am out and about and my own wifi at home.

    I also have it unlocked with AnySim. So when I am travelling for work, I just get a sim card at the airport when I land and I am instantly up and running. I certainly can’t go back to life without my little buddy.

    The State of wireless and communications in Canada has sucked since its inception and most notably since the proliferation of mobile phones.

    The problem is that Canadians don’t stand up for their rights and don’t complain. I have been in Europe, across North America and even in Latin America and the Caribbean. Everywhere else rates are competitive and when you ask how they are so low, the answer is most often that the local public demand is very vocal and have demanded that regulators open up the market to allow more local and international competition.

    CRTC can not be changed if Canadians don’t demand change. CRTC protecting these Canadian monopolies has done nothing for us. And frankly, now with these prohibitive rates, they are now starting to inhibit the growth of mobile technologies and the mobile internet.

    One other thing, I don’t agree with the view that owning an iPhone is an exclusive club. Because of the nature of the technology, this
    is type of device that can and will be readily adopted by all. And associating a cache or being an iPhone flasher is somewhat pathetic. Save that for the Crackberry cowboys.

  • Ken Seto

    I've had an email conversation with someone from the Competition Bureau about how they let Rogers buy FIDO to effectively create a monopoly in the GSM market.<br />
    <br />
    I was basically told they felt there wasn't a need to distinguish between CDMA and GSM service providers so according to them, there was no monopoly.<br />
    <br />
    I also had an iPhone but my unwillingness to pay Rogers through the nose for data rendered it useless.<br />
    <br />
    Now I use a wannabe iPhone, the HTC Touch. But through Bell, it came with a $7/mth unlimited internet plan. Opera Mini works nicely on it. The phone part ain't so great though.<br />
    <br />
    My hopes are for Telus to bring the iPhone when/if they go GSM.

  • Chris Taggart

    I've heard from some Rogers' employees that Rogers actually has the iPhones (3G) in hand already. They just can't sell them yet, due, likely in part to the Comwave trademark.

  • http://www.kenseto.ca Ken Seto

    I’ve had an email conversation with someone from the Competition Bureau about how they let Rogers buy FIDO to effectively create a monopoly in the GSM market.

    I was basically told they felt there wasn’t a need to distinguish between CDMA and GSM service providers so according to them, there was no monopoly.

    I also had an iPhone but my unwillingness to pay Rogers through the nose for data rendered it useless.

    Now I use a wannabe iPhone, the HTC Touch. But through Bell, it came with a $7/mth unlimited internet plan. Opera Mini works nicely on it. The phone part ain’t so great though.

    My hopes are for Telus to bring the iPhone when/if they go GSM.

  • http://www.christaggart.com Chris Taggart

    I’ve heard from some Rogers’ employees that Rogers actually has the iPhones (3G) in hand already. They just can’t sell them yet, due, likely in part to the Comwave trademark.

  • Pingback: The only big thing Rogers is launching July 11th | Bus error: Jake Billo's weblog

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