2010 Wireless in Canada - State of the Nation - FITC Mobile

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Deck first presented at FITC Mobile 2010. Second annual state of the nation wireless industry in Canada presentation by Thomas Purves. …

Deck first presented at FITC Mobile 2010. Second annual state of the nation wireless industry in Canada presentation by Thomas Purves.


Clarification slide 12 "Fixed Costs is spending on property plan and equipment, General overhead is staff, customer support, management etc."

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Transcript

  • 1. FITC Mobile 2010, Toronto
    Wireless in Canada State of the Nation 2010
    tom@thomaspurves.com
    Twitter: @tpurves
    Thomas Purves
  • 2. About me
    2
  • 3. As mobile developer what would be our ideal mobile world?
    Ubiquitous broadband connectivity wired and wireless
    Bandwidth seen as free by users
    Consistent un-fragmented mobile platforms
    Mature/Useful options for monetizing content
    High common-denominator of devices
    Ubiquity of mobile phones and of smartphones
    It’s great if many Canadians have access to smartphones , much better if/when you could someday assume that everyone does.
    3
  • 4. What is the state of Wireless in Canada?
    Canada
  • 5. Just 3years ago, the picture was grim
    Circa April 2007:
    Some of worst data rates in the developed world.
    A country of Blackberry addicts, but low accessibility to most advanced devices.
    Dominated by On-deck content, low accessibility to open content, open services.
    High pricing to consumers, lagging wireless penetration, lagging adoption behaviours
    Ouch
  • 6. Canada’s major wireless carriers 2007
    6
  • 7. Canada’s 2008 Spectrum Auction
    New spectrum Auction rules
    • 40% of new spectrum set aside for new entrants
    • 8. Mandated tower sharing and in-country roaming
    • 9. Attempt by Government to improve wireless services and accessibility by encouraging increased competition
  • Canada’s major wireless carriers 2010
    8
  • 10. Does this look like Competition?
    9
  • 11. Who is exactly zooming who
    10
    ??
    Other than branding agencies, has this mess started to help Canadians?
  • 12. First, the bad news
    11
  • 13. Canada’s Wireless Carriers – To ScaleTotal subscribers, CWTA data Q2 2010 ( Mobiliciy, Public mobile no data)
    12
  • 14. New entrants have not made a big impact (yet)(CWTA Data Q2 2010, no data for public, mobilicity, videotron)
    13
  • 15. Canadians still (still!) pay the highest cell phone bills in the world
    14
  • 16. And that’s not a good thing
    15
  • 17. 16
  • 18. The good news
    17
  • 19. How the majors are competing
    Brand bamboozlement
    18
    Network Investment
    Massive handset subsidies
    (mostly helpful)
    (helpful)
    (not so helpful)
    What is missing from this picture?
  • 20. Canada’s network advantage
    19
    * Services announced but not yet commercially released
  • 21. Some great deals on smartphones
    20
  • 22. More Canadians have access to smartphones
    Summer 2009
    60% mobile penetration
    25% smartphone penetration (Rogers)
    $199 entry point for high-end smartphone ( iPhone 3G w/ contract)
    Summer 2010
    69% mobile penetration
    35% smartphone penetration (Rogers)
    $79 entry point for high-end smartphone (HTC Desire, w/ contract)
    21
    Canadians are still paying the highest wireless fees in the world, but at leastwe are getting more for our money. That’s sort of like good news.
  • 23. Your carrier is not actually a carrier, it’s a handset leasing operation disguised as a wireless carrier
    22
  • 24. Where o’ where your wireless bills goHST and handset subsidies cost more than building the network
    23
  • 25. Basically you get this year’s latest gadget in exchange for 3yrs servitude buying some data fees and a bunch of wildly overpriced minutes
    Average handset subsides >$500 per new subscriber
    “the competitive environment remained intense during the quarter with aggressive acquisition offers and deeply discounted handsets being featured in the market. In response to these competitor actions, we also lowered our average handset prices” -SiimVanaselja CFO Bell
    Consumers are crazy about smartphones (“if it’s not a smartphone we can’t even sell it anymore” - Rogers exec)
    It’s a great way to compete against the new entrants
    But, voice minutes are in decline (down 5% yoy)
    24
  • 26. In a world of mobile broadband, paying for voice minutes doesn’t make any sense
    25
    Rogers just announced 21MBps service in Canada (cool!)
    A standard GSM voice band requires only 12.2 kpps
    Notionally, that’s now less than 0.01% of your phone’s available bandwidth
    How long can this traditional but tiny little bit-stream continue to support 80% of the carrier’s revenue?
    Source CISCO forecasts 2009
    With LTE *all* voice is voip, so why do you need to buy voice services from your carrier vs anybody else?
  • 27. How a carrier makes it’s money today
    26
    ~2B (Rogers adjusted operation profit)
    ~4B (BCE operation profit)
  • 28. Pipes vs Content
    27
    Wireless ( 3.4 B Revenues)
    Cable ( 2.0 B Revenues)
    Source: Rogers Q2 financial report
  • 29. If carriers become dumb pipes, their business would be much reduced
    28
    Carrier operating profit (Simplified):
    Dumb pipes
    Other Fluff(voice minutes, cable subscriptions, media, publishing etc.)
  • 30. Looking ahead: With traditional cash cows like voice in decline, where will telcos get their new fluff from?
    29
    Telcos are buying up broadcasters and Big Content rights holders
    Bell + CTV
    Rogers + CityTV, Chum etc.
    Videotron + their own stuff
    If you are an independent content producer, or into that whole net-nutrality thing, this trend is not especially helpful.
  • 31. Discussion?
    30