Blog > The Travesty of Wireless

April 10, 2007
Jay Goldman

We like to think of ourselves as a pretty forward thinking country when it comes to things like health care, comedy, hockey, and tech. Americans (and the rest of the world) are sometimes quite surprised to discover that their favourite widget or band or actor originated in the Great White North, but it's all part of our evil plan to slowly take over the world.



Unfortunately, our evil machinations fall to pieces when wireless gets involved. Our beloved carriers (and I use the term beloved where others might choose different expressions, like 'hated with the strength of a thousand suns'), an oligopoly consisting primarily of Rogers and Bell, and lesserily of Fido (now owned by Rogers) and Telus (who uses Bell's network in our part of the world), have determined that the best long term business strategy for data is to grab all they can while the gettin's good. They complain about having to service one of the largest countries in the world and the cost of equipment and wa-wa-wa, all of which is a pathetic attempt to justify this:



Cost of transferring 500MB/month in different countries around the world



That horrifying graph is courtesy of our good friend Tom Purves and a brilliant bit of original reporting that you won't see in the mainstream media because they're pretty much all owned by Rogers or Bell. Yes folks, that graph actually says that Rwandans can download mobile porn for 4.625% of the price that Canadians can. Now I have nothing against Rwandans and I wish them all the ... content they can consume, but Rwanda is not a member of the G8, nor are they one of the world's leading technology producers. They aren't home to one of the better computer science schools in the world (University of Waterloo), or - perhaps more to the point - RIM, the company that has a virtual stranglehold on the wireless device market to the point that the US government stepped in to their patent lawsuit to keep the network online because they can't function without it.



If I sound a little bitter, it's because I spend a lot of time with my colleagues from the US, and since we're all a bunch of tech people, a big chunk of that time is spent with our BlackBerries and Treos and Qs and Blackjacks and etc. in hand. Our American friends blithely surf the web and show us streaming videos and download music and we sit in the corner, shamefully browsing with images turned off. If you think our data rates are bad at home - and they're almost disfiguringly bad - you should see what we pay when we're roaming.



So how do we fix this? As Tom points out, the problem largely rests in the hands of the CRTC, who are governed by the Canadian Telecommunications Act. Though you wouldn't know it by looking at the millions carriers spend on advertising, there's an almost complete dearth of real competition in the Canadian wireless market (I believe that there's a single carrier in Saskatechwan and Manitoba). We have new 'carriers' (known as Mobile Virtual Network Operators, or MVNOs) appearing, like the oddly named Amp'd, but they aren't really bringing any diversity to the market since they just piggyback on other networks (Amp'd uses Sprint in the US and Telus in Canada). They have to cover the cost of their own network usage in addition to making a profit from your services, so don't look to them to lower rates any time soon. Rogers and Bell charge what they charge precisely because they can charge it; we may rant and rave and post vitriol filled blog posts, but I still cough up $60 a month for data on top of my voice bill and I'll keep doing it if I want mobile service. This isn't limited to data rates, of course. Don't even get me started on how they're screwing us on SMS short codes, although you have to love the "let's hold hands and be friends!" message of the Catch the Code site which makes it sound like the carriers just want you to come and play with sunshine and lollipops all day. You have to pay their consortium an astounding $1500 for the first three months of the 'lease' of your shortcode, which effectively places SMS marketing out of the hands of small businesses who might use it for innovative programs. Now the carriers, bless their cold, slimy, black hearts, are pushing to end net neutrality so they can arbitrarily charge us more for data access whenever they feel like it, all the while pushing new initiatives like being able to video chat or watch YouTube on your mobile phone (I won't give them any link love, so look for Rogers Vision in the Google results). If our government, at the federal, provincial, and municipal levels, is so intent on promoting Canada as a leader in ICT (Information Communication Technology), they need to step in and end this insanity. The current pricing model stifles innovation and virtually guarantees that any exciting new wireless technology developments will not come from Canadian companies because the market and the funding to develop those products will not exist at home. I'm not usually a fan of legislating the rates that companies can charge for their services, but the only way the carriers are going to achieve parity with our cousins to the south is if they get hit with a big stick.



Update: Martin Cleaver has a bunch of great in-depth information about who regulates the carriers (not the CRTC for things like rates), and on how we can get out of this mess. I stand by my statement that the government (in some form) needs to step and in and apply some beat downs, but you should go read his post to be better informed. Thanks Martin!

Posted by Jay Goldman on Tuesday, April 10, 2007 at 08:25 AM in Tech Geekery, Taking Care of Business with tags , , , , , , , , , , , , , , Permalink4 comments

Comments

They have to cover the cost of their own network usage in addition to making a profit from your services, so don't look to them to lower rates any time soon.

I would think that the MVNOs buy at an attractive wholesale rate, probably shaped in a step function. Certainly the incremental cost of adding traffic must be low - from what I understand all the cost is in acquiring traffic.

the problem largely rests in the hands of the CRTC

That's what I thought. Not so. They are not regulated. Pure market forces in a oligopoly industry. Funny that the MVNOs don't provide more services.

Posted by Martin Cleaver on Tuesday April 10, 2007 at 1:57 PM
Colin Bowern says:

It certainly doesn't help that there are really only three carriers (Fido is Rogers with a pretty paint job). I'm not convinced that the MVNO model is even working in Canada. Telus is running Amp'd, Rogers is running Fido, not sure who is running Virgin. It feels more like a thin veil on the big three that a true network resale strategy, so I wouldn't expect any of them to be too effective at pushing down the rates.



The carriers need to focus on being a good network alone. I think that is where the government can step in - separation of church and state if you will.



Beyond short codes the premium SMS/MMS hold backs are another great example where the carrier takes upwards of 50% of the charge for no real value add! No wonder mobile web growth is slow - only the carriers are really making money. It's all a shame because we'll have 4B phones in 2010 and only about 1B PCs.

Posted by Colin Bowern on Thursday April 12, 2007 at 12:42 PM
at says:

YEah,, agreed.

what we need is to exert political power as a single entity, and very fast.
required organization and political will. i think it will be simple as that for the future.

Posted by at on Thursday April 12, 2007 at 11:36 PM
Truth is that the government is scared to death of doing anything that might collapse the telcom sector even as the big three companies in that sector make Canadians less and less competitive globally. Government leadership on this? That's an oxymoron.
Posted by Robert Ouellette on Saturday April 14, 2007 at 9:07 AM

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