TORONTO-Canada has vast acreage and is sparsely populated in many areas, yet it has the most affordable wireless rates in the world, according to new research.
A recent study by the Yankee Group, a Boston-based technology research firm, concluded that Canada, when measured against 27 other countries, had the most affordable wireless phone rates in the industrialized world, followed by Finland, Italy, Israel and Hong Kong.
Using Toronto as the benchmark city for Canada, the study indicates that an average phone plan offering 100 minutes of wireless airtime a month accounts for less than 1 percent of average monthly salary.
The Yankee Group used a purchasing power parity (PPP) formula, which calculates the value of a currency by the amount of goods and services it can buy, as opposed to what the financial markets deem its value to be. Based on PPP, the “least affordable” countries are Brazil, Mexico, Colombia, South Africa and India, where wireless phone costs can amount to as much as 23 percent of a monthly salary. The United States ranked ninth.
The average price per minute for wireless service in Canada is 17 Canadian cents, compared with the equivalent of 32 Canadian cents in the United States.
Mark Quigley, an analyst with the Yankee Group’s Canadian office in Brockville, Ontario, said it’s not surprising consumers and businesses are coming out ahead in Canada. “The new wireless entrants, Microcell and Clearnet, came in (two years ago) with the stated goal of winning business away from the local landline carriers,” said Quigley.
“They’ve done that with sharp pricing that the established phone companies had to meet. Although Microcell and Clearnet have been market leaders in pricing, Cantel AT&T and Mobility Canada have made aggressive moves with low-cost prepaid services.”
Roger Poirier, president and chief executive officer of the Canadian Wireless Telecommunications Association in Ottawa, says pricing dropped faster here than anywhere else once PCS licenses were issued in 1997. “In the past year, we’ve experienced relative price stability for wireless in Canada, with carriers seeing very good results.”
About 41 percent of households in Canada have access to a wireless phone. Currently, almost 6 million Canadians, or nearly 20 percent, own a cell phone. In contrast, Scandinavian countries have higher penetration. Finland leads the world with a penetration rate of 60 percent.
“You’re going to see tremendous gains in wireless penetration in the next few years. Canada will reach the same levels found in Scandinavia with prices remaining low and service high,” predicted Poirier.
Wireless carriers have been introducing new pricing packages to boost usage. Microcell, for instance, is packaging 1,000 minutes for Cdn$100 (US$66.80). Clearnet is offering unlimited evening and weekend calling.
The industry sees virtually unlimited potential as it aggressively woos landline customers to go completely wireless. “Why have a home phone?” was the tag line used by Clearnet in a recent advertising blitz.
“The price of bundled wireless services is so attractive, we’re going to gain even greater market share. Will prices go down much more? I don’t think so. As the Yankee study shows, Canadian consumers are already winners in wireless,” said Mark Langton, a Toronto-based spokesman with Clearnet.
