TORONTO-Canadian wireless carriers are bracing for tougher times as they gear up for faster 2.5-generation (2.5G) services. The four national carriers-Bell Mobility, Microcell, Rogers AT&T Wireless and Telus Mobility-posted disappointing second-quarter results, reflecting the overall slowdown in the market.
“Canadian pricing is even more competitive than before, as ARPU (average revenue per user) is definitely taking a downward slide. ARPU has fallen because of discounting, free handsets and emphasis on prepaid services. Carriers are trying to boost ARPU by getting away from subsidizing handsets and trying for more postpaid customers. But that’s not so easy,” said Jeremy Depow, senior analyst for The Yankee Group in Canada.
For its part, Bell Mobility added 151,000 new wireless subscribers in the second quarter. These additions represented a 26-percent increase and pushed the carrier past 3 million customers. But the gains are down 18 percent compared with the previous year. Bell Mobility is recognized as the most aggressive discounter among the wireless fraternity.
Microcell Telecommunications added 63,297 retail customers in the second quarter, bringing its total past 1 million at 30 June, up 44 percent from 722,739. Operating under the Fido brand, Microcell has been rolling out its General Packet Radio Service (GPRS) system that will augment its GSM voice network.
“But the commercialization of GPRS will be delayed in Canada until next year primarily because of the shortage in handsets. Data speed by the carriers still isn’t really broadband, not at 10 kbps (kilobits per second) to 100 kbps per user-and, of course, it’s not available today,” said Paul Fulton, vice president and general manager of 3Com’s wireless connectivity unit.
The manufacturer has begun shipping a LAN solution in Canada. Growth in wireless data sales is increasing by 20 percent per annum, according to Fulton.
Rogers AT&T Wireless was the only mobile-phone company in Canada to report customer gains in the second quarter that were higher than the same period last year. Rogers had 110,000 net subscribers in the quarter, a 12-percent increase compared with a year earlier. But the carrier reported a loss of C$52.4 million (US$34.1 million) for the period.
In the scheme of things, Rogers is carrying less lucrative traffic. Net additions of less-desirable prepaid users doubled, making up 57 percent of net additions for the second quarter, while net gains for the more lucrative postpaid subscribers fell 31 percent from the year before. This July, Rogers completed the installation of its GSM-GPRS network in 25 of the largest markets in Canada.
The parent company Rogers Communications is in the midst of taking its wireless unit private. By buying full control of the wireless unit now, Rogers will be in a better position to reap the benefits should Ottawa loosen foreign-ownership restrictions on telecom companies. It is anticipated the government will expand foreign ownership rules beyond the current 33-percent threshold. If so, Rogers could benefit should partner AT&T or another player set its sights on the Canadian market.
Like its competitors, Telus Mobility gained far fewer new subscribers than analysts had expected in the second quarter. It had 75,400 new additions compared with predictions of between 100,000 and 120,000. In a bold move, Telus Mobility stopped giving away phones through rebate plans. But it may have to resort to more giveaways if the likes of Bell Mobility, Rogers and Microcell continue to snare customers with free handsets.
