Canadian wireless data set to boom

Revenue from wireless data services in Canada will explode from $45 million to $1.3 billion over the next four years, according to a recent study.

Between 2002 and 2006, the overall number of Canadian wireless subscribers will grow from 12 million to 18.5 million, and revenues from voice traffic will gradually swell from $6.4 billion to $8.8 billion, according to a report from the Yankee Group in Canada.

Jeremy Depow, a Kanata, Ont.-based senior analyst with the Yankee Group and the author of the report, said that the introduction of CDMA2000 1xRTT wireless networks – offering data speeds as fast as 144Kbps – as well as 2.5G and 3G phones will drive the use of wireless Internet, instant and short messaging, and location-based services.

These technical advances, combined with ever-increasing cellular penetration, will lead to the massive revenues from wireless data services, he said. And with better networks and handsets, Depow said businesses and other more technologically inclined users will increasingly shift away from landlines and wired e-mail.

“I think you’ll see some carriers in Canada, such as Rogers AT&T, really start to focus more and more on the enterprise because that’s where most of the revenue, and the higher average revenue per subscriber numbers are coming from. These people are using stuff all day long and for a variety of different applications,” he said.

Depow also said that as the enterprise leans more heavily on wireless, he is confident that many companies will move to address the security weaknesses that currently affect the casual wireless user.

Although the killer app for wireless will remain voice, Depow said that as revenues from voice stabilize and growth slows, a plethora of data services will take up the slack. Traditionally, he said, the money changing hands in the wireless sector has gone directly from the subscribers to the service providers and handset manufacturers, but there’s a new dynamic at work with data.

“Content providers – if they have a good business plan, a good billing scheme and a good relationship with service provider – are going to see a portion of that revenue. So there are all kinds of new companies that could potentially succeed from this, as well as the big equipment manufacturers, like the Nortels, that make cell sites and base stations,” he said.