July 19, 2007

Although the iPhone can’t be bought yet in Canada, it’s having a striking impact here by forcing Telus and Bell to slash wireless data prices.

That’s the opinion of the SeaBoard Group, which in a report Thursday said the certainty Rogers Communications will soon be selling Apple’s the phenomenally popular handset here has forced its main competitors to strike early and make what the telecommunications consultancy calls “breathtaking” data price cuts.

“The deals now are fabulous,” said Iain Grant, SeaBoard’s Montreal-based managing director and until now an outspoken critic of Canadian carrier pricing.

They’re so good, in fact, he urges organizations with wireless data contracts to rush to Bell and Telus offices to make sure they’re getting the best prices.

SeaBoard calculates that in June, Rogers would have effectively charged a user $2,600 a month to send or receive 1GB of data (e-mail or Web access) on laptop or any handset except a BlackBerry, while Bell and Telus would have charged $2,350.

In August Telus slashed its rate to $375 a month, Rogers dropped to $2,470 and Bell stayed the same.

But by last month Telus and Bell were charging $100 a month for 1GB of data, while Rogers’ rate worked out to $1,580. [Rogers doesn’t have a 1GB rate plan, so SeaBoard made a calculation by using the carrier’s 500MB of data for $80 a month plan, plus the listed $3 charge for each additional megabyte.]

In an e-mail, Rogers spokeman Elizabeth Hamilton complained SeaBoard was “highly selective and oddly restrictive” in its calculations. “1Gb usage is extremely uncommon handset use and most likely to be from a high data business user,” she wrote. Rogers has a $65 a month plan for modem users that would have been more appropriate choice for comparison, she said.

“Our plans offer more value to most customers. By arbitrarily picking a 1Gb service, Seaboard’s study makes Rogers look more expensive when in fact we are less expensive for the select group of heavy users that do more.”

“In previous work, Seaboard attributed Canada’s data pricing to their contested belief in a lack of carrier competition in the Canadian market. The carriers have not changed and yet they now have accurate evidence of a significant drop in data pricing from a sample of large Canadian wireless carriers. So how is it Seaboard can attribute Bell and Telus’ drop in pricing to the unavailability of a device they confirm these carriers would not be able to launch on their networks? Isn’t the significant drop in data pricing really clear evidence that there is in fact, today, a highly competitive wireless industry in Canada?”

Bell and Telus’ price plunge is almost entirely attributable to the expectation that the iPhone is coming, concludes Grant. With the BlackBerry Curve, for example, being a direct competitor to the iPhone, how can Rogers justify to its partner a data package for Apple that’s considerably more attractive? NetworkWorld Canada editorial>Text

Before patting carriers here on the back, he adds, remember that in the U.S. providers now only offer unlimited monthly data plans, a concept yet to reach this side of the border, and for up to half as much a month. Voice prices are also lower than ours.

[Just as this article went to press Bell announced an unlimited data plan for its new HTC Touch handset with a 2.8-inch touch screen. For $7 on top of a voice plan, a user gets unlimited e-mail and Internet connectivity. The phone cannot be used as a laptop modem. “It underlines that there are devices that are available now that can do what an iPhone can do,” said Bell spokesman Mark Langton.]

The iPhone only runs on a GSM network, which means in this country it can only be offered by Rogers. However, some people – including Grant – are willing to risk buying a hacked iPhone in the U.S. and run it on the network of either Rogers or its Fido subsidiary.

Apple is squeezing carriers to chop their data rates to boost demand for its handset (or in Grant’s words, to set “plans that aren’t ridiculous,”) which has led to speculation that the reason iPhones aren’t sold here is Rogers’ reluctance to fall in line.

Operators in Britain and Germany have beat Canada to the air with iPhones, although Grant notes that could be a matter of Apple’s priorities. Those countries, and many others, have bigger populations.

Interestingly, neither Telus nor Bell has trumpeted their price cuts. “If it was a car,” Grant says, “you’d expect them to be shouting from the rooftops.” He speculates that the carriers are quietly waiting for customers’ contracts to expire before telling them of the lower prices.

With a bigger screen than competitors’ smartphones and the ability to launch applications by touching icons, the public fascination with the iPhone – for now — is seemingly limitless. But Grant expects major handset makers to release models soon with features that at least approach the iPhone’s soon, and ones it doesn’t have.

“It’s great news for business,” he said of the price cuts. “It’s going the change the weight of the bills companies have been receiving for every device – BlackBerries through PDAs and PCs using 3G data network for connectivity. That’s now a viable option at $100 a gigabyte.”