2010 wireless in canada - state of the nation - fitc mobile
DESCRIPTION
Deck first presented at FITC Mobile 2010. Second annual state of the nation wireless industry in Canada presentation by Thomas Purves. Clarification slide 12 "Fixed Costs is spending on property plan and equipment, General overhead is staff, customer support, management etc."TRANSCRIPT
Wireless in Canada State of the Nation 2010
FITC Mobile 2010, Toronto
Thomas Purves [email protected]: @tpurves
About me
2
As mobile developer what would be our ideal mobile world?
Ubiquitous broadband connectivity wired and wireless
Bandwidth seen as free by users Consistent un-fragmented mobile
platforms Mature/Useful options for monetizing
content High common-denominator of devices Ubiquity of mobile phones and of
smartphonesIt’s great if many Canadians have access
to smartphones , much better if/when you could someday assume that everyone does.
3
What is the state of Wireless in Canada?
Canada
Just 3 years ago, the picture was grim
Ouch
Circa April 2007:
Some of worst data rates in the developed world.
A country of Blackberry addicts, but low accessibility to most advanced devices.
Dominated by On-deck content, low accessibility to open content, open services.
High pricing to consumers, lagging wireless penetration, lagging adoption behaviours
Canada’s major wireless carriers 2007
6
Canada’s 2008 Spectrum Auction
New spectrum Auction rules • 40% of new spectrum set aside for new entrants• Mandated tower sharing and in-country roaming• Attempt by Government to improve wireless services
and accessibility by encouraging increased competition
Canada’s major wireless carriers 2010
8
Does this look like Competition?
9
Who is exactly zooming who
10
??
Other than branding agencies, has this mess started to help Canadians?
First, the bad news
11
Canada’s Wireless Carriers – To ScaleTotal subscribers, CWTA data Q2 2010 ( Mobiliciy, Public mobile no data)
12
New entrants have not made a big impact (yet)(CWTA Data Q2 2010, no data for public, mobilicity, videotron)
13Rogers Telus Bell Wind
-
100,000
200,000
300,000
400,000
500,000
600,000
700,000
Net Subscriber Additions in 2010 (so far)
Canadians still (still!) pay the highest cell phone bills in the world
14
And that’s not a good thing
15
16
The good news
17
How the majors are competing
Brand bamboozlem
ent
18
Network Investment
Massive handset
subsidies
(not so helpful) (helpful) (mostly helpful)
What is missing from this picture?
Canada’s network advantage
19
AT&T - 3G
Sprin
t - "4
G"
Verizon - "
LTE"*
T-mobile
- HSP
A+
Rogers
HSPA+
Bell HSP
A+
Wind/M
obilicity
H...
Telus HSP
A+ *0
7.2
14.4
21.6
28.8
36
43.2
50.4
US vs Canadian Network Speeds
Rate
d N
etw
ork
Spee
d (M
Bps)
* Services announced but not yet commercially released
Some great deals on smartphones
20
More Canadians have access to smartphones
Summer 2009
60% mobile penetration
25% smartphone penetration (Rogers)
$199 entry point for high-end smartphone ( iPhone 3G w/ contract)
Summer 2010
69% mobile penetration
35% smartphone penetration (Rogers)
$79 entry point for high-end smartphone (HTC Desire, w/ contract)
21
Canadians are still paying the highest wireless fees in the world, but at leastwe are getting more for our money. That’s sort of like good news.
Your carrier is not actually a carrier, it’s a handset leasing operation disguised as a wireless carrier
22
Where o’ where your wireless bills goHST and handset subsidies cost more than building the network
23
HST; $9.56
Handset sub-sidies; $6.80
Marketing; $5.87
General over-head; $18.94
Fixed costs; $6.30
Profit; $35.63
Where Your $83 Wireless Bill Goes(Example: Rogers Q2 2010 financial results
Basically you get this year’s latest gadget in exchange for 3yrs servitude buying some data fees and a bunch of wildly overpriced minutes
Average handset subsides >$500 per new subscriber
“the competitive environment remained intense during the quarter with aggressive acquisition offers and deeply discounted handsets being featured in the market. In response to these competitor actions, we also lowered our average handset prices” -Siim Vanaselja CFO Bell
Consumers are crazy about smartphones (“if it’s not a smartphone we can’t even sell it anymore” - Rogers exec)
It’s a great way to compete against the new entrants
But, voice minutes are in decline (down 5% yoy)
24
In a world of mobile broadband, paying for voice minutes doesn’t make any sense
25
Source CISCO forecasts 2009
Rogers just announced 21MBps service in Canada (cool!)
A standard GSM voice band requires only 12.2 kpps
Notionally, that’s now less than 0.01% of your phone’s available bandwidth
How long can this traditional but tiny little bit-stream continue to support 80% of the carrier’s revenue?
With LTE *all* voice is voip, so why do you need to buy voice services from your carrier vs anybody else?
How a carrier makes it’s money today
26
~2B (Rogers adjusted operation profit) ~4B (BCE operation profit)
Pipes vs Content
27Source: Rogers Q2 financial report
Wireless ( 3.4 B Revenues) Cable ( 2.0 B Revenues)
If carriers become dumb pipes, their business would be much reduced
28
Dumb pipes
Other Fluff(voice minutes, cable subscriptions, media, publishing etc.)
Carrier operating profit (Simplified):
Looking ahead: With traditional cash cows like voice in decline, where will telcos get their new fluff from?
29
Telcos are buying up broadcasters and Big Content rights holders
Bell + CTVRogers + CityTV, Chum etc.Videotron + their own stuff
If you are an independent content producer, or into that whole net-nutrality thing, this trend is not especially helpful.
Discussion?
30