Data usage will drive mobile phone penetration in Canada, experts say

Industry experts bemoaned the relatively tepid mobile phone market in Canada but expressed optimism about the future at the Mobile Media World ’09 conference in Toronto.

Compared with many other post-industrial nations, Canada just doesn’t have a lot of cell phone users. That can make it tough for developers looking to make a buck off of mobile applications. But things are going to get better quickly, experts say.

The surge in popularity of smartphones and the proliferation of mobile application storefronts is helping to drive Canada’s mobile marketplace. Innovation beyond cell phones and avoiding congestion problems faced by higher population countries will be instrumental in coaxing the marketplace out of its infancy.

“Canada’s [mobile] penetration pales as compared to elsewhere,” says Johanne Lemay, co-president of Montreal-based Lemay-Yates Associates Inc.

“We lag behind in the deployment of wireless technology,” says Paul Brannen, general manager of wireless terminals at Samsung Electronics Canada. One possible reason for this state of affairs is good landline penetration in Canada. This means there’s less of an incentive to have a portable phone.

Indeed, just 60 per cent of Canadians use a mobile phone, according to comScore Inc. Compare that to nearly 90 per cent market penetration in the U.S. and over 100 per cent in other parts of the world.

But there are signs of life for Canadians using mobile phones. The average user talks for an ample 350 minutes per month. Also, mobile devices have one thing going for them – women like using them more than men.

“Every medium that is more popular with women than men becomes successful,” says Bryan Segal, vice president at comScore. “Don’t ask me why – but it’s true.”

Also, social networking applications on smartphones are becoming more popular, as are other data-oriented activities.

That gives Canadians more reasons to put a cell phone in their pockets beyond making a phone call whenever they want to.

Canada’s current most popular applications on smartphones are sending and receiving pictures, browsing the Internet and using instant messaging and chat, Lemay says. But given that 12 million Canadians are Facebook users, it is likely that social networking will soon enter into the picture in a big way.

Facebook Mobile has increased its worldwide users by 300 per cent in the past nine months.

By virtue of simply having a smaller marketplace, Canada could duck the congestion problem now being felt by carriers in the U.S. and Europe, says Duncan Stewart, director of a research centre at Deloitte Canada.

“Congestion is a serious issue there,” he says. “It has to do with the pricing structure – with this all-you-can-eat stuff … people are downloading video and not even watching it.”

Unlimited data plans allow users to not worry about how much Web browsing, video streaming or music downloading they do in a month. Other plans that put a cap on bandwidth often include surcharges on any usage that exceeds such a limit.

In the U.S., unlimited data plan options grew in popularity by 70 percent year-over-year, according to comScore.

About half of Canadians say they want this pricing option for their mobile phone plan.

Increased competition for the wireless marketplace in Canada could soon see such plans offered. New entrants are expected to start offering plans as early as this year, after the government held a Wireless Spectrum Auction that raised $4.2 billion.

That’s quite a bit more than all the money spent on wireless spectrum for the decade previous, Lemay says. That totaled only $1.7 billion.

“In the U.S., [mobile phone] carriers are beating each other up to get to the consumer,” Segal says. “Hopefully that will happen in Canada so I can pay less on my phone bill.”

The result of that competition was a 245 per cent growth in smartphone users in the U.S. over the past year, he adds.

Canada could be next.

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