Canadian iPhone users “unlikely” to get big price break

A new price model for data service set to be unveiled by Rogers Communications Inc. to coincide with its Canadian rollout of the 3G iPhone could mean lower data rates.

However, cell phone users shouldn’t expect data rates to fall dramatically, say telecom industry analysts.

Speculation has been rife about the type of  pricing plan Rogers would adopt to support its iPhone release set for July 11.

At least one group that has petitioned Rogers for lower data rates has even warned of a “consumer backlash” if pricing plans for the new phone turn out to be too high.

We’re paying data rates three times higher than those in the U.S., noted Tom Bielecki, an engineering student at the University of Calgary. “Our prices are worse than some third world countries.”

Bielecki began an online petition for Rogers to reduce its data rates, which so far has got more than 6,000 signatures.

“You will see more value in our pricing as we go forward,” Nadir Mohamed, president and CEO of Rogers Communications was recently quoted as saying in response to queries about projected pricing arrangements.

The company, however, refused to reveal further details.

Canadian analysts have welcomed the announcement, but predict that Canadian voice and data rates – considered among the highest in the world – will probably only go down slightly.

“I think the magic number would be at or under $75/month including voice and data. That would be the sweet spot to make more people sign up,” Darren Mak, principal of DigitalWeb, an IT consulting firm based in Winnipeg.

“Rogers will probably offer higher data cap or lower flat rate fees to further boost the interest in the iPhone,” said Michael Rozender, principal of Rozender Consultants an Oakville, Ont-based wireless technology consultancy firm.

“Any price cut will be minimal. It’s highly unlikely that the Canadian telecom industry will allow prices to plummet,” he added.

Rozender noted that Rogers’ data plans are currently very expensive.
A 5GB plan can go for $100 a month, with $0.03/MB for additional usage.

“They do not offer unlimited plans with flat rates enjoyed by most users in other parts of the world. Once you go through the basic coverage, you’ll be paying through the nose.”

Rogers is also following the example of other providers offering the iPhone.  The company is subsidizing the price of the costly device and bringing down its $600 to $800 price tag to $199 for an 8GB version and $299 for the 16GB version with a three-year Rogers contract.

These are prices similar to those offered by AT&T in the U.S. However, AT&T has said it will offer a US$30-a-month unlimited data plan for the new iPhone.

Rozender says Rogers priority will be to recover its money for subsidizing the phone. “I don’t think it will come down to $30/month.”

Another analyst agrees.

“The price can’t drop too low. The strategy would probably be to gradually reduce the rates,” said Michelle Warren, senior analyst for Info-tech Research Group, a consultancy firm in London, Ont.

Canadians would probably agree to fork out $100/month for an unlimited data plan with the apps laden iPhone, she said.

“It’s a niche market where consumers are willing to pay top dollar in exchange for leading edge features and brand cache.”

Bielecki, on the other hand, says “there could be a consumer backlash if Rogers doesn’t offer more palatable price plan.”

He said Rogers should also bump up its data limits as data-intensive applications – with features such as Google Maps integration, support for full HTML Web browsing with Flash, Java or JavaScript, e-mail access and various widgets – make the iPhone a potential data hog.

Signatories to the petition want Rogers to adopt a data cap closer to the 100MB offered by Bell Mobility or a $100/month per 250MB plan offered by Telus Mobility for BlackBerry units.

Bielecki is also asking Rogers to provide users with access to a site that will allow them to monitor data usage online.

But DigitalWeb’s Darren Mak feels that too much emphasis is being placed on data capacity.

“I currently have a 1GB data plan for $60/month with Rogers on my iPhone and it’s more than enough as long as you use the phone for what it’s suppose to do,” Mak said.

He said he uses data for four to five Web page searches daily, checking e-mail, and even a little GPS navigation activity.  Mak says he saves on costs by using the iPhone’s WiFi capability when at home or in the office.

Rogers has to find the right combination of affordable price and data to make the iPhone more attractive, said the consultant said.

He says $75/month or less would be the “deal maker” for many users.

Anything more would make the iPhone unreachable for many younger users such as college students.

With the price, Rogers can offer 1GB or offer an additional $15-30 a month for unlimited in-device browsing. This would mean using the iPhone for Web-browsing and even GPS functions but no third party software activity such as Bit Torrent downloads.

Even seasoned BlackBerry users find the iPhone hard to resist.

“The phone has a very sleek design, a unique and very useable touch screen interface and a portfolio of features and applications. In a word – it’s neat,” says Cameron McKay, systems administrator for McKesson Canada, a healthcare product and service provider.

McKay fancies the iPhones ability to provide instant access to videos, music and photos. He foresees many executives requesting their IT departments to integrate the new mobile device to company networks.

It’s unlikely, though, that McKay will be dumping his BlackBerry anytime soon.

“Large enterprise organizations like us have heavily invested heavily in adopting our network to the now ubiquitous BlackBerry.”

Mak feels positive about Apple’s assurances that the iPhone can easily integrate with corporate networks. Price would not be a deal breaker for business users, he noted.

“Many companies are already paying a hefty price tag for data on their BlackBerry devices.”

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Jim Love, Chief Content Officer, IT World Canada

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