Since the first wireless phone such as Motorola’s “brick” hit the Canadian market 20 years ago, the number of subscribers here has grown to just over 15.2 million or 47.6 per cent of the population, according to the Yankee Group.
2009, that number will grow to 52 per cent – 13 points behind the current number of subscribers in the U.S. and much less than the adoption rate in countries like Scandinavia, which has 100 per cent penetration, said Yankee Group analyst Marina Amoroso, who covers the wireless markets in the U.S. and Canada.
While Canada’s wireless industry Wednesday celebrated 20 years of wireless phones at a conference in Ottawa, limited spending on wireless services, easy and inexpensive access to wireline telephone service and delayed movement from analogue to digital technology have contributed to Canada’s lower penetration rate relative to other countries in the world, according to wireless experts.
Despite how far wireless phones have come in the last 20 years, Canada still has a long way to go over the next few years, said Nada Usina, general manager and president of Nokia Canada.
“There are still only one in two people in Canada that have handsets,” said Usina. “You look at other markets in the world where there’s 100 per cent penetration.”
Amoroso likens the growth of the wireless industry in Canada to the Internet.
“I don’t think anybody could doubt that the wireless industry has surpassed the expectations of 20 years ago similar to the way the Internet has surpassed expectations of 50 years ago,” said Amoroso, who attended the conference, adding Canada’s cultural mindset is different than that of other countries when it comes to disposable income. “The willingness to pay is not there from Canadian subscribers compared to other countries.”
Motorola Canada president Frank Maw said 20 years to get to 15 million subscribers in Canada is a milestone in of itself.
“Celebrating 20 years of cellular in Canada for most of us marks what we think is a halfway point to where we see ourselves being in a 25 to 30-year timeframe,” said Maw. “Within the next 10 years we’ll see 100 per cent penetration when all 32 million Canadians have a cell phone.”
Maw added that not every single Canadian will have a cell phone; rather there are going to be many people that will have more than one device or have devices other than voice.
Maw also pointed out that countries like India, unlike Canada, doesn’t have a wireline infrastructure in place to impede growth of wireless.
“We have terrific networks, good competition and the lowest rates in the world,” said Maw. “We have all the ingredients for high level adoption and penetration but the impediment has been good wireline service.”
In rural Canada, economics has been the biggest obstruction to high speed connections, said Maw. IMS and inexpensive broadband will allow these areas to connect relatively inexpensively, he added.
The latter is one of several key drivers that will push adoption rates upward in the next few years.
“There’s going to be an explosion in bandwidth as broadband continues to grow,” said Maw, adding he agrees with Industry Minister David Emerson’s view that broadband connectivity to every Canadian is essential to prosperity. “Most of us in the industry equate bigger broadband capacity with lower prices.”
Both Amoroso and Usina noted that interoperability between carriers on SMS and now MMS have and will continue to help further wireless adoption.
“MMS interoperability in Canada and the interoperability of voice, text messaging are having an incredible impact on power-packed devices that are easy to use and understandable,” said Usina, adding that unlike the other five means of communication (print, recording, radio, television and Internet), mobile connects everything together.
“Mobile has become the sixth medium,” she said. “It’s truly the only medium that can incorporate the other five into one device.”
Maw added the digitization of all types of information including voice, entertainment and now office applications will also help fuel wireless adoption rates.
While experts agree that the market will continue to grow, Amoroso pointed out that the wireless industry in North America is saturating as it reaches its limits as far as subscribers are concerned. Because traditional revenues from voice are declining in price, carriers need to broaden their offerings, she says.
“Carriers need to start differentiating their service products so they no longer have to resort to the knee-jerk price wars every quarter,” said Amoroso. “They can actually focus on attracting subscribers based on their brand and quality of service.”
Bell, for example, recently adopted a multi-branding strategy with the signing of a joint equity share agreement with Virgin Mobile in the hopes of capturing the youth market with Virgin’s image resonating with the lifestyle of that market.
Product differentiation aside, Maw said there are going to be a lot of new disruptive technologies like Wi-Max coming along that will present challenges to the wireless industry.
“There’s a debate going on if Wi-Max can replace traditional cellular telephony in a fifth-generation (5G) level,” said Maw. “Will it compliment it? Or will it be used in underserved areas or overlay in metro areas?”