A growing number of young consumers are fuelling Canada’s hunger for wireless messaging and entertainment services, but prohibitive pricing packages, lack of content, and a dearth of more sophisticated handsets are putting a damper on adoption rates, according to a recent study.
At the end of 2007, Canada had around 20.4 million wireless subscribers, or a penetration rate slightly over 62 per cent.
That number is expected to shoot up to about 26 million (76.3 per cent) by 2011, according to a study conducted by IDC Canada Ltd. titled: A Brave New World – Wireless Data and Entertainment Services in Canada.
“Consumer enthusiasm for wireless data and entertainment services is fueling the [growth] of the segment,” said Steve Yang, analyst for communications research at IDC Canada and study author.
The survey, which queried some 1,000 Canadian consumers aged 13 and above on their mobile phone habits, indicates that downloading ring tones and swapping SMS (short messaging services) messages remain the top wireless activities in Canada.
“The key for vendors and carriers is to hook the 18 to 29 consumer bracket because these individuals are technologically adventurous and have the disposable income,” Yang said.
More than 21 per cent of the respondents download ring tones; about 12 per cent download graphics; another 12 per cent play mobile games; nine per cent use ringback tone services; yet another nine per cent download music to their phones; while eight per cent download TV shows and video clips.
About 50.5 per cent of the respondents use SMS, sending an average of 63 messages a month; 24 per cent employ multimedia messaging service (MMS involves transmission of data, video and photos) at a rate of about seven messages per month; and 15 per cent use wireless instant messaging (IM).
Mobile social networking services, which allow users to connect their mobile phones to social networking sites such as Facebook or MySpace, were used by less than five per cent of the respondents.
The rest of the respondents do not use any of the above services either because their devices are not capable of carrying out the activity, or they are not signed up for such a service, or they do not know how to use the feature.
“The numbers show that there is tremendous interest among consumers and the market has a lot of growth potential,” said Yang.
Apart from exorbitant data packages – such as those which met iPhone Canadian buyers – the analyst explained that a lack of applicable devices and content are holding back adoption.
Even though more than 60 per cent of Canadian consumers are believed to have cell phones not all of these units are GPS-enabled or suitable for downloading and viewing colour video, he said.
In addition, he said, Canadians don’t have the range of wireless entertainment content choices that mobile users in other countries enjoy. “We need more service providers who can provide wireless entertainment apps and content.”
It’s a sort of chicken-and-egg situation, according to Paolo Maralit, lead software developer at Mobidoki, the wireless application development arm of Offshore Solutions, a global software development company based in Vlijmen, the Netherlands.
Users won’t buy into a service unless they see an attractive application. Carriers are unlikely to offer a service unless they’re assured or a market.
Perhaps, the wireless industry and market in North America is a bit conservative compared to its European and Asian counterparts, says Maralit.
Mobidoki is developing applications that will allow mobile users to create and swap image-based greeting cards on their cell phones. The company is also using the same idea to enable businesses to push video and other data on cellular networks for corporate collaboration and mobile advertising.
In other countries adoption is tied to the development of mobile devices, he said “Once a new capability is built into a phone, developers lose no time in creating applications and users scramble to try them out because they’re excited about it.”
He said if the app doesn’t deliver as expected or if people get tired of it, they simply drop it and move on to the next new thing.
According to Maralit, the Canadian mobile entertainment market is very much in its infancy. For instance, while most users in Toronto still have their ears stuck on ring tones, their counterparts in Manila and Seoul have been viewing TV series and movie clips on their phones for more than two years now.
Mobile users in Tokyo have been purchasing products with their cell phones for over four years.
If there are two things Canadian carriers can learn from the mobile industry across the oceans, Maralit said, it’s to keep on providing exciting services, and at price points that target users can swallow.
For example, when MMS was introduced in the Philippines several years ago, the public didn’t embrace the service because it was 10 times more expensive than the available alternative. At 24 cents a pop, users tended to forgo sending video and images to one another for the less costly .024 cent text message.
When carriers dropped the price of MMS to just twice of that the current text message charges, adoption shot up, Maralit said.
An earlier study by Deloitte Canada Research on technology and telecommunications also points out that as mobile phones become cheaper, making money out of the technology will depend on how the device can be connected to networks and services.
“A $10 dollar phone won’t get manufacturers much profit,” according to Duncan Stewart, head of Deloitte Canada Research.
But if cellular functionality can be embedded in machines such as automated tellers, vending machines or cars, the potential for revenue is greatly increased, he said.