Canada’s largest wireless companies are now clearly wrestling with their first real decline in smart phones customers’ monthly spending, and wondering if it is a sign of the times or a harbinger of the future. “The companies have spent billions to deploy networks and are stocked with fashionable smart phones. But even as Canadians snap up the latest handsets and sign three-year data contracts, operators are seeing average revenue from each customer fall. Is the drop a result of the recession, or does it reflect the more competitive landscape that is about to see even more players enter the field? BCE’s Bell Canada said yesterday that it generated 4 per cent less money on average from its wireless customers in the last quarter, compared with a year earlier.That follows similar news last week from rival Rogers Communications Inc. , which reported a drop of more than 2 per cent. Today. The downward trend of what the industry calls ARPU – for average revenue per user – is significant for Bell, Rogers and Telus because they rely on wireless as their engine for growth. As part of its second-quarter financial report, the company said it signed 45,000 new wireless customers in the period, compared with 83,000 in the second quarter of 2008. In addition to the fewer new accounts, Bell said ARPU fell $2.22, to $52.05 a month. Both results fell short of analysts’ expectations and crimped BCE’s overall performance, with profit dipping 4 per cent and sales down 2 per cent. “People are actually using the product less in the economy, from a voice perspective,” “A decline in employment means a declining use in wireless and we are seeing that. BCE executives agree that tougher competition, especially among their discount brands, is a factor. But they say it is being offset by customers’ adoption of new data services, which generated 28 per cent more revenue in the quarter from a year earlier. A key step involves cutting costs, which BCE has done by eliminating several thousand jobs over the past year. Executives said it has also improved quality of service, eliminating many customer calls. General and administrative expenses were down 11 per cent in the quarter, which helped bump gross margins up to 40 per cent. Other steps include the recent purchase of the 50 per cent of Virgin Mobile Canada Bell didn’t already own; the acquisition of electronics retailer The Source and its 750 stores nationwide; and a more aggressive branding campaign. In addition, the company is building a new national wireless network on the leading wireless standard of the day, called HSPA. Bell is sharing the development costs with Telus and both companies expect to launch service on it by year-end. Bell TV turned in the best performance of the quarter, with video revenue rising 9 per cent to $389-million.
Meanwhile , Bell Canada is taking the federal broadcast regulator to court to stop the country’s big networks from charging cable and satellite companies for their TV signals. Bell, which owns Canada’s largest satellite service, known as Bell TV, alleges in documents filed with the Federal Court of Appeal that the broadcast regulator has overstepped its jurisdiction and has asked a judge to intervene. The move comes after the Canadian Radio-television and Telecommunications Commission said in May it would let large conventional networks, such as CTV and Global Television, negotiate with cable and satellite carriers on compensation for their signals. The court filing is unorthodox, since it is extremely rare for a company to challenge the CRTC so directly. The bitter debate has driven a wedge down the middle of the broadcasting industry in Canada, and these court filings demonstrate how contentious the issue has become. There is already tension between Bell Canada and CTV, the television network in which Bell owns a stake, and this case will only increase it since the two sides could meet in court. Bell owns 15 per cent of CTVglobemedia, which is the parent company of CTV and also owns The Globe and Mail. Paul Sparkes, CTV executive vice-president of corporate affairs, also reserved comment. “As the matter is before the courts, it’s not appropriate for us to comment on the substance of the appeal,” he said. “We are confident that the Federal Court of Appeal will see this for what it is, a stall tactic.” ” Interesting how Bell fought very hard and successfully to get the feds to bring in laws against people who use “black boxes” to take Bell’s satellite signals without paying. Now Bell wants to take the network’s signals, without paying for them, and then charge customers for these signals. Seems very inconsistent to me! “
It is no surprise to me that mobile companies are overpricing their wireless internet services so that only businesses can afford this service. A wireless spectrum auction last year attempted to improve competition but there is still lots of work to be done. Most mobiles available in Canada come locked to a multi-year contract