Today’s post is going to be getting into the mathematics of telecommunications.
For years, a number of so-called industry analysts have had trouble with the concept that wireless rates are coming down, but monthly bills are going up. Maybe we need more precision in the way terms are used, consistently. The language is important.
For clarity, I think most of us view a “bill” as the total amount we pay. Rates refer to the prices for the things on that bill. The two are related, but comparisons are only meaningful if the number of things being bought are considered.
In telecommunications, rates have declined over time, but monthly bills are, in many cases, going up. More of us are buying more stuff. We have added data plans, or increased the speeds and data volumes. Our voice plans include more features, better roaming, more long distance. In most cases, we are buying more, precisely because the relative value proposition has improved for the things we are buying: the prices are lower and we see more utility from these capabilities.
First, there is the confusion between bills and rates. Second is the question of correlation versus causality. It would have been correct to say that consumers are paying 22% less for wireless services. But, how do we know that the change in rates is due to “our policies”? In the same period, wireless rates in Australia also fell by 22%. was this due to the Canada’s wireless policies? US wireless rates fell by 31% in that period. What does that say about “our policies”?
Panel discussions and keynote addresses at The 2015 Canadian Telecom Summit will explore these issues and much, much more. Early bird rates available through February 28. Book your seat, today.
All three reported an increase in ARPU – average revenue per user – as more customers added data plans with smartphones.
But the number that I want to explore is churn. Churn is a measurement of how many customers choose to leave the company each month – it is a good proxy for customer satisfaction. Happy customers are less likely to leave their current service provider.
With the old 3-year contracts, on average, nearly 3% of your customers had contracts come due each month. Under the CRTC’s Wireless code, there are effectively no contracts anymore. Well over half of Canada’s wireless customers can leave their service provider without penalties. Many stay with their service providers for 2 years, the maximum period for amortizing their smartphones. That means about 2% of these customers are shopping each month.
As reported in the Globe and Mail, TELUS reported churn of just 0.94% for the last quarter (0.93% on the year); Bell had 1.3% and Rogers 1.46%.
On a base of 8.1 million customers, the difference in churn means that TELUS lost about 40,000 fewer customers each month. That is 120,000 customers per quarter. Customers that generate an average of almost $65 per month in revenue.
TELUS said: “TELUS’ low blended churn rate reflects the Company’s successful customers first service approach, investments in customer retention as well as a greater proportion of postpaid clients in TELUS’ subscriber base.”
It pays to invest in delivering an improved customer experience. Once again, The Canadian Telecom Summit will explore this, during panel discussions. The Canadian Telecom Summit takes place June 1-3 in Toronto. Early bird savings are available through February 28. Have you registered yet?
Allison Lenehan President & CEO Xplornet Communications
Through the years, I have written a number of articles that look at Australia’s multi-billion dollar National Broadband Network plan. Many commentators have mistakenly portrayed the plan as one that will deliver universal fibre to the home.
I have long said that satellite based service is the only reasonably economic way to reach many households in a sparsely populated country [such as here, here and here].
In Canada, Xplornet Communications has been active in delivering next generation broadband, supplementing its 4G fixed wireless in delivering broadband service to rural Canadians. I use Xplornet satellite service each summer as my primary communications service provider.
A week ago, CRTC Chair JP Blais announced a series of decisions in a speech in my home town – London, Ontario – the cradle of Canadian cable TV. For a week, I have been considering what to write about these decisions. How can I add to the analysis that is already available?
Mobile TV has been under examination by the CRTC to see if rules are being broken because people can’t get open internet video streaming for the same effective cost per megabyte as packaged mobile video. Frankly, my initial reaction would be to respond that mobile carriers marketing departments should be free to choose whatever products they want to offer. Some service providers only offer voice and text. Isn’t it up to the service provider to decide whether they offer data and at what speeds?
If you want open internet, here is the price per megabit per second and here are the terms and conditions. If you don’t accept those conditions, please feel free to find another service provider.
We don’t mandate that ice cream stores offer tiger ice cream – although maybe we should – nor do we limit them from offering more than vanilla flavour. We don’t even require them to offer vanilla.
Price discrimination is not against the law, contrary to the views being expressed by many. I saw one piece that said:
Indeed, the CRTC found that a member of the public viewing identical programming would pay $5 if they were a Bell mobile TV customer and $40 (a difference of 800%) if they did not subscribe by way of Bell’s mobile TV service. In these circumstances, how could the CRTC find other than that Bell and Videotron, in their roles as signal transmission providers, had discriminated against the customers of other Internet streaming services available in the mobile market?
It is actually a 700% difference, but that is irrelevant. Massive discounts for subscriptions are the norm as those of us who still like glossy paper know. Consider magazines. It is quite common for annual subscriptions to be priced at 80-90% off the individual cover prices. My newspaper delivery is less per month than I would pay per day at the convenience store.
In “Roadblocks for an innovation economy“, I observed “The UK was concerned that net neutrality regulation might prevent pricing innovation, differentiation of offers and serve to discourage investment in higher-speed access networks.”
Through the years, carriers have tried various means to encourage adoption of new services, including special flat rate prices for certain services (Canadians have demonstrated an affinity for flat rate over variable pricing).
Even today, Mobilicity offers an “Unlimited Light Data” plan that provides unlimited access to certain popular social media websites, but not others.
Such plans were common in the early days of mobile internet, encouraging the adoption of smartphones and getting consumers into the idea of incremental data plans.
But in reference to the Mobile TV decision, in his interview with Cartt.ca, CRTC Chair JP Blais said “this is about an open internet. It’s about making sure that there aren’t fast lanes and slow lanes.”
No data was being slowed down or sped up, so are we to interpret this statement as a ban on bundling data for certain applications?
As such, is Mobilicity’s Light Data add-on next to be shut down?
Should the dairy board be investigating why my ice cream shop charges the same price per scoop for truffle packed ice cream as it does for plain vanilla?
I doubt I would ever find tiger ice cream if my local shops needed to get bureaucratic approval.
The digital economy framework shouldn’t block service innovation and differentiation.
In Canada and the United States, government bodies are increasing their intervention in the internet.
A few weeks ago, I wrote about special pricing plans in a piece called “Zero is better than nothing.” It concluded “Consumers can benefit greatly from creative, competitive, targeted pricing plans. Regulators need to be careful imposing restrictions on the evolution of business models.”
In addition to our annual Regulatory Blockbuster, The 2015 Canadian Telecom Summit [June 1-3 in Toronto] will be presenting a panel of leading economists from both sides of the border to explore the impact on innovation and investment. Early Bird prices are available until the end of February. Register today!
The 2015 Canadian Telecom Summit, taking place June 1-3, 2015 in Toronto, brings together the key influencers who are creating Canada’s unique telecommunications, broadcast and IT market structure.
For 3 days, the leadership of the telecom, broadcast & IT industries will converge at the Toronto Congress Centre to discuss the key issues and trends that will impact this critical sector of the economy. Join your peers, suppliers, policy makers, regulators, customers and competitors in attending the industry’s most important gathering.
For 14 years The Canadian Telecom Summit has been the place for Canada’s ICT leaders to meet, interact and do business. As in past years, this year’s Summit will feature high-octane interaction, top-level keynote speakers and thought-provoking panel discussions.
Hyper Connectivity: Shaping Personal & Business Digital Relationships
As connectivity expands to include billions of devices and machines in our homes and businesses, how does Canada stake out a leading position in an increasingly digital world? How do our networks and our industry need to change? The 2015 Canadian Telecom Summit’s keynote speakers and panelists will address these points, giving you a chance to hear about service deployment, what is in store for next generation business models, and underlying all of this, the technologies that continue to drive the industry forward.
As always, The Canadian Telecom Summit features cutting-edge topics. This year, in addition to our always popular Regulatory Blockbuster, we are featuring sessions devoted to
Cyber Security;
Big Data & Analytics;
Competition in Telecom;
Customer Experience Management;
Advanced Mobile Services;
The Internet of Things;
Turbo-charging network performance; and,
The video revolution.
The Canadian Telecom Summit has something for everyone! It leaves no stone unturned in bringing you the most substantive and comprehensive line-up of speakers and topics. Hear from senior executives from across the industry. Meet with your suppliers, customers and peers for 3 full days of thought provoking
interaction.
Save more than $200 by registering by February 28.
Special Networking Event
All participants are invited to join us for our annual cocktail reception Monday evening, June 1.
