Keitai

In honour of Canada Day (July 1st) I thought i’d offer up some information about mobility in the ‘great white north.’

I have an ongoing love-hate relationship with the Canadian mobile industry—mostly due to the fact that we don’t really have one yet (harsh words I know.) Digging up information about what’s going on here is painful at best. The local media still calls mobile ‘wireless’ or ‘cellular’, still thinks that ‘mobile’ exclusively refers to iPods and Blackberry devices, and most consumers have fallen madly in love with the ‘ultra-cool’ Razr (…bad UI, hobbled Bluetooth, non-existant battery life…enough said.)

It’s for all these reasons that Bryan and I tend to disappear to Asia several times a year, subscribe to more European mobile blogs than North American ones, (sad to say—only two Canadian ones) and collect bucket-loads of strange items like Nokia pamphlets, keitai straps and content brochures from MBK, Changi and Heathrow airports.

All that said, things are improving. So for everyone out there who knows nothing about Canada—here’s a bunch of stats, some local context, and my (optimistic?) predictions for the future.

Mobile Penetration, Operators and Stuff

Canada has a population of about 32 million and a mobile penetration rate of roughly 48.3% (Q4 2005.) Current estimates predict a rate of 67% by 2010 so the numbers are growing fairly fast. We have three operators — Telus Mobility (CDMA, IDEN), Bell Mobility (CDMA), and Rogers Wireless (GSM) — along with the Roger’s ‘Fido‘ sub-brand. Due to the country’s physical size, smaller operators so provide service to the north and other remote areas but most(all?) of these operate under the Bell network (MVNOs of sorts…I suppose.) Official MVNOs are currently limited to Virgin Mobile and the Loblaws/President’s Choice supermarket chain which offer basic, ultra-low-cost handsets (including the Nokia 1100 which has been a very high seller in emerging markets) under a pre-pay only format. A friend in the industry tells me that ironically, the Virgin MVNO is doing better with the over 60 crowd than the teen demographic they’re actually trying to attract due to the cheapness of the devices and the ability to pre-pay.

[Shortl addendum: Since writing this i’ve discovered that apparently Amp’d may be about to enter the Canadian market—possibly buoyed by the news of Virgin’s 250,000 Canadian subscribers. Thanks to Om Malik and Mark Evans for the links.]

Why is Penetration Low?

High fixed-line teledensity is certainly to blame—with a long history of reasonable prices, flat rates and easy home connectivity—there was less of an immediate incentive to adopt mobile. Our high rate of broadband connectivity probably hasn’t helped either. And from a technology point of view (my theory…but I think it’s a reasonable one,) the high CDMA presence has had an adverse effect on handset quality and variety reinforcing the impression that handsets are only meant for voice or text.

Content Consumption, Handsets, and Services

Canadians send on average 120 million text messages a day and the numbers seem to be growing fast. The average consumer has no idea what SMS or even ‘texting’ means however—here we call it text messaging Monthly texting and voice plans are reasonably economical but the monthly CDN $6.95 + tax CRTC ‘license fee’ on each post-pay bill can make basic plans unaffordable (and likely serves to increase ARPU as paying $27 for a $20 plan seems hard to swallow, while an additional $7 tacked onto a $70 plan is far easier to ignore.)

Independent of SMS, data usage is quite low—last I heard, about 7% of ARPU revenue—and I suspect these numbers are skewed by the relatively high usage of Blackberry devices which typically allow unlimited data transfers within a sand-boxed environment. For the rest of us, the going rate is about CDN $0.03 per kilobyte, although packages can decrease this rate slightly but things can get very silly if you try to use data on a regular basis.

All things considered, our overall blended ARPU is fairly high, at about CDN $50. Most Canadians (4:1) subscribe to handset subsidized monthly post-pay packages, usually through long-term (3yr) contracts with high cancellation penalties. Purchasing a handset is typically not possible outside of an operator’s retail outlet and—until very recently—purchasing a un-locked handset was also not possible (and remains that way on the CDMA side I think.) Bryan and I tend to visit suburban Asian malls to purchase all our handsets and most seem to be coming from Malaysia or Hong Kong. Otherwise we buy handsets when traveling.

Operators have recently begun offering subsidized access to multimedia services (MMS, video, photo sharing, IM etc.) but so far, much of it is tightly controlled or maps directly to their content deck or media sandbox. Third party services are not terribly welcome and we’ve heard lots of stories of developers being unable to initiate a simple WAP push download due to network restrictions. Shortcodes are growing in popularity but with a monthly license cost of about CDN $500, they’re not really practical for small companies.

As best we can tell, no Flash Lite enabled handsets are available at this time (although Flash Lite compatible ones are being sold—we still haven’t figured out if Flash is simply not pre-installed or rather blocked altogether.)

Lifestyle

Hmmm…this is a tough one. Blackberrys, Treos and Razrs currently define the Canadian mobile lifestyle. Nokia, Samsung and Motorola have very recently (6 months maybe) begun advertising their handsets using print and billboard media. The ads are typically big, sexy and command lots of real-estate so I’m sure it’s increasing consumer awareness of the OEMs from a brand perspective.

Personalization accessories are pretty much non-existant. You can find ‘Keitai straps’ and table-top cell-phone holders/cozys in Chinatown or other Asian neighbourhoods but that’s it. And, unlike almost every other country i’ve visited, there are no ‘mobile lifestyle’ magazines or publications, no television adverts and little print media coverage so the Canadian visibility of ‘mobility’ is pretty non-existant. We do get the occasional special report in the technology section of the Sunday paper but they often relate to iPods, enterprise-style devices like the Blackberry, stories about high-visibility overseas markets like Japan, or sensationalist media stories like the debate over brain safety and handset use.

[Addendum: See this new post on a Rogers/Nokia word of mouth marketing program for Vancouver and Toronto bloggers. Free handsets are available to those who qualify.]

The Development Community

There is a fairly large ‘wireless’ development community in Canada, but not necessarily a ‘mobile’ one. Development has traditionally been focused on infrastructure and network related products and services but this is starting to change. The interest in mobile applications and content is growing with small clusters of companies sprouting up in Toronto, Vancouver and Montreal offering SMS/MMS marketing, C/J2ME based B2B and B2C applications, and content (games, ringtones, wallpapers) aggregation or delivery platforms. We also now have two Mobile Monday chapters—Vancouver and Toronto which have been very well recieved locally.

Where I See Things Going

In no particular order…:-)

• Vancouver has a large concentration of (console) gaming and web/broadcast animation companies and attracts hundreds of students from Asia as well as Central and South America.. A smaller cluster operates out of Montreal and the Eastern Atlantic provinces—large portions of which are French speaking with strong ties to Europe, North Africa and the Middle East. This makes for an interesting mix of talent and culture which is bound to generate some great mobile games and content in the coming years.
• A Vancouver organization by the name of Mobile Muse is sponsoring a series of cultural mobile initiatives and hopes to create a local ecosytem of cultural projects over the next few years. There is a long history of cultural and artistic experimentation in Canada and—once the market catches up a bit—I think we’ll see some interesting work come out of this area.
• A related group to watch is the large Canadian eLearning community which has always been quite innovative and experimental in the area of multimedia learning objects. I think they’re going to love Flash Lite and widget-based mobile web technologies.
• I’ll probably get run out of town for saying this but I keep wondering what we’re going to do with our CDMA network. Bell Mobility and Rogers Wireless are currently about even in market share. I’ve recently heard from several people that Rogers is interested in finally offering more innovative services. Their 3G UMTS network is apparently being tested (internally) in Vancouver and expected to launch in a few months. We’ve heard that larger data plans 200+MB will be available soon (who knows, they may even re-instate the unlimited plan they launched then immediately discontinued a year ago Their handset offering has really improved with several Sony Ericsson music phones and even a Nokia E Series device coming soon. Meanwhile the CDMA crowd offers a handful of PDA/push-email devices, four different colours of Razr :-), some basic LG clam-shells and one lonely EV-DO enabled Samsung. I can’t personally see a reason to go CDMA. There’s also been lots of talk recently about global operators switching to GSM based technologies . All that said—the official carrier for the upcoming 2010 Olympics in Vancouver is CDMA which should make for an interesting battle to win over consumer mind-share in the coming months.
• Number portability and mobile payments are supposedly comming…but as they require operator cooperation, it’s taking a bit of time

And finally, there seems to be a fair deal of (albeit hidden) interest from Canadian consumers. With a large multi-cultural population, many Canadians travel or have family overseas so they’re aware that things are different elsewhere—they just don’t know why.

Bryan and I often work in coffee shops around the neighbourhood and get the inevitable “what do you do?” question from staff or patrons. Our response often generates an avalanche of questions about handsets, technologies, content and services seen or experienced overseas. Our response at Vidfest a few weeks back was about the same (I still owe several people emails to explain to them where they can buy decent handsets, how to get a SIM etc.—I’m sorry, I will email you this week!)

And a note to the Canadian press—we need intelligent media coverage in this area. My favourite technology section in an otherwise very mainstream publication is the Bangkok Post. They cover all sorts of stuff including web 2.0, linux, social software, mobility, devices, lifestyle, eLearning etc…—and they do it every single week with lots of variety. And as for our operators, I know the market is only 30 million but please relax and open things up a bit

[Source for many of the above numbers is the 2006 Netsize Guide and the 2005 IDC Canadian Wireless Forecast.]