Canadian smartphone plans cheaper than U.S.

Monthly smartphone plans are about 24 to 27 per cent cheaper in Canada than in the United States, said a new report from Scotia Capital. The report issued Thursday, called “Canadian Wireless Myths and Facts,” by Scotia Capital analyst Jeff Fan, said Canada has a healthy wireless market that benefits consumers and carriers with lower smartphone price plans and a higher smartphone penetration than the U.S. “We think it is time for the regulators to declare victory on the policies they adopted five years ago,” the report said. Scotia Captial said that, on three-year contracts, Canada’s monthly smartphone plans are cheaper than those in the United States by 21 to 23 per cent. The main reason for the difference, the report said, is the incumbents' cheaper flanker brands such as Fido, Koodo Mobile and Virgin Mobile Canada. “We think the three-year contract has actually led to low handset prices that helped smartphone penetration in Canada,” the report said. Incumbents have also been affected by new wireless entrants that launched following the 2008 wireless auction, causing average revenue per user (ARPU) for voice services in Canada to decline from between $46 and $54 in 2008 to $36 in 2012. “We believe this was largely due to competition and data/text substitution,” the report said, adding that the decline in voice service ARPU will continue toward the U.S. level of below $30. The report said Canada’s smartphone penetration growth has outpaced that of the U.S. for the past two years. The Canadian smartphone penetration rate for postpaid subscribers, the report said, reached 67 per cent in 2012 compared to 62 per cent in the United States. “Canada has higher cumulative 4G LTE coverage at 194% vs. the U.S. at 144% because there are three healthy operators,” the report said.

Canadian smartphone plans cheaper than U.S.

Brief | March 8, 2013

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