Unlimited plans ‘premature,’ will hurt ARPU: Bell CFO

For BCE Inc. the industry-wide lurch toward unlimited data plans in the mobile wireless market was “premature,” because it will cut the amount of revenue generated from data overages in the short term. “We didn’t start this, we followed,” Bell chief financial officer Glen LeBlanc told investors at the CIBC Eastern Institutional Investor Conference in Montreal this morning, responding to questions from CIBC analyst Robert Bek. “We will always go into the market with competitive offers,” LeBlanc said. “But I thought this one was a bit early.” Because customers on unlimited data plans cannot -- by the nature of the plan -- be charged for going over data caps, companies like Bell cannot charge customers associated fees. The move, LeBlanc said, will reduce the average revenue per user (ARPU), a key metric for telecom businesses. “Let’s be honest, this will not be accretive to ARPU in the short term,” he said. “Data overages remained fairly significant in our industry in Canada and this is going to ultimately reduce significantly the data overage revenue that we earn.” While hurting ARPU in the short term, LeBlanc said, the move may have positive impacts in the long term, namely that the lack of data overages would reduce customer service costs. “It will simplify the offerings for customers, it will simplify the packages and the offerings that are in place which ultimately means more self serve is capable,” LeBlanc said. The move toward unlimited data plans kicked off in June when Rogers Communications Inc. introduced its “unlimited” data plan, the other big telecom companies quickly followed suit, introducing or announcing their own unlimited plans. Prices then dropped across the industry, according to Consumer Price Index data from Statistics Canada released in August. When Shaw Communications Inc. president of wireless Paul McAleese took the microphone later in the morning, he said that Shaw was to thank for the changes following the introduction of its Big Gig plans in 2017, and took a different tack on overage fees. “I can sit here today and quite proudly, on Shaw’s behalf, take responsibility for leading the Canadian wireless market down to a more thoughtful approach to how we deal with Canadian consumers,” he said. “Some of the toxicity that we saw in things like overage fees and things have I think started to work their way out of the Canadian pricing regime,” McAleese told investors. The drop in consumer prices has been an industry talking point all summer, and McAleese also pointed to the drop as evidence of the reduced need for regulation on the industry. “I’m not sure what categories in Canada would see a more than one third decline in the retail rate and still be arguing about the need for more competitiveness,” he said, reiterating that the CRTC’s consideration of mandated access for mobile virtual network operators was a “solution without a problem.” Bell’s LeBlanc, too, said that the introduction of MVNOs would hurt new entrants like Shaw, and would further hurt prospects for investments in facilities development. This past weekend, the Liberal Party laid out a goal of reducing cell phone prices by 25 per cent, partially by mandating access for “qualified” MVNOs to incumbent networks. The CRTC, too, has teased the possibility of mandated MVNO access ahead of the January wireless review after having reversed its long-held view that network operators shouldn’t have to rent space to MVNOs. LeBlanc pointed to the strength of Canada’s networks, saying “don’t take that for granted. If you travel, and you go into the US, you will realize the difference of our wireless networks. So be careful,” LeBlanc said. Leblanc also said the CRTC’s new, lower wholesale internet rates introduced in August -- currently being appealed by telecoms -- would hurt investment prospects. “This decision, I guess in some regards, is fearful in that is this the canary in the coal mine to what’s going to happen with access to our fiber to the home,” LeBlanc said, referring to the disaggregated wholesale pricing landscape that will set wholesale tariffs for access to FTTH networks, which the CRTC is in the process of deciding. — With reporting by Michael Lee-Murphy at mleemurphy@thewirereport.ca and editing by Anja Karadeglija at akarad@thewirereport.ca

Unlimited plans ‘premature,’ will hurt ARPU: Bell CFO

News | September 25, 2019

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Unlimited plans ‘premature,’ will hurt ARPU: Bell CFO

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