Just north of the US border lies the second largest country on earth. Canada’s population of 34 million is just over one tenth of the US population. In many ways, Canada is quite similar to the US. However, the mobile environment is quite different.
Canadians are still in the middle of the pack when it comes to mobile penetration. While the country was an early adopter of mobile technology, inexpensive land line phone services kept the growth of mobile at relatively modest levels throughout the 1990s. As of June 2010, Canadian wireless subscribers numbered 23.4 million.
Adoption of wireless has increased significantly over the past decade. With 75 percent of Canadian households having access to wireless phones and with the number of total wireless connections passing land line connections this year, Canada is moving quickly towards complete wireless adoption.
The past few years have seen a significant change in Canada’s mobile landscape. While the big 3 mobile players have maintained the lion’s share of the Canadian mobile market, a group of new entrants has been working hard to carve out specific niches for themselves. The efforts of the upstarts have not gone unnoticed by the incumbents and the result has been a surge in network investment, marketing and price competition.
An interesting aspect of the Canadian mobile industry is the marked absence of international mobile players on the Canadian scene. Names like Vodafone, AT&T and Telefonica are noticeably missing.
Since the 1980s, strict foreign ownership limitations have been placed on the Canadian mobile industry. Those limitations were never challenged by any of the multinational global mobile players. Not until a few years ago. In a landmark case, Globalive Wireless, through a sizable investment from Egypt based Orascom Telecom, was able to gain access to the Canadian market in 2009.
Globalive now operates under the Wind Mobile brand in most urban Canadian markets. As of November 2010, Wind Mobile’s subscriber base is listed at 140,000.
Although that is a mere fraction of the subscriber numbers held by Rogers (8.881 Million), Bell (7.125 Million) and Telus (6.852 Million), the numbers show growth in a market that many believe has plenty of room to grow.
Canadian consumers have always been primarily postpaid. Postpaid represents more than 80 percent of the customer base for Rogers and Telus. Bell, mostly because of their primarily pre-paid Virgin Mobile brand, has a slightly lower percentage of postpaid customers with 76 percent reported as postpaid and 24 percent prepaid as of the end of the third quarter of 2010.
Canadians have also embraced messaging. As of June 2010, they sent more than 150 million text messages per day; growing from less than 100 million in June 2009 and 10 million in June 2006. The growth of Canadian messaging, as in many countries, has been nothing short of explosive.
Shortcodes, administered by the CWTA, continue to grow in popularity as well as functionality. With enterprise applications focused on SMS messaging, shortcodes have come to represent a ubiquitous and easy to use entry into the mobile marketplace for corporations and marketing agencies. In total, Canadians sent and received over a billion SMS messages through shortcodes in the first half of 2010.
Perhaps the most ambitious development over the past several years has been the investment made by Bell and Telus to move off of CDMA networks. After investing billions of dollars in a joint investment, Bell Mobility and Telus have built and now switched to HSPA+ and have begun to double network speeds to a maximum of 42 Mbps.
This change has broken the exclusivity Rogers had enjoyed for years on GSM and the prize that has eluded them for years – access to the iPhone. All three major Canadian carriers now offer Apple’s smash hit device and the competition is bound to get even more intense in the months to come.
With this current mobile landscape in Canada, there are abundant opportunities for banks, financial institutions, retailers and merchants to take advantage of mobile commerce solutions. However, Canadians are amongst the most reluctant to engage in mobile commerce technologies.
According to Sybase’s 2010 Global Consumer Acceptance and Usage Report, only eight percent of mobile users currently utilize their mobile handsets for mobile banking. This figure is significantly lower than the 30 percent of people worldwide who conduct mBanking. The reluctance of Canadians to participate in mobile commerce may stem from the pervasiveness of free e-commerce services online and the abundance of internet-enabled computers as opposed to in developing countries where the reliance is on smartphone devices due to limited- access to computers. In order for mobile commerce to take off in Canada, mobile users must be convinced of the value of these services: the ease of use, security and convenience of transacting via mobile devices.
Since SMS text messaging and shortcodes have been widely adopted in Canada, the mobile industry needs to take advantage of this fact and utilize both in order to engage customers and demonstrate the convenience and ease of mobile commerce via a channel they already understand and are familiar with. There is a desire for mobile commerce and experts predict that there will be a mobile payments revolution in Canada by late 2011, but there needs to be a ubiquitous solution before Canadians leave their credit and debit cards at home and carry just their mobile wallet.
Similar to the United States, Canada requires alignment—not intense competition—among the major players in the mobile space in order to see mobile commerce take off on a larger scale. This means mobile operators (particularly Bell, Rogers and Telus), retailers, financial institutions, card networks, payment processors and regulatory bodies must harmonize their efforts in the same ways that led to global adoption of SMS and MMS technology. All of the industry players need to work together to build greater awareness of what is possible for mobile commerce. These pieces need to align before Canada sees a mobile commerce adoption comparable to the deployments in countries such as Austria or Japan.