A new study by the Convergence Consulting Group predicts that wireless prices in Canada—already among the most expensive in the world—will rise by 2014.
Increased competition from Wind Mobile, Mobilicity, Public Mobile, and Videtron have kept ARPUs, or average revenues per user, relatively static since 2008. But Convergence believes that this trend will reverse in the coming years as startup carriers’ heavily discounted prices become unsustainable, forcing them to raise rates and allowing more breathing room for the Big Three of Rogers, Telus, and Bell.
Convergence’s report, called Canadian Wireless: Assessing the Impact of New Entrants, that the new entrants undercut incumbents and even the incumbents’ “discount” brands by more than 50% on data and voice pricing—and by up to 80% on data alone. Convergence’s research suggests this is not sustainable in the long term, but will allow the newbies to gain 6% of the Canadian wireless market by the end of 2012, up from 4% by the end of 2011.
Convergence also said that by the end of 2013, smartphone penetration could reach 65%. It was 43% in 2011 and may hit 55% this year.
It’s worth noting that Convergence lists Rogers, Telus, and Bell as clients. So the firm’s suggestion that rising prices are necessary should be taken with a grain of salt.