Last week, Rogers, TELUS and Bell pretty much simultaneously raised prices across the board for new users on contract and diminished bring your own device (BYOD) benefits.
In statements to The Globe and Mail, wireless incumbents clarified why these price increases were justified.
Bell said its price increases were impacted by the lower Canadian dollar and its ongoing need to invest in network improvements, highlighting how it recently won several awards for wireless network performance.
Bell spokesman Mark Langton explained “Most equipment and smartphone suppliers are international companies and while having the best networks has been the key to Bell Mobility’s marketplace performance, we have also faced a significant increase in costs due to the weakened dollar.”
TELUS similarly linked price increases to the lower Loonie, along with “the annual multibillion-dollar investments required to keep up with the growing demand for wireless data.” Spokeswoman Emily Hamer clarified price changes only affect new contracts and not renewals.
As for Rogers, their spokesman Aaron Lazarus noted the same as their competitors, by saying “ongoing network and service investments along with current market conditions impacting our industry.”
While the Big 3 claim price adjustments allow for ongoing network investments, analysts believe the jumps were to make up for sagging average revenue per user (ARPU) growth, a closely watched industry metric.
RBC Dominion Securities analyst Drew McReynolds and Scotia Capital Inc.’s Jeff Fan both forecast average ARPU growth for incumbents to be roughly 1 per cent in 2016—down from estimates of 2.5 to 3 per cent growth for 2015.
A recent report by Fan suggested the fourth quarter of 2015 was a particularly competitive period for Rogers, TELUS and Bell, as the Big 3 offered large handset subsidies to fight for subscribers. Carriers are now taking a break from offering discounts.
As for why BYOD benefits have been eliminated? Fan explains “We think that is a signal that the free-agent base may be getting too big … and the carriers want to incentivize them to sign contracts.”
There you go—does that clarify why prices have jumped across the board?
