Wireless carriers in Canada have set the stage for the busy back-to-school and holiday season, and customers and analysts have taken notice.
Rogers, Telus and Bell all currently have ‘no overage’ wireless plans, with data starting at $75/10GB. After data caps are exceeded, throttled speeds of 512 Kbps kick in. Originally, Rogers had 256 Kbps throttling, but Telus debuted 512 Kbps and Bell followed. Shortly after, Rogers joined in with 512 Kbps throttled speeds.
The Big 3 also have launched 0% annual percentage rate (APR) device financing over 24 months on smartphones (Rogers is offering a 36-month option which some believe contradicts the CRTC Wireless Code), which require certain plans. This financing now separates the cost of devices from monthly plans.
In response, Shaw’s Freedom Mobile recently launched their back-to-school promo, offering customers select handsets for free, including Apple’s iPhone XR, with a $75/18GB plan, in what they’re calling ‘Absolute $0’ offers.
Shaw is subsidizing the entire device amount, meaning customers can get a $1,029 iPhone XR paid for over a two-year contract on a $75 plan, with $0 upfront and at the end of their term.
If you work the math out, it’s $1800 over 24 months. Subtract the $1,029 iPhone XR cost, and that’s $771 remaining for the wireless plan portion. Divide that by 24 and customers are paying $32.13 per month for 18GB of data, which is pretty cheap for Canadian wireless pricing standards.
According to analyst research notes obtained by The Financial Post, the moves by Freedom Mobile are being called “aggressive”.
Desjardins analyst Maher Yaghi said some of the latest pricing strategies made by carriers “signal that competition in the Canadian wireless market is currently intense.”
“We think the incumbents’ move away from subsidies is prudent and makes sense because they are trying to offset slower revenue growth by lowering subsidy cost,” said Scotiabank analyst Jeff Fan, last week.
Both Yaghi and Fan said pricing by Freedom Mobile was “aggressive.”
According to Fan, Shaw’s Freedom Mobile and their latest ‘Absolute $0’ promotion “will make the incumbents’ equipment installment plans look relatively more expensive,” from a customer value proposition he said. The higher pricing by the Big 3 may affect subscriber counts in the upcoming busy fall and holiday periods.
Have you jumped on any of the Big 3 ‘no overage’ plans, or Freedom’s latest ‘Absolute $0’ promo?