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Marketers in Canada are watching closely as consumers increase time spent with mobile, in many cases using their phones and tablets as the “first screen” for media consumption. eMarketer estimates that mobile internet ad spending in Canada increased 127.0% in 2013 and will grow more than 70% in 2014, according to a new report, “Canada Mobile 2014: Despite Massive Ad Spending Growth, Nagging Questions Remain.”
But digging deeper into this rapid growth reveals a different story. Firstly, the big growth numbers can be attributed to a relatively small base of activity, reflective of a nascent spend category; secondly, mobile is less than 10% of digital ad spending in Canada—far less than users’ time spent with mobile should justify.
Canada’s big three mobile network operators control the vast majority of the market, which limits choices for consumers. According to Q4 2013 company filings, Rogers Wireless was the largest of Canada’s three primary mobile service providers, with 9.5 million mobile phone subscribers, followed by TELUS Mobility (7.81 million) and Bell Mobility (7.78 million). The big three and their discount subsidiaries—Fido Wireless (owned by Rogers), Virgin Mobile (Bell) and Koodo Mobile (TELUS)—accounted for 88% of mobile users, according to June 2013 comScore data.
The result of limited competition is high pricing for consumers—some of the highest among industrialized countries. Data released by J.D. Power and Associates in May 2013 showed that the average monthly wireless bill among mobile phone users in Canada was C$77 ($74.76), up from C$68 ($66.02) the previous year. J.D. Power reported that more than half of mobile users in Canada did not have a data plan in March 2013, likely due to high prices. Particularly among lower income brackets, these economics slow adoption of richer mobile devices.
J.D. Power’s “2014 Canadian Wireless Total Ownership Experience Study,” an update to last year’s survey, showed an average drop of C$7 (around $6.80) on monthly wireless bills, the result of a new operating environment. Regulators have stepped in to quell service issues resulting from the telecom oligopoly. In December 2013, the Canadian Radio-television and Telecommunications Commission put restrictions on operators’ ability to impose three-year contracts and use cryptic billing practices. Specifically, the new rules enabled consumers to break their contract without cancellation fees after two years and capped operator charges for data and roaming.
The other impact of limited competition is slower-than-average build out of higher-speed wireless infrastructure. comScore reported there were 5.9 million 4G mobile connections in Canada in December 2013, dramatically fewer than the 17.2 million 3G connections.
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