Bolder Thinking Blog

[Part 1] Canada vs US Telecom: Mobility

March 6th, 2020 | Emily Groch

In the first of our three-part Canada vs. US Telecom series, we compare and contrast mobility in the two markets, paying particular attention to price, streaming, and 5G. 

The Canadian and US wireless marketplaces are looking more similar than ever, as a result of recent changes in each market. In 2019, Canadian carriers launched unlimited data plans and device installment pricing, mirroring the US marketplace, which re-introduced unlimited data and removed device subsidies several years ago. US wireless will soon look more like Canadian wireless when the merger of T-Mobile and Sprint brings the dominant players from four to three. Ultimately, Dish will offer a cellular service as well, a condition of the merger meant to preserve four major players in the space. However, it will take time—likely many years—before Dish offers as robust a network as AT&T, Verizon and T-Mobile. Providers in both countries are actively preparing and building out their 5G networks, with the US leading the North American race.

There are a number of important differences between the Canadian and US marketplaces. First, the dominant players in the US market lease their networks to mobile virtual network operators (MVNOs), which ultimately gives consumers many more options for affordable wireless service. Canada, on the other hand, does not have MVNOs. Meanwhile, Canadians continue to balk at the high prices of service in, despite the fact that Canadian networks are widely acknowledged to be superior to US networks. Canadian consumers are likely well aware of the lower costs and extensive freebies offered to US cellular customers, which helps fuel their dissatisfaction with Canadian mobility pricing.

The price discussion is particularly relevant as the Canadian Radio-Television and Telecommunications Commission (CRTC) has just wrapped nine days of hearings focused on whether the Canadian cellular marketplace sufficiently serves consumers. The hearings considered wireless affordability, and whether telcos should be mandated to open up their networks to MVNOs. If Canadian carriers were required to lease their networks for use by MVNOs, the two marketplaces would likely look even more similar than they do today.

The price gap

Both Canadians and Americans prioritize low prices when it comes to cellular service. Mintel research on mobile network providers in Canada shows that nearly 40% of Canadians agree they chose their current mobile service provider because they had the cheapest plan available—it was the top reason. According to Mintel research on mobile network providers in the US, almost half of consumers agree that their mobile carrier “has the best price”Canadians are so dissatisfied with the prices of wireless service in the country that some are going so far as to exploit loopholes enabling them to get service from American providers. There is a strong argument that the lack of competition in the market, with only three major Canadian carriers and no MVNOs, is to blame for the high costs, as areas of the country where there are additional competitors typically pay less for service.

On the other hand, there is also strong evidence that Canada’s wireless networks are superior to those in the US, which could also explain why prices are higher. OpenSignal’s “The State of the Mobile Network Experience” (May 2019) found that Canadian cellular download speeds were the third-highest in the world (42.5Mbps on average), compared to the US, which came in 30th (21.3Mbps on average). Canada did lag behind the US in 4G availability (18th vs. fifth), but it out-performed the US on most of OpenSignal’s key metrics. Additionally, a report from PWC found that Canada’s unlimited data plans ranked first among G7 countries.

Free streaming video for Americans

If Canadian consumers are paying attention to the happenings in the US cellular marketplace, the fact that major US carriers offer a wide range of “freebies” to unlimited subscribers could also be compounding frustration with Canadian carriers’ higher prices.

  •       AT&T offers free HBO to qualifying subscribers.
  •       T-Mobile offers free Netflix and free Quibi (when it launches) for unlimited subs.
  •       Verizon offers six months of free Apple Music, plus a year of free Disney+ to unlimited subscribers.

US consumers embrace free streaming video, with more than 20% of those considering switching carriers saying they would hope to get free video streaming from their new carrier, and a whopping half  of US consumers agreeing mobile plans that include streaming services like Hulu and Netflix are good replacements for cable TV, according to Mintel research on mobile network providers in the US. Canadian carriers might consider free streaming video options for premium customers. In addition to the free streaming services, all of the major US carriers offer loyalty rewards programs.

Streaming video consumption will only continue to grow in Canada, as it has in the US (more on this in part two of the series). Canadian carriers might consider free streaming video options for premium customers as a way to continue encouraging consumers to upgrade to unlimited data, and to drive greater satisfaction among Canadian consumers.

US 5G lead

The US leads in 5G deployments and marketing hype. Although Canadian carriers are still readying 5G, most Canadians say they have heard of 5G. In both countries, there’s a lot of room for educating consumers about 5G. According to Mintel research on attitudes toward technology and the digital world in Canada and the US, although most consumers have heard of it, nearly 9 in 10 Canadians and 4 in 5 Americans know little to nothing about 5G. 

Verizon and T-Mobile have led the charge in 5G marketing in the US. Verizon drove hype around its mmWave 5G throughout 2019, while T-Mobile built up to its Dec. 2019 nationwide 5G launch with a consistent “5G for All” message tied to its anticipated merger with Sprint.

In Canada, Rogers is first out the gate, beginning deployments in several metropolitan areas. Marketing messages around 5G have been slim to-date in Canada, but we expect the marketing to really heat up this year.

Across both countries, carriers are selling Samsung’s new Galaxy S20 5G, the first major flagship phone that is capable of utilizing all three types of spectrum used for 5G. Although this device is likely to spark interest among early adopters, 5G is still too limited to attract most consumers, even in the US where T-Mobile has launched nationwide 600 MHz 5G. Canadian providers are likely to feel added pressure to maintain their global network prowess with 5G, particularly if network quality remains a justification for higher prices.

Stay tuned for part two of our three-part series, Canada vs. US Telecom: Video.

Emily Groch

Emily Groch

Emily Groch is Comperemedia’s Director of Insights, Telecommunications, providing omni-channel marketing analysis and competitive insights to telecom providers.