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Canadian online video consumption, premium pricing on a collision course

Canadian wireless consumers could be headed toward a digital collision.

A report just published by comScore confirms that Canadians are rapidly becoming among the heaviest users of digital media and mobile video in the world. At the same time, recent mobile rate plan price increases by Canada’s Big 3 wireless carriers are bucking the global trend toward affordability. Something’s got to give, and when it does it may not be pretty.

Addicted to video

The Canada Digital Future in Focus 2014 report confirms Canadians watch significantly more online video than Americans – 1,769 minutes per month, compared to 1,237 for American viewers. The proportion of Canadians using online video, 74 per cent, also tops the Americans, at 63 per cent. The Canadian usage figures are almost triple the 25 hours per month from the previous year’s report.

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The study also suggests video-mad Canadians are increasingly taking their obsession on the road: Between December 2012 and December 2013, 33 per cent more Canadians – 7.029 million compared to 5.271 million – watched mobile television or video. The trend, fuelled by the accelerating shift toward more capable 4G wireless networks, larger-screened, more powerful smartphones and cheaper tablets, could lose momentum if Canadian wireless prices continue to rise, and if government plans to encourage competition in the space continue to sputter.

“These numbers really show that more Canadians are using smartphones in a data intensive way,” OpenMedia.ca spokesman David Christopher said in an interview. “So of course there’s a huge and growing demand for reasonably priced data plans. But the problem is our wireless market is actually moving in the wrong direction.”

National affordability

Christopher cites the recent move by all three national wireless carriers to raise their main smartphone data plans by $5 per month. Telus quietly increased its rates in January, while Bell and Rogers followed suit in March.

Canada’s new Wireless Code, which came into effect in December, eliminated three-year contracts. As the post-paid subscriber market shifts to contracts that max out at two years, carriers have less time to recoup the hardware subsidies on devices that have for so long made it easy to pick up leading-edge smarthphones for relatively low – or in some cases free – up-front prices. That may explain part of the recent upward price pressure. But monthly discounts averaging around $20 for bring-your-own-device subscribers don’t come close to compensating for the full cost of most devices.

Telus also raised hackles last week when it announced subscribers to Public Mobile – which it scooped up in October – would be forced to purchase new phones after it begins shutting down its existing network in May. Christopher says shrinking choice for consumers isn’t just hitting wireless consumers’ pocketbooks. It’s damaging our digital economy, as well.

“We’ve had leading innovators and job creators from right across Canada, including some big names from Canada’s tech sector, speaking out and saying that these high prices are holding back businesses right across Canada, particularly in the digital economy,” he said.

“So we simply cannot afford to go on with this near monopoly that the Big 3 have been controlling now for far too long.”

Consumers in some provinces, like Manitoba, Quebec, and Saskatchewan already enjoy somewhat lower prices thanks to the presence of strong regional players like MTS, Videotron, and SaskTel, respectively, who put significant pressure on the incumbent carriers to keep rates in check. Christopher says Ottawa can expand these benefits nationally by forcing the major carriers to open up their networks to independent carriers.

As Canadians consume ever increasing amounts of mobile bandwidth, expect the pressure toward increased wireless competition and more affordable rate plans to continue. With higher prices already nipping into our on-the-go video addiction, the status quo won’t hold indefinitely. Left unchecked, the Canadian mobile usage boom could soon run out of steam.

Carmi Levy is a London, Ont.-based independent technology analyst and journalist. The opinions expressed are his own. carmilevy@yahoo.ca