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More Canadians will upgrade to pricier unlimited data plans when 5G rolls out

Shruti Shekar
·Telecom & Tech Reporter
A sign is pictured on top of the Rogers Communications Inc. building on the day of their annual general meeting for shareholders in Toronto, April 21, 2015.    REUTERS/Mark Blinch/File Photo                GLOBAL BUSINESS WEEK AHEAD PACKAGE    SEARCH BUSINESS WEEK AHEAD 17 OCT FOR ALL IMAGES
A sign is pictured on top of the Rogers Communications Inc. building on the day of their annual general meeting for shareholders in Toronto, April 21, 2015. REUTERS/Mark Blinch/File Photo GLOBAL BUSINESS WEEK AHEAD PACKAGE SEARCH BUSINESS WEEK AHEAD 17 OCT FOR ALL IMAGES

Rogers Communications (RCI-B.TO)(RCI) is rolling out 5G wireless networks in various downtown markets across Canada, and an analyst expects that once the rollout is consumer-ready, more Canadians will upgrade their phone plans to take advantage of faster speeds.

On January 15, the Toronto-based national carrier said it was activating the next generation of wireless networks in downtown Toronto, Vancouver, Ottawa, and Montreal. However, consumers won’t be able to access these networks until 5G-enabled smartphones are available.

Rogers said in a press release that 20 other markets will also be 5G operational by the end of 2020.

Edward Jones’ analyst Dave Heger said in an interview with Yahoo Finance Canada that customers with limited data plans will choose to pay $10-$20 more so they can take advantage of 5G speeds, which are expected to be faster and more reliable.

“A number of customers, in general, are on limited data plans where they weren’t necessarily using as much data as they might like to because they didn’t want to hit overage charges. So, [for Rogers], there are some base customers who will actually step up from what they are paying for a month to get the unlimited capability,” Heger said.

In June 2019, Rogers was the first carrier to announce unlimited data plans starting at $75. Bell and Telus launched similar plans shortly after.

In its Q3 results, Rogers reported that it had signed approximately one million wireless subscribers to its “Infinite Unlimited Data” plans; Rogers has over 10 million wireless subscribers.

Rogers said that customers who migrated to an unlimited plan, on average, use over 50 per cent more data than before.

Heger said over 50 per cent of Rogers’ existing wireless subscriber base will migrate to unlimited plans in the next two to three years because they’ll be willing to use their data, rather than trying to get on Wi-Fi, which they have in the past used to avoid overage charges.

Duncan Stewart, director of technology, media and telecommunications research for Deloitte Canada told Yahoo Finance Canada that, based on data reported a year ago, Canadians consumed about one to two gigabytes per month.

He said he expects consumers will use “closer to 10 gigabytes per month” when 5G becomes available to them.

Bell, Telus won’t be affected with Rogers’ early roll out

Bell and Telus have yet to choose a 5G vendor as they await an announcement on whether the federal government will ban Chinese-telecommunications manufacturer Huawei.

Rogers uses Ericsson as its 5G vendor.

Bell’s spokesperson Marc Choma confirmed in an email that the carrier expects to launch “similar Early 5G service in these and other centres this year as capable smartphones become available.”

“Canada has an opportunity to lead the world in 5G if our regulatory environment continues to encourage wireless infrastructure investment. Policies that hamper or restrict the significant capital investment required will lead to the opposite outcome,” Choma wrote.

Heger doesn’t believe Rogers has “some dramatic advantage” over Bell and Telus by being the first to roll out 5G networks because he expects the two carriers to roll out something similar this year.

5G will benefit consumers at concerts, sporting events

Rogers said that it will use 2.5 GHz spectrum to start, which is used to deliver communications services. But later in the year, it plans to use 600 MHz spectrum, which can deliver wireless data over long distances and through populated and dense urban locations.

Telecom and tech expert Peter Nowak said in an emailed statement that 5G will result in faster wireless speeds with less latency and more network capacity.

However, he added that Canada’s wireless networks are already “pretty good” so “it has not been demonstrated how 5G will in fact benefit the consumer” once the higher costs are considered.

“It’s safe to assume that costs of 5G network upgrades will be passed on to the consumer,” he said. “We can, therefore, expect 5G to be a net negative for consumers - the expensive ‘upgrade’ no one asked for.”

Nowak suggested that the Big Three (Bell, Telus, and Rogers) will use the argument of “ongoing network investment” as a “rationale for regular price increases.”

According to Stewart, consumers will see the benefit of 5G at large sporting events or concerts.

“The problem with 4G is it only supports fewer than 1,000 devices simultaneously within an arena. If I have 5G rolled out, and I am now at a game or a concert, my regular cellular [network], all of a sudden supports many more devices in a small area,” he said.

Rogers said in the release that it will “turn on” the 5G network at the Rogers Centre and Scotiabank Arena in Toronto, and Rogers Arena, located in Vancouver.