Rogers and Fido Abusing Market Power?

With the release of the iPhone in Canada on July 11th approaching quickly, many people are raising the issue of a lack of competition in the Canadian wireless industry once again. The iPhone will be launched in Canada under the Rogers and Fido brands, the only GSM provider in Canada. The bad news for Canadians is that in order to get the iPhone, you will have to sign a 3 year contract with Rogers–one of the longest contracts for any provider in the world.

While many are quick to point out that the contract lengths and lack of competition are the result of Canada’s market being too small, that is not the sole reason. There are smaller markets out there that have competitive markets–and cheaper monthly fees–such as Australia. A more probable reason for lack of competition in Canada for the wireless carriers is because of protection by the Canadian Government. This will change soon as the Government just completed the auction of new wireless spectrum. Initially the Government expected to raise about $1.5B with the spectrum auction, but it has already surpassed $4B. The new wireless service providers will undoubtedly offer great prices/service to lure Canadians to their services.

Knowing this, Rogers/Fido is using the highly sought after iPhone to lock customers into lengthy contracts. iPhone customers that want to switch over to the new carriers will be out of luck as their contracts will still be relatively new when they arrive. A buyout of the Rogers contract is $20 per month, up to a maximum of $400 (recently increased just for the iPhone). Many people have decided to stick with their unlocked iPhones purchased from online auctions such as eBay as the switch to a 3G version of the iPhone isn’t worth it to them. Others that were patiently waiting for the iPhone to be officially launched are going to keep waiting for new carriers to provide GSM service in Canada. Rumor has it Apple will be looking for a wide distribution for the iPhone and will offer the device to new wireless providers setting up shop in Canada.

Nobody expected anything less from Rogers. The day it was announced that the iPhone was coming to Canada, many speculated that the iPhone would either be crippled by the pathetic data packages offered by Rogers or that Rogers would use the phone to “steal” customers from Telus and Bell, both of which operate on the CDMA band which is not supported by the iPhone. The arrival of fresh competition cannot come soon enough as there are rumors spreading that Rogers will soon be utilizing IMEI filtering to block non-rogers iPhones from operating on their network.

Are you going to get an iPhone 3G from Rogers or Fido? What are your thoughts on the mandatory 3-year contract?

3G iPhone Coming To Canada

Rogers has announced that the 3G version of the iPhone is coming to Canada later this year. While many Canadians have been happily using their iPhones for awhile now, most have not been able to use the iPhone to its full potential due to the terrible data plans offered up here in Canada.

“One of the things I think we need to be aware of is pricing works on data, where we price it by the application,” Rogers Communications president and chief operating officer Nadir Mohamed said Tuesday during a news conference before the company’s annual shareholders meeting.

It was long rumored that the only reason the iPhone was not made available in Canada was because of our dismal situation in terms of data plans from the Canadian carriers, but Tuesday’s announcement suggests that there will be some big changes to the data plans to accomodate the iPhone and other smart phones.