Massive demand for more data, lower prices, as incumbents respond to Freedom with sales of their own and are overwhelmed with response
MILLIONS OF CANADIANS constantly exceed their data limits, so it’s no wonder the wireless carriers’ sale exploded this weekend.
Canadians lined up (in stores, online and on the phones) in droves as thousands of them attempted to opt into a 10Gb for $60/month sale on offer Saturday through Monday from Rogers, Fido, Bell, Virgin, Telus and Koodo in BC, Alberta and Ontario. The sale price was available to existing customers who already have devices.
However, social media was ablaze Sunday and Monday with tales of very long, frustrating waits to sign up for the deal (no matter the carrier) before it expired Monday night – which led Rogers to extend the sign-up time by a day through Tuesday.
The weekend rush was started by Rogers and its flanker brand Fido, which launched the pricing plan in Alberta and BC on Thursday and was then matched by Telus and Koodo there – which then extended the sale to Ontario, which in turn forced Bell/Virgin to respond. The normal price for 10Gb of data from the various brands is gene
rally in the $125/month or more range, so this was a serious discount – likely meant to hit back at Freedom Mobile’s October “Big Gig” launch of 10 Gb for $50/month.
The fact that all the carriers decided a blowout sale just before Christmas was all of a sudden a good idea must mean that Freedom’s new price must be hitting the big three incumbents harder than anyone thought.
“Is Freedom having an impact on the incumbents with their 10 Gb plans? Clearly, recent subscriber loading trends from Freedom have been soft and nonthreatening, and while we were expecting some uptick in early 2018 with the broadened handset availability and bigger data plans, a reaction of this magnitude (albeit limited in terms of duration) from the incumbents was a surprise to us,” wrote Canaccord Genuity financial analyst Aravinda Galappatthige in a note to investors on Monday.
“As we think through a few scenarios, a reasonable hypothesis is that perhaps Freedom was gaining some degree of traction in the GTA with its heavy advertising campaigns around its 10 Gb plans, as well as its $0 down handset offerings. We know that Rogers is the clear market leader in the GTA, so if that were indeed the case, we can surmise that Rogers was relatively more impacted by any incremental Freedom mobile gains,” he added. “Hence, 
the retaliation in AB and BC. We suspect that this in turn triggered a reaction from Telus given its AB/BC home base, which then extended the promotion to Ontario, with perhaps some retaliatory intent itself. Given the heavy loading during this timeframe, Bell was forced to respond.”
There are enough stories out there about what happened this weekend, but precious few which note the carriers should have been able to anticipate this avalanche of consumer demand, and been far better prepared – and that they weren’t may now lead to certain consequences.
Recent research done by Toronto’s Solutions Research Group shows that millions of Canadians regularly exceed their data caps (a fact which the carriers are well aware) and therefore have to pay extra – which means they are candidates ripe for this kind of sale.
“Of the about 24 million smartphone users in Canada, 29% exceeded their data limit on a six month basis – that’s about 7 million,” said SRG’s president Kaan Yigit in an email exchange with Cartt.ca. “Add to this the large number of smartphones out there without data plans which we have been tracking… whether younger people, seniors or 
second units – we are estimating another 4 million – you have 11 million smartphones basically in a low-cap-data or no data situation. That’s a lot of people who might be looking for cheaper data.” (see chart. Click to enlarge)
This sale also leaves the carriers in a serious conundrum, adds Yigit. Long-time customers who missed the deal might be bitter their loyalty has not been rewarded. “Some will eventually defect or become less loyal, especially millennials, 35% of whom seem to exceed caps. If they continue the promotion, they will cannibalize their own data revenues,” added Yigit.
Going back to an SRG study in 2015, the fallout from this promotion may send the Canadian wireless incumbents down a dangerous road. Back then, only 39% of Canadians surveyed characterized the value proposition from their wireless carriers as excellent or good, 37% said only fair and 24% said poor, he added (this is lower than the ratings for banks and utility companies).
Given that nearly all of the market then was Bell, Rogers and Telus, you could view those results as a referendum on them, so when this sale ends, it may reinforce the feeling that the big three wireless carriers are charging more than what their service is actually worth – and that could have a negative impact on customer loyalty and their brand image, longer term.
