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The invisible hand in the Canadian wireless market

December 14, 2010 by Behshad Hastibakhsh — Director of Marketing, TIO Networks Corp

Canada is abuzz with excitement, as new wireless carriers launch unlimited plans for text messaging, local, national and international calls. This is welcome news to Canadian consumers who, according to the latest global telecom report from BofA Merrill Lynch, pay the highest cell phone bills in the developed world.

This international study surveyed more than 50 developed and developing countries, and ranked countries based on the mobile ARPU (Average Revenue per User), or the average monthly bill for voice and data before taxes. This is about to change with the entry of new wireless carriers and the self-regulating nature (or the "invisible hand") of the marketplace.

Until recently, Canada's wireless market has been an oligopoly that has lacked competition and left consumers with overpriced cell phone services. Three companies, BCE Inc's Bell Canada, Rogers Communications and Telus Corp., have dominated the wireless industry with 95 percent of the market share. However, new mobile phone companies are now offering consumers a choice between a wide array of low cost voice and data services. Mobilicity, Wind Mobile and Public Mobile are the latest players to penetrate the Canadian wireless market by targeting 30 percent of consumers who previously could not afford cell phones. These include young people, new immigrants and low-to-medium-income individuals in ethnically diverse communities. With this target demographic, several wireless providers offer unlimited plans for international calling and texting.

Competitive edge with multi-channel bill payment strategy

Among these wireless providers, Mobilicity has been the first to recognize growing market needs for convenient access to cash-based bill payment services in Canada. In May 2010, Mobilicity partnered with TIO Networks to replicate success stories of U.S.-based companies, such as Cricket Communications and AT&T, with real-time bill payment services for last-minute and pay-in-person customers. Mobilicity's fast growing network of resellers use TIO Networks' secure, Web-based processing platform (TIO Express) to access customers' accounts, view balances, make payments and record transactions. Following its successful launch in Toronto, Ontario, Mobilicity has expanded its over the counter bill payment program to new markets, including Vancouver and Edmonton, with Ottawa to follow.

In the long-term, Canadian consumers are bound to benefit from open competition and price warfare. The "invisible hand" of market forces will likely bring down the mobile ARPU and create winning conditions for consumers and industry players alike.

About Behshad Hastibakhsh

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