Solutions Research Group

by Catherine McLean
The Globe and Mail
April 20, 2008

When Rogers Communications Inc. brings Apple Inc.'s cult iPhone to Canada later this year, it's not just expecting a jump in subscribers but also a nice bonus from cellphone bills.

Consumers love the sleek device for its bells and whistles. But Rogers is banking on increased data traffic on the smart phones to compensate for flatter growth from voice services.

In Canada, iPhone users will probably spend $80 a month minimum, according to estimates from consulting firm Solutions Research Group. That's considerably more than the $72.39 average that customers on Rogers cellphone contracts currently part with each month.

Rogers chief executive officer Ted Rogers crowed yesterday about his latest cellphone coup as the wireless business contributed to a big jump in the company's first-quarter profit.

“We're thrilled to have announced a deal with Apple to bring the iPhone to Canada later this year,” Mr. Rogers said on an earnings conference call.

He wouldn't disclose details about the launch date or rates.

Rogers has always been considered the logical choice to carry the iPhone in Canada. It's the only carrier that owns a GSM network, the technology the device runs on and the world wireless standard.

But Canadians have had to wait and watch as the coveted iPhone was launched south of the border and then in Europe. Speculation about the delay includes the possibility that Rogers may be less than keen on changing its data rate plans as other carriers have done.

Mr. Rogers offered his own reason for the wait. “We're a little slow, I guess, in negotiating is all I can say,” he said yesterday at a press conference before the company's annual shareholder meeting.

The iPhone gives Rogers a unique product to attract consumers just as rivalry heats up in the wireless market. Ottawa plans to auction off new wireless spectrum, or airwaves, next month, and a portion are reserved for new entrants.

Rogers, already expecting to add more than 600,000 wireless customers this year, could sign an additional 100,000 thanks to the iPhone, according to National Bank Financial analyst Greg MacDonald.

The iPhone may also boost customers' monthly bills as they spend more money on features such as wireless Internet access or music.

So-called smart phones that offer a range of data features, including the iPhone and the popular BlackBerry, are fuelling growth in the wireless market.

Consumers are starting to follow business users, doing much more on their cellphones than just making calls. These include sending text messages and buying ring tones, games and music.

That trend was evident in Rogers' first-quarter results yesterday. The Toronto-based company reported that monthly bills for cellphone subscribers on contracts jumped $4.75 to $72.39 due to greater demand for wireless data services.

The typical profile of an iPhone buyer in Canada will probably be under 34 years of age, according to Solutions Research Group. About 43 per cent of iPhone customers will already be with Rogers, while 22 per cent will come from Bell and another 9 per cent with Telus, the consulting firm said.

Still, consumers can be fickle, and one device won't rule forever. Geoff Teehan, a 33-year-old partner at a website design firm called Teehan+Lax in Toronto, bought his iPhone in the U.S. last year and used software to unlock it and run it on the Rogers network.

He says the iPhone is better than other cellphones for browsing the Internet, and he also likes carrying just one device around instead of bringing both his cellphone and iPod everywhere he goes.

“It's really something actually,” he said.

But another device has caught his eye. There is a lot of speculation online about the coming “BlackBerry 9000” device that is rumoured to work on speedier third-generation or 3G networks.

“I would probably switch again and try that device out,” Mr. Teehan said.

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