Canadian Wireless Providers Look To Pre-Paid Services For Subscriber Growth

By: Talha Bhatti  |   January 1st, 2013   |   Business, News, O Canada, Smartphones

Canadian wireless providers are renewing their efforts to upgrade pay-as-you-go services in the country to attract young consumers because the demographic is thought to be the reason behind subscriber growth rates. Providers like Telus are expecting prepaid to be a key part of the next phase of growth in the sector.

 

The prepaid market place has shrunk because consumers have looked towards subsidized smartphones by accepting long term contracts. With the introduction of cheap smartphones, like the many Android-based devices that are currently hitting the market, wireless providers in the United State have started to focus on the pre-paid sector again. Canadian firms are also predicting that their top end services will see a drop in demand and they will need to focus on prepaid services to add new subscribers. This is because currently 27.4 million wireless subscribers are in the country and wireless penetration rates should be 100 per cent within the next three years.

 

First time users like teens and tweens are now the new focus for carriers that want to grab these first time users and help growth. Prepaid services are expected to be the gateway for the user into wireless services.

 

Brent Johnston, vice-president of mobility solutions at Telus Corp, says that, “As the Canadian wireless market matures, the people who really needed a phone already have one. Increasingly, the next wave of adopters will be prepaid.”

 

However, Wind Mobile thinks this is not the case and the chief executive officer of the firm, Anthony Lacavera, sad that the prepaid market is “doomed.” The company has changed its business to acquire post paid customers so that they have larger profit margins.

 

The Canadian Radio-television and Telecommunications Commission (CRTC) statistics show that 78.2 per cent of Canadian households are subscribers of mobile phone services and while prepaid make up 22 per cent of that total. wireless subscribers.

 

Telus’s Johnston says that “I don’t believe that prepaid is dead.” He thinks the Canada will follow the trend in the United States where there is higher level of cellular adoption and a higher percentage of prepaid users. He claims that Canadian prepaid segment is going to expand.

 

That is why Telus is bringing in a prepaid service from the Koodo brand in August. Kevin Banderk, head of Koodo, says that, “We did see a need. We have lots of customers who would come up to our shops. … Sometimes we couldn’t offer them postpaid based on their credit, lack of ID or even their age, if they’re under 18.”

 

Prepaid plans also offer parents control on how much is being spent on wireless bills. With a prepaid device a user cannot overrun their budget because the service stops once the prepaid amount is consumed.

Source: The Globe and Mail