While I’d agree with you on the present economics of wireless voice versus data, the point is to continuously evolve a viable business model for tomorrow - and naturally to position both consumers and their own organizations to shift to the new paradigm.

The increased commoditization of landline voice and services (i.e. long distance), and its effects on Canadian carriers shows us where wireless voice services are headed - they will become a still-lower margin, (and in many cases flat rate) utility. Any carrier that denies this is just setting themselves up for a fall as competition increases - already the counter-intuitive approach by Bell and Telus on SMS pricing is costing them significant customer goodwill and represents no cost-reality from their point, just a blind atttempt to increase revenue by gouging customers.

The question to ask is where the next ARPU-lifting (or maintaining, really as average wireless voice pricing will fall - see today’s Moody’s downgrade of the sector) service is coming from. And, chances are, it’s related to wireless data.

Data prices will fall, and see some commoditization as well, no doubt of that, but as phones get smarter and customers begin to understand what they can do with them, data-related services will become a significant portion of the revenue picture. Presence-related services, music downloads and on-screen navigation are just a few examples of where data services are beginning to show revenue promise as stand-alone offerings worldwide (though not so much in Canada as we’re way behind), not to mention the many applications and multimedia services that will drive significantly higher data consumption - if you just want to talk about data volume - but really, it’s not going to be about that for too long. Smart carriers will realize that charging by event/usage for value-add services and maintaining relatively generous data and voice pricing will ultimately be a strong retention and revenue model. Until the next great thing comes along, of course….

So sure, voice is king for revenue right now, but it is declining, and will continue to decline on a per subscriber basis, something that Canada’s currently turgid wireless penetration rates will make unsustainable. As stated, this is no different than most wireline telcos - they too still have a huge amount of revenue pouring in from voice and (surprisingly) LD, but they have the foresight to move in new directions (IP TV for instance), just as their competitors across the telecoms space are diversifying (cable operators -> VOIP), and hopefully in the process, differentiating themselves here and there. The alternative is to be left behind, as single-play ISP’s have found themselves - a utility that provides conduit and no differentiating value. And that’s not a money-winning proposition.

Cheers,
Christian.

Mark

Smartphones will become the norm many Canadians in 5 years time.

Handsets are improving - RIM, Nokia and of course, Apple are making the smartphone a more attractive proposition. Wireless access has improved. Prices are likely on the way down.

These factors will serve to make the smartphone a more attractive proposition and thus part of most cell phone owner’s lives in five years time.

Remember, it was all of 10 years ago that many people scoffed at the thought of what’s now considered the most basic of cell phones.

Even in Canada, where prices are relatively high compared to other developed nations, wireless penetration is now at roughly 63% to 64%. In the U.S. it is above 80%.

Soon the smartphone will be in many of those cell phone owners hands.

Kevin