Even after the stores opened and the customers have packed home with their lawn chairs, the disaster that has been the iPhone’s launch in Canada continues to ring (pardon the pun) in the ears of consumers. I took a spin around Vancouver on my motorcycle (sorry, going too fast for photos) this morning at 7:30 and counted 250-300 people at the Broadway & Arbutus Rogers store, some TV trucks, and some balloons but otherwise not much fanfare. The smaller stores had maybe a dozen or so people hanging around at best.

I was concerned that the media were going to get taken on a ride by Rogers with this launch. Fortunately, the CBC is reporting that desperately few of the customers who were encouraged by Rogers to go to Rogers flagship stores in 6 Canadian cities have walked home with the prize, while still others are getting denied the purchase because some Rogers outlets are showing preference to new customers (and thus, highly-spiffed new activations) over existing ones. The CBC has thus far been on the money on this issue I hope this REAL story is echoed in other media over the course of the day.

As Daniel Smith reported, Apple may have heard the more than 63,000 voices at RuinediPhone.com and diverted shipments destined for Canada to elsewhere. Plausible, but this clear internal “leak” might actually be a way for Rogers to blame the lack of supply on Apple in a very subtle way.

This is what happens when big, arrogant service providers who fail to remain customer-centric come into contact with a mass-market trend. The launch of the iPhone in Canada could (should) have had a huge impact on subscriber loyalty and shareholder value for Rogers, but today even those few folks lucky enough to actually have paid through the nose and signed their lives away on a 3-year contract to get an iPhone are embittered by the experience.

It seeps down from those obnoxious gouging prices and the three-year lock-in (in an industry where the life cycle of a phone is less than 2 years) all the way to the flagship Rogers store passing out Granola Bars from Costco instead of paying the overnight campers the respect of some eggs or pancakes (they promised ‘breakfast’).

Somewhere in between those two offences is the fact that, with diminished supply on hand, Rogers store managers failed to tell those in the lineups that there weren’t enough devices to go around. Moreover they failed to give those people any promise that they might get one sometime in the future, so as a result many fan boys have now sat on their asses outside a store all morning for nothing.

Rogers created a media event around the iPhone launch.. great for free marketing, bien sur. They made promises about special promotions and breakfasts and early openings for these stores, and encouraged crowds to concentrate at specific stores to make sure they’d be part of the media frenzy and make the event seem much larger in scale than it actually is. It’s an even trade, I guess, when the consumer ends up getting what they went there for. But with the biggest stores having fewer than 100 units on hand you can do the math: of those 200-400 people who waited at each of the flagship stores, as many as 75%-80% did it for nothing.

In essence, Rogers exploited them to generate buzz and get some free marketing, and gave them nothing in return. So let’s do the math: A Triple-Lock for the lucky few, a lost night’s sleep for many, and for everyone a granola bar.

Yeah, screw you too, Rogers.

The next thing I’ll line up for is to be the first subscriber on the nation’s next GSM wireless carrier.

Posted by Ian Bell at 1:06 pm
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Apparently trying to steal the thunder of customer ire from Rogers Wireless’ ill-considered iPhone launch, Bell and Telus are trying to slip out the back door with an announcement that they’re going to be charging users extra for text messaging.

SMS costs in Canada are already disproportionately high versus the unrealistically high costs for SMS across the entire wireless industry. This article suggests that SMS costs are, in the aggregate, 4x higher than getting data from the Hubble space telescope. Global SMS revenues are larger than the Hollywood movie, music and video game industries combined.

The quote from the Telus spokesperson is hilarious:

“The growth in text messages has been nothing short of phenomenal,” wrote Telus spokeswoman Anne-Julie Gratton in an e-mail to The Globe and Mail, “This volume places tremendous demands on our network and we can’t afford to provide this service for free any more.”

The same article refers to the latest statistics from the Canadian Wireless Telecommunications Association that pegs the number of text messages sent in Canada at more than 45.3 million per day. According to recent reports from IEMR the number of wireless subscribers in Canada was 20.4 million in 2007, and wireless subscribers in the UK (which has roughly double the population of Canada) for the same year numbered 71.7 million. Sweden, with a third of the population of Canada’s has better than half as many subscribers. Canada is trending remarkably behind nearly every comparable western nation.

These stats are great, in that they illustrate the problem with subscriber growth that shareholders and analysts are presently appreciating. There’s clearly something wrong with the wireless business in Canada, and it’s not something that the recent spectrum auctions are likely to quickly address.

Allow me to translate Ms. Gratton’s TelecomSpeak in a way that more accurately reflects what went down in the boardroom:

“The growth in text messages has been nothing short of phenomenal,” said Telus’ Business Development Manager, “This is an unprecedented opportunity to exact greater revenue from the customer base without spending a penny on service development!”

The Canadian wireless market has been infantilised by the greed and short-sightedness of our wireless carriers and the mismanagement of our asleep-at-the-wheel regulators. Whereas (according to Wikipedia) the average user in the Philippines sends 10-12 text messages a day, doing some quick math from the stats above reveals that the average Canadian use of text messaging is far lower at 2-3 messages per day.

Still, this 45.3 million SMS messages per month business must be creating a stress on the Telus service network, you’d think. Right?

Well, if you send 45.3 million SMS messages all at the maximum size of 140 characters, you’ll get almost 6 Gigabytes in total storage volume - or, roughly the size of the hard drive I had on my IBM Thinkpad in 1999. That’s a lot of data to store (in 1972, that is). At the end of the day, this means that the entire Canadian SMS relay network has to be able to sustain about 453MB/s of data transfer (someone check my math here, I think this might actually be on the high side). My Mac Mini has a 1GB/s ethernet interface but since it’s ultimately connected to a (for Canada anyway) smokin’ 30MB/s internet pipe, I guess this means that 11 or 12 Mac Minis connected to Novus broadband in Yaletown could handle relay for all of Canada’s SMS traffic.

SMS uses the signaling overlay path of wireless carrier networks, and from the wireless perspective SMS messages ride in the carrier byte packet. As such it costs the network exactly nothing and uses no bandwidth that isn’t already in use — traffic load is the same on the network even if no SMS messages are being transferred. The networks themselves need to invest in this infrastructure anyway, so there is perhaps an added provisioning and data processing impact created by SMS for wireless carrier network planners, but it is not substantial.

For TELUS to suggest that this traffic is in any way meaningfully impactful to their operating costs suggests that either they’re lying, or perhaps they should go back to operating mechanical switches.

This is a cash grab. Pure and simple. But then, you knew that…

Posted by Ian Bell at 4:02 pm
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In a week, when Apple FanBoys are lined up outside the Rogers and Fido stores to purchase their iPhones and get locked into Rogers’ draconian service plan for the next three years, yours truly wil be cooling his heels waiting for a shipment from the UK to arrive at his door. In this package, likely a week after the launch, will be contained a couple of 3G iPhones from a friend in London.

This is a critical opportunity for you to vote against Rogers with the only ballot that counts: your wallet. You too will be able to purchase unlocked 3G iPhones from him on eBay about a week later.

Why go to the trouble? Well, let’s just say I’m conflicted. I want the new iPhone (love my old one) but I don’t want Uncle Ted taking my purchase of one as an endorsement of his brutal pricing plan. The Globe & Mail makes the following comparison:
“For example, for $75 a month, Rogers provides 300 weekday voice minutes, 750 megabytes of data and 100 text messages. In the United States, a customer gets 450 weekday voice minutes, unlimited data and 200 text messages for the same price.”
750MB for a frequent iPhone user, particularly one who uses the navigation and web browsing tools, is nothing. But in particular it’s the three-year lock-in that requires the greatest consideration. At that end of the deal, Rogers has you by the short-and-curlies. And your obligation to them will almost certainly outlast your 3G iPhone. Needless to say, many of us are pissed.
So how does it work? Well, let’s just say that you can finally thank the French for something.
Thanks to French law, it is illegal for Apple (or any mobile phone handset maker or carrier) to sell a locked phone in the French marketplace without also making the same device available in the popular pay-as-you-go mode, fully unlocked and portable to any carrier.
This puts a stick in the mud for Apple’s lock-in plan and means that France will likely be selling a substantial number of 3G iPhones, until ZiPhone learns how to software unlock them, to eBay resellers like my friend.
So yes, please go and sign the petition at RuinediPhone.com but, since I know you’re going to buy one anyway, get the French iPhone instead of buckling under peer pressure to lock into Rogers’ data plan. It might cost you more in the short run (ironic) but in the long run you will force things to change.
Software unlocking has already forced several key changes in Apple’s strategy that favour the consumer. But a flop of Rogers’ package pricing on the Canadian market can send a clear signal to both companies, and their shareholders. Industry Canada, which should be paying attention, can and most definitely should censure Rogers, and its wireless competitors for a long history of market-limiting pricing (not limited to the iPhone launch in Canada) that has rendered our country a wireless backwater.

Posted by Ian Bell at 7:50 am
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