Six things that need to happen in 2012 to be Canada’s best year ever in mobile

2011 was a fantastic year for mobile, but it was only a blip on the timeline compared to what 2012 holds in its potential. The Canadian cell phone market is poised to explode in smartphone usage, exceeding 50% as early as May or June, based on estimates from comScore. As we look on to what the next twelve months will bring, let’s focus on a few areas that are most important to Canadians’ mobile futures.

1) Three-year contracts have to go. We’ve been saying this for years: the 3-year contract is what keeps Canada in the mobile stone age. A lack of competition between the Big Three means that they can keep monthly rate plans absurdly high while charging very little, or what appears to be very little, for the handset itself. And over time Canadians have become complacent, used to paying $0 for a phone while forking over upwards of $60-100 every month for a plan, for three long years.

Our neighbours to the south have migrated to an industry-standard 2-year contract system, and are charged slightly more for the phone upfront. Many European nations have regulations preventing carriers from gouging customers. If the consumer doesn’t understand that the carrier is heavily subsiziding the cost of the handset to later accrue more revenue in the contract, they will continue blindly signing 3-year contracts here and complain about being overcharged. Instead, they need to view the alternatives.

When Mobilicity and WIND Mobile entered the market in 2010, it appeared that there would be a sea change in the way the Big Three did business. But instead they launched their own discount brands and kept prices high on the flagships. Progress has been made in certain areas, namely the elimination of the Early Cancellation Fee, reasonably-priced devices on 1- or 2-year terms, and, most importantly, the same plans are available to those who don’t sign a contract.

But the new entrants have not conquered the market to the extent they wanted: WIND has signed up 400,000 customers, and need a great year to hit its target of 1.5 million by the end of 2012. Mobilicity keeps lowering prices, but has had some big management shake-ups, and is in WIND’s acquisition sites. Public Mobile had a good year, sitting at over 150,000 subscribers, but all three companies are still extremely limited in where they operate and by the speeds of their aging 3G networks.

2) The 700mhz spectrum needs to be open to all, especially the new entrants. I’m not a soothsayer, but it’s fairly easy to predict that if spectrum is not put aside for the little guys like it was in 2008 for the AWS auction, it will be very difficult for the new entrants to continue competing. The 700Mhz spectrum is fundamental to the continued proliferation of high-speed, high-penetration LTE networks in Canada. The Big Three are taking the auction very seriously as they understand that the more bandwidth they have in the lower-end, the less they will need to rely on their limited AWS spectrum in areas of lower density.

If the new entrants ever want a chance at competing long-term, they need to secure enough 700Mhz spectrum to deploy Long-Term Evolution networks: they will not survive with it. The auction will determine who has enough bandwidth to deploy in rural areas, in high-density cities and, ultimately, who can fend off the competition. It’s not rocket science: whoever owns the most bandwidth will have the most robust network. The amount of capital available to them is lower than that of the Big Three due to foreign ownership restrictions, lack of public funding and a lower number of traded shares.

3) Consumers need to be better educated about their options. I still hear too many times, “What phone should I get, an iPhone or a Samsung?” Android has a branding problem that only Google can solve.

Too many OEMs taking bits and pieces of its open source OS and creating mulch; customers are overwhelmed by choice, and it’s not a good thing. Chris Ziegler of The Verge summed it up perfectly: Apple introduces one phone per year while HTC introduced over a dozen in 2011. It undermines the brand and makes customers regretful, anxious that their purchase will be obsoleted and unsupported in six months, a year.

Google needs to do two things: promise to support its vendors in updates, so customers are not left complaining endlessly about how and when they will receive an OTA update. Sure, this is a small, vocal minority, but their words have power. These people have convinced HTC and Sony Ericsson to develop bootloader unlocking services and Motorola to discontinue its terrible MOTOBLUR skin. But in a bid to differentiate themselves, these same companies are moving further into proprietary territory, alienating the very Android brand on which they are staking their future.

Google has a very different role to play behind the scenes than the one we know of. They are constantly talking to manufacturers and carriers, but not to the public. What I hear from that same public is a discontent with carrier bloatware, OEM “value-adds” and slow updates. Especially slow updates. That the first devices to get Android 4.0 after the Nexus S and Galaxy Nexus may be in Q2 2012 is ridiculous. Microsoft managed to deploy Mango through multiple manufacturers and myriad carriers without issue, by asserting control over the update process. The “overlay” problem is not insurmountable, but Google needs to set guidelines. This may never happen, but it needs to.

The Canadian market is being flooded with low-, mid- and high-end Android phones. It’s great to see the Galaxy Nexus featured so prominently in print ads, on TV and even at the movies: proof enough that Google’s name, along with the Android brand, is enough of a sell for potential customers. But it’s the superior experience that needs to be emphasized: your Nexus phone can do everything another high-end Android could and more, with the added bonus of direct support from the company who designed it in the first place.

4) RIM needs to get its stuff together. Canada’s once-darling has been knocked down more times than we can count, as evinced in their sad stock price. But where some see defeat, I can’t help but think that 2012 is going to be the beginning of a resurgence for the BlackBerry brand. It may not happen until the end of the calendar year, but RIM has a couple choices to make. They’ve already pledged to redouble their advertising efforts for the current BlackBerry 7 lineup in North America (and if you’ve watched any televised sports game in the past couple weeks, you’ll see evidence of that) but it’s clear that the United States is a lost cause.

Instead, they need to focus on markets they can win. RIM still owns Canada, or at least they did in September 2011, with 36% of total smartphone market share. I see BlackBerry 7 devices everywhere, often more so than I do iPhones. Canadians love their BlackBerry’s, and it is with this in mind that I suggest RIM work really hard on disappearing from the US market only to emerge again with a killer BlackBerry 10 device when it’s ready. When it has everything a smartphone user would want, including a wide array of quality apps to go along with existing BIS and BES services we expect from the company. BBM is a strong incentive to keep your customers around. Use it. When BlackBerry 10 devices emerge, offer loyal customers heavily discounted upgrades. Make it irresistible for people not to upgrade.

Moreover, take the advice of thousands of stockholders and analysts: get rid of the co-CEO hierarchy. Don’t sell off parts of the company you’ll never be able to get back. There is a huge Apple circa 1997 moment in here somewhere, but RIM is traditionally clumsy at taking chances.

If our darling of Waterloo can come through the next challenging quarter or two with a small profit, it will be enough momentum to sustain them going into 2013. It’s not a lot, but it’s all they have. In the meantime, stop making mistakes, getting into fights and buckle down on improving your products. We’ll wait.

5) Apple needs a hit. “What?” you say! The iPhone 4S is the biggest phone in the world; the iPad 2 ostensibly the only tablet on the market. And yet. And yet since Steve Jobs’ death in October the company has been a constant study. The first sign that the status quo has been disrupted, and that Tim Cook isn’t up to the task of his world-famous predecessor, and there will be disquiet amongst the ranks. Like Pixar, Apple has an almost-flawless record, which means, like the pessimists we are, everyone is waiting for them to screw up.

Going forward into 2012 with a continued swath of innovating and successful product launches will reassure the world that the management team at Apple is still strong, and that Steve Jobs’ influence is intact within the walls of Cupertino.

6) Devices need to last longer. If there is one insidious trend inside the smartphone market it is the quickening daily demise of our favourite toys. Combined with the fact that we are constantly using them, inserting and removing from our pockets every few minutes, they are getting more power-hungry and less energy efficient. Well, perhaps more energy efficient with the types of batteries, but less so in the trend towards thinness and more powerful internal processors. While the next-generation 32nm SoCs like Qualcomm’s S4 line, as well as the improved power mechanics inside NVIDIA’s Tegra 3, should improve battery life in some devices, in general we are getting used to our devices lasting for shorter periods.

Power-hungry LTE chips and desktop-calibre graphics have all led to us expecting to recharge our devices not only every night, but for many of us, by mid-afternoon. Even Apple’s iPhone 4S has been plagued with reports of poor battery life. If vendors can implement power-saving features into the software, combine LTE into existing baseband chips and scale down the CPU when not in use, 2012 could be the year our smartphones start lasting longer, for once.