The Canadian launch of the 3G iPhone received international coverage due to consumer reaction to Rogers initial price plans. But having followed the story since last fall and, having interviewed the first two customers to buy the iPhone 3G at Rogers Toronto launch location, the real story is about how Rogers is learning that smartphones are not simply another broadcast medium where the broadcaster or publisher determines the programming available to a viewer, listener or user. From a broader perspective Rogers also owns several radio stations across Canada, the Rogers Sportsnet which broadcasts, amongst other sports events, Blue Jays baseball games (and guess who owns the Blue Jays?). So conditions are ripe for a culture of “delivering programming” with little or no user interactivity or participation.

This came home to me at Rogers Nokia N95 8GB launch back in early May where I found that Rogers was offering access to predetermined mobile communities (Facebook, Flickr, My Space Mobile, etc.), video on demand streaming using licensed content such as Tonight Show with Jay Leno, radio on demand to access 25 XM radio channels, mobile TV under a Rogers Vision service providing licensed news, sports, weather content, mobile gaming and “Rogers Telenav GPS Navigator”. But they had no handle on the potential of the true mobile smartphone user experience.

Their pricing did not really allow for full access to mobile Internet applications as determined by the user. Over the past year-and-a-half I have used my evaluation Nokia N95 for YouTube videos, Qik.com live streaming, SlingPlayer viewing of my cable programming, Truphone for international mobile calling, Google Maps, iSkoot and recently added the Skype for Mobile beta along with a new GoBoingo client that senses when I am in a Boingo WiFi HotSpot. And, of course, the Nokia phones have improved their browsing experience immensely since I first experiences a Nokia N-Series phone two years ago. But I would make sure that I only ran these applications over a WiFi connection (the N-Series phones always ask what network connection you want to use with each application); otherwise, of course, a 5 minute Qik.com video recording would have cost $600 (yes six hundred dollars) under Rogers original data plan for the Nokia N95 8GB.

Rogers’s experience with the originally announced pricing plans for the iPhone demonstrated that their internal corporate “culture” really did not understand that

• one of the key breakthroughs of the iPhone, namely, the total browsing experience, and, with iPhone 2.0, the Apps store.
• the iPhone was not about just handling email or casually browsing to a few web pages.
• the fanatic Mac user community who viewed the iPhone as a mobile extension of their Mac.
• 3G’s speeds, effectively the first mobile broadband protocol, would change user’s mobile Internet habits simply resulting from 3G’s much faster speeds than 2.xG EDGE. (Update: Om Malik: New iPhone will Jumpstart Demand for Wireless Broadband.)

When they finally changed their data plan two days before the iPhone launch, this was implicit in one media relations comment where the Rogers spokesperson effectively admitted they had relied too heavily on their internal legacy market data to establish their initial pricing plans for the iPhone and effectively did not understand the “Mac” and “iPhone” culture. These users want the freedom to decide what they want to do – just give them a decent data plan. (As an aside, the Rogers plan is capped at 6GB whereas AT&T’s unlimited plan apparently has a 5GB cap that has not been publicized. And, if you’re downloading 6GB per month, I say, “get a life”.)

These factors hit home when I interviewed the first two customers to acquire an iPhone at Rogers Toronto launch store. Jordan Brown, a 16-year old high school student, had been wanting an iPhone since it was first announced a year ago and was not really able to go to the U.S. to get an unlockable iPhone 1.0; Wednesday’s data plan price change was the final trigger he needed to line up at 4 p.m. Thursday to ensure he would get an iPhone at 8 a.m. Friday. Robert Cowley, an auctioneer and Mac addict who joined Jordan at 4:45 p.m. Thursday, sees the iPhone as a mobile extension of his current MacBook. While Robert moved his Rogers account from a Pearl 8100 to the iPhone, it was his previous Mac enthusiasm along with the browsing experience and the Apps store, amongst other features that drove his change.

It is going to be an interesting summer as the Blackberry Bold launches in two weeks, with several new media management features along with, supposedly, an enhanced browser experience, while others such as Samsung attempt to launch an iPhone competitor called Instinct. But the bottom line will be twofold: what device best matches the user’s needs once they can experience new applications and what applications become the real interest and demand generators for these products.

Or maybe this should be called: Steve Jobs Does Not Tolerate even the Contemplation of Failure.

Last week I reported on Rogers’ announcement of new data plans for both the forthcoming iPhone (available in two days) and RIM’s Blackberry. In fact, I had immediately changed my Blackberry plan to a new one where the price per MB had gone down by 96%.

But the blogger and Internet response to the announcements re the iPhone turned into a huge PR fiasco for Rogers. Almost 60,000 signed an online petition; reaction on the Internet through blog posts and comments demonstrated that Apple has a huge fan base that wants to remain loyal to Apple but would not tolerate being overcharged. Rumors had Apple diverting Canadian-designated iPhone shipments to other countries in response to Rogers’ pricing. The story garnered five minute bytes on evening national newscasts on all three Canadian television networks. Comparisons with AT&T and T-Mobile plans demonstrated that either Rogers did not have sufficient infrastructure, including backhaul, to support unlimited data plans or they were simply overcharging due to their GSM monopoly situation in Canada. It became an international story with CNN amongst others covering it.

Mark Evans and I (see link above) both predicted these plans would not garner the sales volumes that Apple was expecting.

Today Rogers announced that, until August 30, any smartphone, including Blackberries on BIS, on the 3G network will be able to get a $30 per month data plan covering 6GB of data until August 31. As predicted last fall, I knew the RIM people had to be onto Rogers as soon as they announced this plan for the iPhone. Now Rogers has to address the inequity of the situation where Blackberries on BES (read “corporate accounts”) are still being charged $60 for 25MB. (When I started this post, the new data plan was only for the iPhone. Talk about “Breaking News”.)

Thanks to the leadership of Steve Jobs at Apple and Jim Balsille at RIM, along with the very passionate Canadian Apple and Blackberry fan base, for demonstrating that it is possible for the smartphone vendors to call the shots. Even in monopoly situations, carriers have limits as to how much the public will tolerate the abuse of a public trust — in this case licenses for wireless communications. Obviously ARPU went out the door in favor of customer recruitment. (Were bonus plans renegotiated at Rogers?) Let’s see if the same happens in Mexico and New Zealand where again, there are some very exorbitant plans offered for the iPhone.

And, in closing, let the real Canadian Smartphone Games begin!

Reaction at Crackberry.com; Rogers initial press release today

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Caveat: This post is mostly for the benefit of Canadians but then again if you’re outside Canada where unlimited data plans are the norm, count your blessings. These plans do have implications for mobile Skype usage costs, such as with iSkoot. Update: maybe it is international – the story has made CNN.com.

Rogers takes major steps towards lower cost data plans for Canadians but they still don’t measure up to US and European benchmarks.

To review the Canadian wireless data scene:

• Rogers is the only GSM carrier in Canada
• the iPhone is to be launched July 11 with the introduction of the iPhone 3G.
• Blackberry Bold will be available on Rogers at some time this summer (indications point to a July launch; seems that Rogers has more HSPA experience than AT&T)
• Rogers is replacing the Blackberry 8800 with the WiFi-enabled Blackberry 8820.
• Rogers monthly data plans have been, to be kind, somewhat expensive ($60 for 25MB on Blackberry; $60 for 1GB on an Nokia N95). In one cited example, 500MB of data per month would have cost $1,600.
• These are the first popular WiFi-enabled phones to be launched by Rogers (their N95 8GB launch two months ago has not exactly been a roaring success). Canadian still don’t have much experience using WiFi access points with smartphones.

As predicted here last fall and discussed again two months ago, the forthcoming Canadian launch of the iPhone with the accompanying Rogers voice/data plans has been accompanied by new Rogers data plans for the Blackberry (at least for those using the Blackberry BIS service). While Rogers offers no unlimited plans, last week I was able to change my Blackberry data plan from $60 for 25MB to $30 for 300MB (4% of my previous per MB cost). Down from the $1600 per month mentioned above, 500MB of data now costs $50 per month. And they now offer overage protection or FlexRate in their plans with incremental costs well below those of previous data plans from $5/MB to $0.50/MB for the first 60MB and $0.03/MB thereafter. Finally to get a feel for your usage, the Rogers Blackberry plans offer unlimited email and browsing for the first one/two/three months of a contract provided you take out a 1/2/3-year contract.

Higher capacity data plans are available; however, I found I was using much less than 25MB per month but I was also cautious with my usage. A good part of the reason for this low usage was related to my heavy use of the WiFi available on my evaluation Blackberry 8820 at my home office, in hotels with accessible WiFi and even at other locations with accessible WiFi — this was especially true when traveling in the U.S.. In a couple of cases I even fired up my Linksys Travel Router to convert an wired Ethernet connection to an WiFi access point in my hotel room.

On doing a comparison of combined voice and data plans I found the Blackberry plans to be slightly (~5%) less than iPhone plans comparing 450 voice minutes, 100 Canadian long distance minutes and 1GB of data. Provided you take the $15 Value Pack (required for CallerID) they are equal on issues such as sent text messages and enhanced voice mail.

Here is the key point all the media coverage of the Rogers plans misses. The iPhone comes with WiFi in addition to GSM/EDGE/HSPA.Over the past year many Canadians who bought iPhones out of the U.S. simply limited their Internet access to WiFi access points (on an unlocked iPhone) and never used the voice service; some actually paid the AT&T monthly fee if they traveled frequently to the U.S.. But here are the consequences of the iPhone’s WiFi feature:

• Rogers iPhone plans include free access to Canadian HotSpot network sites at Starbucks, Second Cup, major airports and other public locations.
• Home and office use: In Canada some broadband Internet services end up supplying a cable modem/router with WiFi access; at worst it’s a one-time cost of $100 to buy a WiFi-enabled router to create a home or office WiFi access point.

I have now had about 8 months’ experience with the Blackberry 8820 and Nokia N95; as mentioned above I learned how to adopt to maximizing WiFi usage and using the Rogers data network only when absolutely necessary. Speculation at crackberry.com is that Rogers is in the process of launching the Blackberry 8820 to replace the 8800. Check the linked Crackberry.com post for all the activity that can be carried on through a WiFi access point on the 8820; no doubt those same features will carry over to the Blackberry Bold when it becomes available.

But there is one key feature of Blackberries that will not be available on the iPhone (aside from Copy & Paste): Blackberry 8×20′s also support the UMA/GAN protocol. This means that you can also reduce your cellular plan voice minutes by calling through a WiFi access point. T-Mobile has had this service, called T-Mobile @ Home, since their launch last September. Rogers is commencing the offering of similar but more limited service through its Home Calling Zone plan which also is rumored to include free access at Canadian HotSpot Network locations. Relative to T-Mobile’s service, Rogers Home Calling Zone only works for WiFi access points within Canada whereas several of my acquaintances have been able to access T-Mobile’s service through their hotel WiFi services in Europe and Israel.

Neighbourhood Rogers/Bell Cell Tower - Jan 08

So here are the outstanding questions:

• Why did Rogers issue a press release announcing their iPhone plans while their customers only learn about their new Blackberry plans via sites such as Crackberry.com? Is this the Apple hype machine in action or has RIM fallen down on the PR opportunity?
• Why do Rogers data plan rates for enterprises with BES servers remain unchanged at $25 per month for 25MB? One excuse is that this is what is charged by market competitors Bell and Telus (who use CDMA instead of GSM).
• Why do Rogers’ plans remain much higher than the equivalent AT&T pricing for both iPhone and Blackberry (for both of which AT&T provides unlimited data usage plans)?
• What role does installed backhaul capacity have in these rates? Is it the need to build out more backhaul capacity that is causing Rogers to only offer “limited” plans. Pictured is a new cell tower near my home; yet I understand, in spite of having a fibre optic connection, it still uses only two T1′s or two E1′s to get back to an Internet consolidation point. (It’s final connection was delayed several months awaiting municipal permits to run the fibre optic line under a major roadway.)
• When will RIM and Rogers make available the 4.5 firmware upgrade for 8xxx series Blackberries to improve the browsing and HTML email experience, amongst a multitude of other issues addressed? RIM upgraded all their BIS servers over this past weekend in preparation for this new firmware.

Going forward I recommend:

• Leverage WiFi wherever possible. Download programs, preview Map routes and perform other data intensive activities while at a home or office WiFi access point. On the Nokia N95 I only use data intensive applications such as SlingPlayer (coming soon to Blackberries upgraded to the 4.5 firmware, where available) and Qik.com when in a WiFi zone.
• For a real mobile phone, the Blackberry 8×20 series or Blackberry Bold: UMA/GAN support (8×20 Blackberries only), Copy & Paste, video services (especially with the Bold), proven battery life, true stereo Bluetooth support and MMS are some of the differentiating reasons.
• For mobile entertainment: wait for an iPod Touch with GPS and maybe a microphone and use it in WiFi-enabled zones for the iPhone browsing experience – no monthly subscription fees. Meanwhile I’ll stick with my iPod.

The Looming Canadian iPhone Launch Flop: As for the iPhone’s launch in Canada, some early “geek” adopters may rush to get them on the launch day but on reviewing the plans, especially with the incremental costs for voice overage ($0.35 per minute on the two lowest costs plans) along with the data caps, it would appear the only plan that makes any sense for a complete iPhone experience is the highest cost one at $115/month. This is especially true if you want an iPhone to be your primary phone; the overage charges will quickly drive you up a level or two, irrespective of data usage. Even then you need at least the additional $15/month iPhone Value Pack if you want to take advantage of callerID’s ability to locate your caller in your iPhone address book. When combined with the requirement for a three year contract, this is not a plan that is going to really bring the massive uptake the Apply hype machine is trying to generate and Rogers is anticipating. Ah, the iPod Touch offers such a good alternative provided you can live with only using WiFi access points!

Other posts:

• Jack Kapica, Globe and Mail: Pig in a Poke; How Rogers Stacks Up
• Great Expectations About To Be Disappointed: Facebook Petition
• CNet News: Canadian iPhone 3G Plans lack unlimited data
• Mark Evans: How Badly Do Canadians Want an iPhone?
• Mathew Ingram: Rogers iPhone: Get a Second Mortgage

Tags: Rogers, iPhone 3G, Blackberry, RIM, Blackberry Bold, Blackberry 8820, Rogers data plans, WiFi, smartphones, iPod Touch, T-Mobile @Home, Rogers Home Calling Zone, Crackberry.com, Jack Kapica, Mark Evans, Mathew Ingram

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Yesterday’s announcement of new international calling plans available from Skype probably set a record for generating press traffic about Skype. Certainly my “:Skype” keyword feed in FeedDemon has been gone off the end. Most of the reports were simply rehashes of the original two press releases (Global and North America). But some bloggers’ observations are worth mentioning.

Pat Phelan at Cubic Telecomm (MaxRoam) thinks these plans will seriously impact the phone card market:

This a serious blow to the phone card market and with the multicountry plans to launch prepaid Skype cards now starting to ramp up this could spell the end. ….

These packages are certainly going to make me re-examine my Skype usage, couple this with the excellent quality I have been getting on my 3Skypephone lately and its time thr a package change on my Vodafone corporate account

Mark Evans thinks the sexier story is Skype’s growth:

There’s lots of excitement today about Skype unveiling a new plan offering unlimited long-distance calls to 34 countries but the far more interesting story – at least from this corner’s perspective – is Skype’s strong growth, which has been chronically unreported.

Andy Abramson, at VoIP Watch gives his take:

1. Revenue can become more predictable as it will be charged monthly. Unlike the Skype Unlimited plan which was a one time purchase, this allows users to change plans and also drop or add it as they need it. That means students and vacationers are ideal targets.

2. The charges can be to PayPal or any credit card. This opens up the universe of potential users to non-PayPal users.

3. The plan is changeable between hemispheres so if you buy one in say the USA and end up in Europe working, in school or on vacation the Skype users can swap out as needed.

While I know road warrior and world traveler Andy immediately signed up for a World plan, PhoneBoy’s selection is more typical of North Americans with no overseas family ties:

This certainly makes it easier for people to justify giving Skype more per-month. If I made a couple of calls to Mexico or to the countries that are supported, I would certainly do it. However, I find the current Skype Pro offering–and the Skype Unlimited U.S./Canada plan–suffciient for my needs.

Dan York, who gets a bird’s eye view of the telecomm world from his work with Voxeo sees it, for the U.S. market, as a step up from “unlimited” domestic calling plans in the U.S. He also comments on telcos’ use of the term “unlimited” (to really mean “lots and lots” but “enough is enough”):

Of course, I had to laugh at Skype joining into the game played by all the major carriers here in NA known as “redefining the word ‘unlimited’”. Several of the carriers here in the USA and also in Canada have at various times trumpeted their “unlimited” data plans… which of course were “unlimited” only according to the carrier’s definition of unlimited… really something more like:

“Unlimited” = “unlimited calling up to a certain point that our finance folks have determined you start to impact our profit”

My thoughts on that issue: if you’re using that many minutes (over five hours of calling per day)

• it’s only fair, and does not hurt, to pay for excessive use if you’re running a (revenue generating) business
• figure out a way to get your contact onto Skype.
• get a life!

Certainly these plans could have a major impact in the Canadian market where we have many families with roots in the overseas countries serviced by the World plans. From my own anecdotal contacts, Skype attracts two major demographics in Canada: (i) family calling back to the “home country” overseas and (ii) small businesses wanting to grow worldwide. Unfortunately Skype’s “World” plans do not cover India, Pakistan and the Philippines where many Canadians have strong family ties. (I’m especially surprised by the lack of India since we know Skype has termination arrangements for both Canada and India through VSNL.).

The consensus in this morning’s Squawk Box call (recording link to follow when available) was that these plans are evolutionary while setting new pricing benchmarks for flat rate calling. It’s more a matter of working out the various terminating carrier agreements as opposed to any major new technology developments. And the biggest challenge is making access to Skype calling easier for the consumer through increased distribution of dedicated Skype-enabled hardware platforms with the familiar telephone touchtone interface in various markets – but especially in Canada and the U.S.

Tags: Skype, Pat Phelan, Mark Evans, MaxRoam, Andy Abramson, VoIP Watch, Dan York, PhoneBoy, VSNL, Skype Calling Plans, Squawk Box

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