AORTA is an acronym invented by Mark Anderson (yes — he of Strategic News Service fame). It stands for Always On Real Time Access, which is the chief benefit of broadband internet. Not the fact that broadband is fast, but that it's always up, which means that you can have access to the 'net instantaneously. In the 1990's, the move from dial-up to broadband changed everything by ushering in a world of flat-rate pricing and ubiquitous connectivity — the world of always-on, real-time access.
Mark coined this term a decade ago when most of us were thinking of broadband as a wired internet phenomenon. Blogger / analyst Chetan Sharma has been tracking the wireless AORTA revolution for some time. So when he published his Global Wireless Data Market Update last week, it was worth paying attention to. In fact, there are real some gems in there.
Take, for example, this chart, which shows average monthly revenue, per user, plotted against data revenue (as a % of total revenues), by carrier. It tells us which countries have the most usage of wireless data, and which countries are generating the highest revenues.
It's no surprise that Japan is such an outlier. With Docomo as the worlds most successful wireless data service, many Japanese prefer the wireless Internet on their cellular phone to any other Internet.
Let's look at the western world, though. Those green and blue dots represent European and North American countries respectively. We immediately note that after Japan, the UK and Ireland are the most profitable wireless data markets in the world. The US isn't that far behind either. The UK and Ireland are also in the top grouping of countries in terms of percentage revenues from data.
Strange then, that the data tolls in those places are so low, wouldn't you say? T-mobile offers unlimited* data, and free access in 1200 WiFi hotspots for £14/month (about $28.50 in Canadian or US currency). O2 has a similar offer for their iPhone users. For £5/month, the UK Carrier 3 offers unlimited mail and web browsing as well. By contrast, our Canadian data rates are many times higher. I just recently, for example, signed up for a new $65/month 1G plan in Canada. To get T-Mobile UK's "unlimited" plan, I would have to pay $195/month, about 7x the UK rate. How is it that UK carriers can be generating such high revenues, compared to Canadians, when their prices are so low.
The answer, of course, is price elasticity. Because the cost of mobile data is so high, Canadians automatically use their data plans much more conservatively than folks in many other parts of the world. We don't surf the mobile web, stream video, or upload photos from our mobile phones. We don't buy music, or use YouTube. We don't use mobile mapping systems, or location based services, either. Remote telemetry? Forget about it. ECommerce via phone? Likewise. For us, mobile data means parsimoniously receiving a few wizened BlackBerry messages, stripped of all their multimedia content in order to use the minimum possible number of precious packets on the carriers networks.
Perhaps the most striking data point in Sharma's analysis, however, was the prevalence of mobile data globally. As of the end of 2007, there were 293 3G launches globally using WCDMA technology, with 270 million users. Japan and Korea continuing to expand their 3G base with over 75% penetration in each country. Western Europe and the US are at 25% already.
The Canadian consumer is being deprived, which is in itself nothing new. Historically, we've often received goods and services common in other parts of the world much later. Call it the price of a tiny population living in the worlds largest physical land mass. So what? Does anyone really care if we spend our money on maple syrup and poutine rather than the latest wireless phone?
Well, we should.
Our country's legacy is telecommunications, and it grew from the fact that our country was so large. Telecommunications technologies are the way that we have stayed in contact and done business cost effectively in this massive place. Thus, it's no mistake that our proudest technology innovators have historically been telecommunications companies. Yet today, with the exception of the immensely talented and successful group at RIM in Waterloo those companies are mere shadows of their former selves.
The way to start fixing that problem is to start home growing wireless innovation again. Is it any wonder that Finland is such a hotbed of wireless technologies, when the largest business in the country is Nokia? Finns grok wireless. Canadians don't. That's because we don't use wireless, data or voice, with anything like the abandon of residents of most other countries in the world.
Lay the blame at the feet of those who control the pricing of wireless products — the cartel of Rogers, Bell and Telus. Lay the blame also at the feet of the CRTC and Industry Canada, who have failed to take the necessary steps to ensure that the Canadian market remains healthy, and that Canada remains competitive globally.
Enlightened carriers, motivated by self interest, should recognize that price elasticity will help to drive up data ARPU. Their shareholders will reward them for revenue growth. Accordingly, they should find a way to bring those wireless data prices down without intervention by government. They should offer the same kinds of services and similar prices to those being offered by the other 292 carriers rolling out 3G globally. If not, then Canadian industry, which is already suffering from a kind of data arteriosclerosis, is at risk of a debilitating heart attack due to the partially blocked AORTA that it suffers from today. And it will be the wireless carriers that have delivered the death blow.
* T-Mobile weasels out of providing truly unlimited data with a 3G fair use policy.