It’s that time of year again: your phone is dying more quickly than you remember, your bill seems to always be too high for your liking, and the new generation of shiny new smartphones are rolling out. If this sounds like you, you are one of many Canadian students who have this problem.
As a student, finding the smartphone plan that caters to your drastically changing needs can be a stressful task. Questions like “Which provider do I sign with? How much should I pay? Should I get a new phone from a provider or from a store?” can overwhelm us.
In Canada, the mobile provider industry is occupied by three main companies: Rogers, Bell, and Telus with Vidéotron being a fourth player in Quebec markets.
These companies take up 85.5% of the Canadian market for phone service providers. As a result, they have high control over pricing, benefits and have each branched off into subsidiary companies to capture an even wider market share.
Unfortunately, what this means is that these companies have an oligarchical stranglehold on the increasing smartphone consumer base. This, in turn, means these companies make no hesitation in playing around with prices as they see fit without providing a better service. In fact, Canada is by far the most expensive country for cell phone plans. Studies have shown that after comparing rates in different countries, “Canada landed dead last by a long shot when researchers compared how much mobile data $45 can buy you” according to The Tyee and that data is where those big name brands make all their profits.
But do not despair! We will be looking at each tier of company, comparing your consumer needs to the services advertised and offered, and bringing it all together to give you an idea of what will give you the best bang for your buck!
Here are the Top three cell phone providers broken down into their respective high, medium, and low price point subsidiaries:
This begs the question: Why would these massive companies choose to branch off into smaller companies? This allows providers to target specific segments more effectively. While everyone is looking for a phone, not everyone has the same needs. For some, the latest tech and amenities is most important, for others, the price is all that matters. Others may find that data is their primary focal point and do not care about chatting beyond internet texting applications. Therefore these tiers exist, to better position themselves for a demographic or psychographic market that these companies feel require attention and can profit from.
"The Big Three"
Like the term entails, these providers have invested billions of dollars to establish the infrastructure to have the largest coverage, fastest speeds, and most reliable service.
The other companies below profit from essentially reselling the network that these companies give them.
Due to their size and range of services, these companies do not exclusively market to mobile users. Their image to both consumers and enterprises portray that they are advanced, professional, efficient, and multifaceted.
As a result, their brand image is that of the one-stop-shop for all your communication service needs. These companies position themselves in the market as cutting-edge tech moguls with the best customer-service and the most reliable and diverse amenities, benefiting larger groups as opposed to individual buys. Companies like Bell and Rogers even provide internet and television packages when purchasing phone plans and use the complete pack age deal as leverage when marketing their individual products and services.
Individuals who are purchasing a phone plan from these top-tier brands are generally individuals with established jobs, families or own a company. As such, advertising for the top 3 will usually take the form of radio or television advertising as the demographic that is most likely to purchase the service offered by these brands watches TV after work or listens to the radio on their way to work. The commercials will generally be directed towards parents attempting to consolidate their family’s phone activities into a single bill as opposed to tracking multiple phone lines. A similar approach can be taken for potential clients looking to purchase business lines. According to an international study, The content of the advertisement usually touches upon network performance and family or group plans and the newest phones on the markets. Rarely is price or affordability mentioned.
Tier 1 Subsidiaries: The Middle Ground
On paper, these companies seem indistinguishable from their top 3 counterparts: great coverage, slightly lower pricing, and helpful customer service. The main difference here is that most of these companies are built from the ground up on being a mobile provider. This means more plans centered around smartphones and their marketing targets smartphone users more specifically, particularly the younger generations.
These companies target mobile users, younger individuals with likely less money to spend. As a result, their brand images are more approachable and relatable. Their advertising is more eccentric, energetic, and more centered on providing the brass-tax information in the cost versus data argument compared to their larger counterparts.
As their target demographic is a younger audience with more internet experience and consumption, ads for these brands would be more effective on social media platforms in the form of sponsored content, podcast sponsorships, or quick intermission ads on YouTube videos.
These companies position themselves as friendly, helpful, and adaptable services with relatable advertising that incites brand loyalty through their promotions and pay as you go services. They are cheaper and allow consumers to bring their own phones so they can save more money on their plans.
These companies know their market is young, generally high school students or broke college kids and so they drive their services toward better data plans, or at least better data service. As a first-tier subsidiary, the priority is to provide a smartphone service to smartphone users and as such, they are much less interested in selling additional services or combination plans.
We also see a move towards more price-conscious offers like Fido’s “Fido Xtra” or Virgin’s “My Benefits” service that gives purchasers of their plans exclusive benefits to certain partnered clothing stores and restaurants, a draw that surely positions them in the market for a younger, more active demographic that may be going out to restaurants and purchasing clothes more frequently (though maybe less so at the moment). Consumer-friendly data services are important to this demographic, so Fido and Koodo provide more direct savings in the form of services that prevent data overages with the Fido Pulse +5 Hours and Shock-Free data services, respectively.
Tier 2 Subsidiaries: For the Penny
Tier 2 subsidiaries prioritize one thing and one thing only: price. They have no smartphone plans (smartphone plans are under the assumption that you bring your own device), no contracts, monthly pay-as-you-go services, and little to no customer service. Most do not even have a storefront, but they are the cheapest option in comparison to the other tiers. These plans are extremely customizable, with no set commitment.
Their demographic would be individuals looking for a bare-bones plan that keeps them accessible through limited talk and text. This type of consumer is likely not thinking much about getting a data plan and would prefer only using available WiFi hotspots.
The best way to advertise to the target demographic with these brands is on public transit, billboards, and social media as it is likely that individuals who are looking for these options are taking public transit as opposed to spending money on a car while air time for tv and radio commercials would likely be too expensive for these brands to effectively profit from. This is a niche demographic. While most Canadians want to “take advantage of the latest innovations available,” this demographic wishes to maintain simplicity without being bound to a contract or dealing with unexpected charges.
The brand image here is accessible, modular, adaptable, and simple. Of course, the low price point is the major factor and as Public Mobile puts it, “Less for Less” is the overall motto for these Tier 2 companies.
So what are your options?
Generally, there is no magical plan that will benefit everyone perfectly. However, we also always need to be able to stay connected. Tier 2 companies are notably weak at providing strong data bands. As the research on Canadians from the CTA would suggest, the newest models are a driving factor for purchasing a phone and while this is possible with the Tier 2 subsidiary companies, the cost of the phone must be paid in full upfront which is difficult to justify as a student likely working a minimum-wage part-time job just to pay tuition. Money for the latest iPhone or Samsung product is not something that students have readily available. So, while the plans are affordable, the lack of reliable data services and a somewhat expensive (albeit totally dependent on the buyer) barrier of entry make the Tier 2 option less enticing.
Conversely, the Top Tier solution may be too expensive in cumulative monthly charges. With the expense of the contract, the new phone, and the potential for overage charges that are generally not kind to the wallet, a student may be turned off entirely by those prices. The average price for a phone plan in Quebec, while lower than the average phone plan in most other provinces, still reaches 75$, 85% more than the average international phone plan, ranking the highest in its bracket.
While reliability and performance are important, particularly in the data sphere, the argument comes back around to an inability to afford those prices as a student and committing to a contract at those excessive prices for 2 years.
The 1st tier subsidiaries seem to be the best of both worlds, providing a strong network and service, with a quality product and companies that position themselves in a way that makes potential clients feel welcome. The plans are generally no-hassle contracts with strong customer retention services that allow you some flexibility for less expensive. Koodo, Virgin, and Fido seem best for students!
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Sources:
Koroinos, Eva. Wireless Telecommunication Carreers in Canada. February 2020, https://my-ibisworld-com.lib-ezproxy.concordia.ca/ca/en/industry/51721ca/industry-at-a-glance
Government of Canada. Review of Mobile Wireless Services. May 2019, https://www.competitionbureau.gc.ca/eic/site/cb-bc.nsf/eng/04431.html
An exploratory study on determinants of customer satisfaction of leading mobile network providers
Jackson, Emily. Second-tier wireless brands leave Canadian customers more satisfied: J.D. Power. April 2017, https://financialpost.com/technology/flanker-wireless-brands-leave-canadian-customers-more-satisfied-j-d-power
NGL Nordicity Group Ltd. 2017 Price Comparison Study of Telecommunications Services in Canada and Select Foreign Jurisdictions. October 2017, https://www.ic.gc.ca/eic/site/693.nsf/vwapj/Nordicity2017EN.pdf/$file/Nordicity2017EN.pdf
Rewheel research. The state of 4G pricing. May 2018, http://research.rewheel.fi/downloads/The_state_of_4G_pricing_DFMonitor_9th_release_1H2018_PUBLIC.pdf
Carney, Bryan. If Canada Wants to Slash Cell Bills, Here’s How One Nation Did It. February 2019, https://thetyee.ca/News/2019/02/28/Slash-Cell-Bills-Israel/