Slower growth may be good for wireless clients
Fuelled by voracious demand for data and smartphones, Canada’s wireless providers have consistently made more money per subscriber with every passing quarter.
But the pace of growth in average revenue per user slowed in the latest quarter for all wireless players — the Big Three incumbents and the new entrants — a slight deceleration that could be good news for consumers, Desjardins analyst Maher Yaghi noted to clients Thursday. “The fact that (average revenue per user) reduction affected all carriers could indicate that market power is slowly moving into the hands of consumers,” Yaghi wrote.
Across the industry, average revenue per user, or ARPU, grew 2.6 per cent in the quarter, down from a growth of 3.9 per cent in the previous period, Yaghi noted. BCE Inc. and Telus Corp. led with growth of three per cent each, while Quebecor Inc.’s Videotron trailed with growth of 1.4 per cent.
Videotron blamed the Canadian Radio-television and Telecommunications Commission’s decision to ban its unlimited music packages for a 1.6 per cent hit to growth in average revenue per user. The regulator ruled earlier this year that providers must treat all data the same and thus cannot exempt music from data limits.
But Yaghi called the drop notable, as even without the regulatory change Videotron’s ARPU “would still have declined meaningfully” from the previous quarter where it grew 5.6 per cent.
The slower growth could also stem from the increasing popularity of bring-your-own-device plans, Yaghi noted. They tend to be cheaper because they don’t include device subsidies, which tend to push bills upwards by at least $20 a month. “This is not necessarily bad news for the carriers as these plans generally come with higher margins,” Yaghi wrote, given the lower cost with these clients.
Regardless, wireless bills hit an average of $87.25 in 2015, up 5.5 per cent from the year prior, according to CRTC data released last week. The same report found monthly data usage increased 25 per cent to 1.2 GB in 2016.
Slower growth in average revenue per user could indicate higher data buckets resulting in less overage charges or successful attempts by the CRTC to limit bill shock by introducing overage caps. for data and roaming.