Freedom Mobile targets Big Three with data deals

Analyst casts doubt on potential for repeat of past wireless price wars

Freedom Mobile hopes to trigger a holiday shopping spree for the second year in a row with its promotion for an extra 100 gigabyte of data, but not everyone is convinced the new tactic will spark a repeat of last year’s wireless price battle.

Shaw Communications Inc.’s wireless brand on Monday announced that wireless customers on 10 GB for $60 monthly plans will get a 100 GB cushion to use if they surpass their monthly limit, a surplus that won’t expire as long as they remain customers. Technically, a customer could use it all in the first month if they really binged on Netflix, or they could save it for years to augment use when needed. Freedom also introduced two new monthly plans that will get the “big binge bonus”: 15 GB for $80 and 20 GB for $100, data buckets the Big Three sell for nearly double the price.

The new offers come about one year after Freedom shook up the market when it launched the 10 GB plans and finally started selling the iPhone during the December shopping rush. Shortly afterward, the Big Three competitors responded with 10 GB for $60 offers of their own, an unprecedented discount that sparked a flurry of demand from customers used to paying up to $90 for 1 GB plans. Since then, industry analysts have noted that average revenue per user hasn’t grown as fast as it used to, as consumers increasingly expect more data for less.

This year, Freedom is confident the deal will get a repeat reaction. Yet Citi analyst Adam Ilkowitz doesn’t believe it will have a material impact on the competitive landscape. “Compared to the launch of the Big Gig offers a year ago, this feels more limited and less likely to spark a response from the national carriers,” Ilkowitz said in a note to clients Monday. He expects the lessons from last year’s promotional period will keep prices stable, though he does expect flare-ups on extra data or handset pricing.

So far, the Big Three don’t appear to have matched Freedom’s promotion. BCE Inc.’s spokesman said Bell plans to launch Black Friday promotions on Tuesday. Telus Corp. doesn’t comment on pricing or promotion speculation, according to a spokesman who said promotions can be found online and in stores. Rogers said it will have offers on its nationwide network, but didn’t specify timing. Paul McAleese, Shaw’s president of wireless, said the 100 GB of padding distinguishes Freedom from its competitors in a market in which there’s traditionally been a reluctance to expand data buckets to match growing data usage. Meantime, the industry collected $1 billion in revenue from data overage fees in 2016, according to the latest available data from the telecom regulator.

There’s a “failure of logic” in the pricing regimen that’s “completely counter” to how Canadians are consuming data, McAleese said in an interview in Toronto. “Typically, the more you consume of something, the less you pay for it,” McAleese said. “Oh, I get why it’s been priced this way. It’s been priced this way because it’s an extremely profitable way to do it, which is why Canada has the highest prices in the Western world for wireless use.”

Freedom has never charged data overage fees, so the 100 GB deal won’t save money compared with existing rates. But Freedom does throttle to 3G speeds once a client exceeds the data cap.