Far north provider sees good traction
By Ahmad Hathout
GATINEAU – Executives at Canadian wired and wireless service provider SSi Micro said Friday the Yellowknife-based company has seen “high” consumption of its lower-cost wireless plans and that those packages are a necessary component of the market.
“If you look at the disposition of users amongst all of our plans, you would find that a very large number of them are on a lower-end plan but you would also find that our consumers switch plans very easily,” SSi Micro’s founder and CEO Jeff Philipp (pictured in a cpac.ca screen cap) told CRTC commissioners during the last day of the wireless review hearing on Friday. SSi Micro offers wireless service under the Qiniq brand in Nunavut.
In the preceding days, the national carriers have all claimed there is a lack of interest in their CRTC-mandated lower-cost data-only plans, which include flavours ranging from $15 for 250 MB to $30 for 1 GB of data. Rogers executives lamented lower data packages bundled with talk and text were more attractive among its base than the data-only plans, while Bell said there’s been limited interest in them. The CRTC required the big three to start offering those lower-cost data-only options to consumers, which began last year through their flankers.
In pointing out that the large carriers have not seen the demand for lower-cost plans, commissioner Chris MacDonald asked SSi Micro, which launched its mobile business in 2018, how it has been doing with its own lower-cost plans starting at $25 for some talk, text and data.
“We’re maybe not accustomed to margins that are made in some of the bigger markets — maybe we just grew up on a little smaller diet.” – Jeff Phillipp, SSi Micro
“Frankly, maybe a better question is, what is the cost of offering a lower-end plan?” Philipp said in response. “The network exists; the billing, the marketing, the people, the staff, the support – the cost is a lower margin, frankly, and we’re maybe not accustomed to margins that are made in some of the bigger markets – maybe we just grew up on a little smaller diet. But no, those plans are necessary.
“There’s no problem selling those lower-end plans,” he continued. “Those plans should exist, and if the consumer really doesn’t want it, then you won’t put it on your list, but frankly putting it on doesn’t cost much.”
SSi Micro provides some talk (500 minutes in Nunavut and 100 minutes nationwide) and text (unlimited) at its base rate of $25 – and its website currently says data is not available at that price. Two GB are available with its $50 plan. That’s compared to Rogers’ Fido, for example, which offers its 1 GB for $30 plan with unlimited texting, but no calling.
SSi, however, took a different tack and aligned more with the larger companies when asked about raising the data buckets of those lower-end plans but keeping prices low, as consumer groups have clamoured for — that is, something in the region of 4 GB of data with unlimited talk and text for $25-$30. That would compare closely to SSi Micro’s $80 plan, which includes 5 GB of data and unlimited talk and text.
“To suggest that a certain number of gigs should be mandated as a minimum level of service to be delivered by any carrier I think is folly,” Philipp said, adding it would be very hard to regulate such plans in markets with different business models. He also said the reason SSi Micro’s Qiniq plans cost more is because their costs are so much more, having to operate in Canada’s North.
Company executives cautioned also if new mandated plans are introduced at below their cost, it would invite the large carriers to possibly cross-subsidize their business models, meaning they will raise prices for some of their customer base to support the lower mandated wireless prices. That would effectively harm competition by reducing the need to innovate, they argued, while allowing the larger players to trample smaller competitors – a situation even more dire in the North, they said.
“I think if we want to get into something like that, it really should become more of a consumer subsidy to purchase a package and let the competitive market determine what the best package is, because otherwise it becomes very complicated to manage,” Philipp said. “And I’m all for cheaper packages.”
The bigger companies have similarly claimed that introducing those kinds of plans would destroy their profits and then wipe-out investments.
SSi Micro has for years been advocating for open access to backbone transport facilities as its true form of competition, too. The company has also pointed to the high market share of the incumbents and the alleged stubborness of the bigger players to provide enough network capacity to allow a mobile virtual network operator market to emerge.
After SSi’s plea against mandated bigger data plans at lower costs, the Commission was faced with two groups pushing for those ever-better deals – the internet advocacy group OpenMedia and the University of Ottawa’s Canadian Internet Policy and Public Interest Clinic (CIPPIC).
Both groups called for a full MVNO model and mandated carriage of low-cost plans for all Canadians on national carriers’ premium brands.
The low-cost, 4 GB mandatory plan proposal has been a flashpoint of contention during the hearings, which has elicited concern that it would wreak havoc on the market from the larger providers. OpenMedia and CIPPIC requested that the CRTC consider mandating 4 GB for $20 a month – they say preferably on both pre- and post-paid – which would give consumers some cushion to avoid overage fees, on data consumption averages hovering between 2 and 2.5 GB a month.
Final written submissions are due to the CRTC March 10th.
