Wednesday, June 11, 2008

iPhone G3 and Canadian phone service plans

I've been reading comments on an article at the Globe and Mail site speculating about the price of phone plans for the new iPhone G3 due out in July. Lots of moaning about how high the service charges will be, with no thought to the root of the problem. To clarify:

1) phone service providers are not subsidizing the iPhone. They are no longer required to share revenue with Apple. Apple has gone back to just selling the hardware/software, in the hopes of accelerating global sales and thus becoming the world's most popular mobile gadget.

2) Apple has no control over what phone service providers will charge. They will leave that up to the market to decide. Only time will tell what people are willing to pay.

3) Canada's protectionist laws will ensure that Canadians will always pay a higher price via domestic monopolies, than other countries with active international free-trade agreements. Fear of being swallowed/pummelled by foreign competition keeps Canada from participating fully in its free trade agreements. ("Yes, please buy our Canadian exports, but no, no, you can't compete with us at the same price on our home turf. We must insist on slapping high import tariffs on your goods so that the playing field is tilted in favor of our own goods here at home, because we're just not sure we'd survive otherwise.") So Rogers, Bell, etc enjoy a sweet monopoly on domestic markets, with no real fear of international competition.

Until Canada realizes and believes that their products and services are capable of being world-class, they will continue to cling to protectionism. Unfortunately, globalization is unstoppable. It's only a matter of time before the tsunami of competition hits. There are already signs of leaks in the dam: Skype has found a way to circumvent the tariffs. It's called VoIP. And they now offer mobile phones with roaming capabilities (i.e. buy a phone and plan in London, use it in Canada for potentially less than a Rogers/Bell deal). You can tweet and text using Skype. Other technologies will soon follow.

The law cannot keep up with tech innovation, so the only way to survive is to jump into the fray and compete, head to head, with other countries. What are we afraid of? If we can live through harsh winters, surely we can kick some British butt.

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