Monthly smartphone instalment plans are not coming to Canada, at least not from the country’s three national carriers, according to comments made by executives from Bell, Telus and Rogers at a telecommunications conference held in Toronto this week.
Sometimes referred to as an equipment instalment plan (EIP), this method of obtaining a smartphone has become popular in the United States over the past couple of years. Compared to more traditional subsidy models where consumers pay an upfront price for their device and pay for the rest of it over the course of a fixed term contract, EIP and leasing options allow people to walk out of a carrier store without putting any initial money down towards their device.
The most recent example of a plan like this is the one Apple announced at its fall event last Wednesday in San Francisco. In the United States, the company is launching a iPhone subscription plan where consumers can pay $32 USD a month to gain access to new iPhones as they’re released.
However, according to Big Three, these plans don’t make much sense in the Canadian context.
“I think it’s actually a very healthy market when people put some money down to purchase the product,” said BCE chief executive officer George Cope at the BMO Media and Telecom Conference. “But if the market changes, we’ll change with the market. We’re already subsidizing the handsets a lot as it is, so we’ll see how it evolves.”
Bell, it should be noted, seems the most receptive to EIPs. Cope’s peers had less diplomatic things to say about leasing phones out to consumers.
“For us it just doesn’t pass the ‘so what?’ test. Why would we do it? We just see it as cash dilutive for us, and eventually the industry, if everybody does it. So we don’t see a lot of upside for it,” said Rogers chief financial officer Tony Staffieri.
As The Globe and Mail‘s Christine Dobby notes, the main reason EIPs may never become popular in Canada is because of the significantly different telecom landscape that exists here when compared to the United States. National carriers like Verizon and Sprint only started offering leasing options after T-Mobile had already found great success with them. Even as that country’s third-largest player, T-Mobile, with a subscriber base of some 58.9-million subscribers, has significant market power while still being an upstart to Verizon and T-Mobile. There is no Canadian equivalent to T-Mobile, at least not until Wind Mobile launches its LTE network in Ontario, British Columbia and Alberta.
One of the few Canadian carriers that offers leasing options is Eastlink, which just announced an EIP for the iPhone 6s and iPhone 6s Plus. However, its network is limited to the Maritimes.
[source]The Globe and Mail[/source]