Sometimes, fate has a funny sense of humour, like on days when two bits of entirely unrelated news happen that perfectly complement each other. Thursday was just such a day, with Rogers naming a new chief executive officer and a new report from a pair of University of Calgary professors finding that everything is fine in Canadian wireless. The irony, which I’ll get to in a second, is just too rich.
First up, Rogers has officially named Vodafone UK CEO Guy Laurence to be its new top executive, starting in December. Laurence has been with the UK-based multinational carrier since 2000, doing stints in the Netherlands and in the home country. He’ll be replacing outgoing Rogers boss Nadir Mohamed, who has been in charge since the passing of Ted Rogers in 2008.
Secondly, there was the report from the Calgary professors that found Canadians are not paying too much for their wireless services, and that other claims saying the opposite are wrong. As per one of its conclusions:
There is not a competition problem in mobile wireless services in Canada. The government need not, and should not, intervene to promote competition on the basis that increased competition will lower prices; efforts to do so will likely be unsuccessful and inefficient.
The authors go further and suggest that critics who have pointed to Canada’s world-leading average revenue per user numbers are sorely mistaken:
Those who single out high ARPU as an indicator that something is wrong with prices — and therefore competition — are fundamentally misinformed about the meaning of ARPU and why it is high in Canada.
The authors say high usage by Canadians of both minutes and data is what’s causing that lofty ARPU, which is otherwise synonymous with the average bills that customers see at the end of the month.
I looked at their claims back in June and found they didn’t hold water. Wireless customers in several other countries use their phones just as much, if not more than Canadians, yet they see much lower bills a.k.a. ARPU. With usage levels relatively close among comparable countries yet ARPU considerably higher in one jurisdiction, namely Canada… well, that’s pretty clear evidence of higher prices here.
Which brings us to the irony. How do prices compare at Vodafone UK, where Laurence is the outgoing CEO, to Rogers, where he’s the incoming boss? Here’s a handy comparison chart of the two companies’ current offerings, gleaned from their respective websites on Thursday (British pounds have been converted to Canadian dollars). In the far-right-hand column, I’ve indicated how much higher prices are with the Canadian carrier. On the bottom row, I’ve included ARPU figures for 2012 for both companies, from the Bank of America Merrill Lynch Global Wireless Matrix.
So, to summarize in case there’s anyone out there who can’t read simple charts: The exact same plan – unlimited talk and text with one gigabyte of data while on a two-year contract – costs a Vodafone UK customer $53 a month and a Rogers customer $75. In other words, a Rogers customer is paying 41 per cent more for the exact same thing.
Moving up in the data tiers, the two companies offers slightly different plans, but the main takeaway is this: a 4GB plan on Vodafone costs $70, compared to a less generous plan with 3GB on Rogers, which costs $105. Customers thus get more on Vodafone for 50 per cent less.
The more-for-less cavalcade continues when it comes to the device itself. A popular phone such as the Samsung Galaxy S4 is free with a two-year contract on Vodafone, but $179 on Rogers. The differences are as clear as day, not to mention somewhat astonishing. (For anyone who is wondering: purchasing power parity between the two countries is almost right on in this case.)
It all boils down to Rogers’ ARPU being an amazing 78-per-cent higher than Vodafone UK’s, which means two things. One: With CEO pay packages generally based on performance, Laurence looks like he’ll be upgrading his career big time. And two: The Canadian carrier’s plans cost a heck of a lot more than their almost identical counterparts in Britain, with a much higher bottom line resulting. It’ll be fun to see how the University of Calgary professors rationalize that one away.