TOMapleLaughs Posted September 16, 2015 Share Posted September 16, 2015 Canada's Mobile Oligopoly at Workhttp://business.financialpost.com/fp-tech-desk/big-three-canadian-carriers-snub-apple-incs-new-monthly-instalment-plan?__lsa=b3e0-bc71A week after Apple Inc. unveiled a program to allow customers of its retail stores in the United States to finance unlocked models of its two newest iPhones and upgrade annually, top executives at Canadas three largest carriers dismissed the plan in chorus, reiterating that the subsidy model they have in place works just fine. Apples new pricing arrangement separates the cost of a handset from the price of cellular service. Based on equal payments over a 24-month period, an iPhone 6S and iPhone 6S Plus can be leased starting at US$32 and US$37 per month, respectively, and theres no initial down payment. Service will be a separate charge.In Canada, however, the basic storage option for each device can be purchased for $398.99 and $528.99 on a two-year contract. Carriers then recover the balance of the $899 and $1,029 retail prices during the term. While the leasing program can help Apple sell more of its flagship product, U.S. carriers will be on the defensive because they will have to do more to retain key clients. Hence, dont expect the largest carriers in Canada, which analysts say operates within an oligopoly, to import it or ask for a similar pricing model any time soon.Why would we do it? We see it as cash-dilutive for us and, eventually, the industry if everybody does it, Anthony Staffieri, chief financial officer at Rogers Communications Inc., the countrys largest carrier, said Tuesday at an industry conference hosted by investment bank BMO Capital Markets in Toronto. We dont see a lot of upside. We see it as if the market moved that way, then wed look at it reactively. The four U.S. carriers participating in Apples Upgrade Program AT&T Inc., Sprint Corp., T-Mobile US Inc. and Verizon Communications Inc. may lose a point of contact with subscribers, Maher Yaghi, an analyst at Desjardins Securities, said Friday in a note to clients. This, in turn, could encourage people to discontinue their contract with their provider, called churn, and opt to finance directly with Apple.Were certainly not looking to lead at all on any kind of handset financing, John Gossling, chief financial officer at Telus Corp., told the conference. I see why a handset manufacturer might like it, especially when their product is pushing $1,000, but that doesnt mean its something we feel compelled to do. The subsidy model has worked very well for us. Bell Mobility, for example, subsidizes phones between an average of $300 and $350, which sees customers paying $200 upfront, according to BCE Inc.s chief executive officer George Cope. The upfront cost of a new iPhone, however, is almost three times higher than Copes estimated average of $200. What people are looking at is do you finance that $200 to make a person pay nothing upfront to drive it, Cope said during an interview session with BMO Capital Markets telecom analyst Tim Casey. Its not a program youre going to see. Youre not going to see it from Bell. I think its a very healthy market when people put money down to purchase the product, and if it changes, then well change with the market. In the meantime, the carriers are preparing for the Sept. 25 launch of the new iPhones, a smartphone that historically has compelled devout Apple users to renew their plan or look elsewhere to get the latest phone. Will it be the disruptor that the double cohort, the wave of three- and two-year plans expired concurrently, was supposed to be, or will it be too pricey to catalyst meaningful attrition? The double cohort is not nearly as disruptive as we were worried it could have been, said Staffieri, CFO at Rogers. Mind you, us and others have been doing a lot to inoculate our base against potential churn, but I would say that spending has been largely in check. Biggest driver is going to be the success that the (iPhone) 6s is going to have in the marketplace. The reason for them not wanting to ditch the subsidy program is simple: An unlocked iPhone from Apple is cheaper than going on a 2-year term subsidy. Before, the initial cost was the problem, but if Apple is now leasing them? Viola! Cheaper iPhone payments for consumers. Here's the comparison of contract vs. buying done on iPhone 5sWhats a better deal? Get an iPhone on a 2-year term or buy an unlocked iPhone from Apple? We get asked this all the time. Whats a better deal? Well it all depends on your needs. Lets try to compare an iPhone plan with 2GB of data on contract and off contract. Scenario A: Buying an iPhone 5s on a 2-year contract 16GB iPhone 5s: $229.99 $85 plan with 2GB data x 24 months: $2040 Activation fees: Bell ($15, promo price); Rogers ($15) Unlocking fee: Rogers ($50); Telus ($35); Bell ($50) Total cost: $2334.99 + tax (iPhone, plan, $15 activation fee, $50 unlocking fee) Scenario B: Buying an unlocked iPhone 5s from Apple and going month to month 16GB iPhone 5s: $719 Plan 1 $59 Fido Smart Plan with 2GB data x 24 months ($53.10/month after 10% BYOD discount): $1274.40 Plan 2 $49 Fido Smart Plan with 1GB data x 24 months ($44.10/month after 10% BYOD discount): $1058.40 Plan 3 $39 Fido Smart Plan with 400MB data x 24 months ($35.10/month after 10% BYOD discount): $842.40 For couples/families: add an additional line, save an additional 10% on top of 10% BYOD discount Plan 1 total cost: $1993.40; potential savings vs 2 year contract > $341.59 Plan 2 total cost: $1774.40; potential savings vs 2 year contract > $560.59 Plan 3 total cost: $1561.40; potential savings vs 2 year contract > $773.59 http://www.iphoneincanada.ca/carriers/unlocked-iphone-vs-2-year-term/ We're essentially being screwed. Buuuuut it's been great for profits.Rogers, Bell, Telus: The most profitable cellphones around Exactly how profitable are Canada's cellphone carriers? The short answer: very. The longer answer: They are the most profitable in the developed world. The Canadian wireless market, of which more than 95 per cent belongs to Rogers Communications Inc., Bell Canada Inc. and Telus Corp., was the most profitable of 23 developed countries surveyed in a recent report by Merrill Lynch.Rogers, Bell and Telus arrived at the high profit margins by bringing in correspondingly lofty revenue from customers. In the wireless industry's key measure of monthly average revenue per user, or ARPU, Canadian carriers came in not just second-highest among developed countries, but second-highest in the world. http://www.cbc.ca/news/technology/rogers-bell-telus-the-most-profitable-cellphones-around-1.755793 "But they give Canadian jerbs, right?" Well, when Horizon was looking into coming into Canada, the Oligopoly reacted:Wireless incumbents recently launched a website titled Fair for Canada calling for change in Ottawas wireless policies as they will ultimately put Canadian jobs on the line. Full page ads, such as the one below, have hit newspapers along with various spots on local radio stations as well to garner public support. Despite these ads, many have questioned how Rogers, TELUS and Bell can preach the potential loss of Canadian jobs when they themselves have outsourced local positions overseas. TELUS has a call centre in Manila, Philippines which employs 3,000 people; Rogers has outsourced IT services to IBM; Bell has outsourced jobs to India. http://www.iphoneincanada.ca/carriers/ottawa-condemns-rogers-telus-and-bell-for-dishonest-lobbying/ Now, Manuel is a really nice mobile telemarketer and I enjoy talking to him now and then, but he's not Canadian. Fewer and fewer jobs supplied by these companies are going to Canadians. So wtf? "But they pay their fair share of taxes in Canader, right?"Canadian Corporations Had $200 Billion In World's Top Tax Havens Last Year: Report Last year, Canadian corporations held $71 billion in assets in Barbados. They had another $36 billion in the Cayman Islands. Is Canadas business elite anticipating a massive boom in beachfront hotels and little paper umbrellas for mixed drinks? Not likely. More likely, theyre sheltering income earned in Canada from taxes at home. According to a recent estimate from Canadians for Tax Fairness, the amount of money Canadian corporations held in the world's top 10 tax havens jumped to $199 billion in 2014, from $187 billion a year earlier.Most of that money is there to avoid paying taxes back home in Canada, says Dennis Howlett, the group's executive director. Walk down a street in Cayman Islands and you will see very little evidence of $36 billion in Canadian investment. But what you will see are small buildings with hundreds of mail boxes that are head office to more than 18,000 shell companies most of them subsidiaries of corporations trying to avoid tax. The same scenario plays itself out in Luxembourg and other tax havens." Luxembourg is one tax haven Canadian companies are bailing on; $5 billion in Canadian cash pulled out last year. The taxpayers' group thinks that may be partly because of last year's widely publicized leak of secret accounts held in the country. Some of that money may be flowing instead to Switzerland, which has seen a tripling of Canadian corporate assets just since 2011, to $11 billion. More than half of the money is channeled abroad by Canadian banks and financial institutions who play a key role in facilitating tax avoidance, the Taxpayers Federation says. And that may just be the tip of the iceberg. The Taxpayers Federation's numbers are based on foreign investment data from StatsCan, and don't include money held by Canadians through foreign-owned companies and undeclared assets.The group estimates that $199 billion in sheltered assets cost governments some $7.8 billion in lost revenue for 2014. The group is among many others who are calling for the Canada Revenue Agency to officially calculate Canadas tax gap the amount of money Canadas governments are losing due to tax evasion. While many countries, including the U.S. and U.K., have released official estimates of their tax gaps, the Canada Revenue Agency under the Harper government been accused of stonewalling on the issue.The growing use of tax havens comes even as Canadas tax burden shifts steadily away from corporations and onto individuals. One economists analysis estimates that 2014 was the first year that more than half the governments revenue came from personal income taxes. The federal corporate tax rate in Canada began falling at the turn of the century under the Liberal government of Jean Chretien, and has continued to fall under the Conservative government of Stephen Harper. It's down to 15 per cent today, from 28 per cent in 2000.http://www.huffingtonpost.ca/2015/05/16/corporate-tax-havens-canada_n_7293410.html (Hey, maybe some of that recent 'Surprise!' Government Surplus come from some foreign corporate bank account.) Don't get me wrong. Corporate profits for Canadian corporations are great. But at what point do they, y'know, HELP ACTUAL CANADIANS!?! Link to comment Share on other sites More sharing options...
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