Deck first presented at FITC Mobile 2010. Second annual state of the nation wireless industry in Canada presentation by Thomas Purves. Clarification slide 12 "Fixed Costs is spending on property plan and equipment, General overhead is staff, customer support, management etc."

1. FITC Mobile 2010, Toronto Wireless in Canada State of the Nation 2010 tom@thomaspurves.com Twitter: @tpurves Thomas Purves

2. About me 2

3. As mobile developer what would be our ideal mobile world? Ubiquitous broadband connectivity wired and wireless Bandwidth seen as free by users Consistent un-fragmented mobile platforms Mature/Useful options for monetizing content High common-denominator of devices Ubiquity of mobile phones and of smartphones It’s great if many Canadians have access to smartphones , much better if/when you could someday assume that everyone does. 3

4. What is the state of Wireless in Canada? Canada

5. Just 3years ago, the picture was grim Circa April 2007: Some of worst data rates in the developed world. A country of Blackberry addicts, but low accessibility to most advanced devices. Dominated by On-deck content, low accessibility to open content, open services. High pricing to consumers, lagging wireless penetration, lagging adoption behaviours Ouch

6. Canada’s major wireless carriers 2007 6

8. Mandated tower sharing and in-country roaming

10. Does this look like Competition? 9

11. Who is exactly zooming who 10 ?? Other than branding agencies, has this mess started to help Canadians?

12. First, the bad news 11

13. Canada’s Wireless Carriers – To ScaleTotal subscribers, CWTA data Q2 2010 ( Mobiliciy, Public mobile no data) 12

14. New entrants have not made a big impact (yet)(CWTA Data Q2 2010, no data for public, mobilicity, videotron) 13

15. Canadians still (still!) pay the highest cell phone bills in the world 14

16. And that’s not a good thing 15

17. 16

18. The good news 17

19. How the majors are competing Brand bamboozlement 18 Network Investment Massive handset subsidies (mostly helpful) (helpful) (not so helpful) What is missing from this picture?

20. Canada’s network advantage 19 * Services announced but not yet commercially released

21. Some great deals on smartphones 20

22. More Canadians have access to smartphones Summer 2009 60% mobile penetration 25% smartphone penetration (Rogers) $199 entry point for high-end smartphone ( iPhone 3G w/ contract) Summer 2010 69% mobile penetration 35% smartphone penetration (Rogers) $79 entry point for high-end smartphone (HTC Desire, w/ contract) 21 Canadians are still paying the highest wireless fees in the world, but at leastwe are getting more for our money. That’s sort of like good news.

23. Your carrier is not actually a carrier, it’s a handset leasing operation disguised as a wireless carrier 22

24. Where o’ where your wireless bills goHST and handset subsidies cost more than building the network 23

25. Basically you get this year’s latest gadget in exchange for 3yrs servitude buying some data fees and a bunch of wildly overpriced minutes Average handset subsides >$500 per new subscriber “the competitive environment remained intense during the quarter with aggressive acquisition offers and deeply discounted handsets being featured in the market. In response to these competitor actions, we also lowered our average handset prices” -SiimVanaselja CFO Bell Consumers are crazy about smartphones (“if it’s not a smartphone we can’t even sell it anymore” - Rogers exec) It’s a great way to compete against the new entrants But, voice minutes are in decline (down 5% yoy) 24

26. In a world of mobile broadband, paying for voice minutes doesn’t make any sense 25 Rogers just announced 21MBps service in Canada (cool!) A standard GSM voice band requires only 12.2 kpps Notionally, that’s now less than 0.01% of your phone’s available bandwidth How long can this traditional but tiny little bit-stream continue to support 80% of the carrier’s revenue? Source CISCO forecasts 2009 With LTE *all* voice is voip, so why do you need to buy voice services from your carrier vs anybody else?

27. How a carrier makes it’s money today 26 ~2B (Rogers adjusted operation profit) ~4B (BCE operation profit)

28. Pipes vs Content 27 Wireless ( 3.4 B Revenues) Cable ( 2.0 B Revenues) Source: Rogers Q2 financial report

29. If carriers become dumb pipes, their business would be much reduced 28 Carrier operating profit (Simplified): Dumb pipes Other Fluff(voice minutes, cable subscriptions, media, publishing etc.)

30. Looking ahead: With traditional cash cows like voice in decline, where will telcos get their new fluff from? 29 Telcos are buying up broadcasters and Big Content rights holders Bell + CTV Rogers + CityTV, Chum etc. Videotron + their own stuff If you are an independent content producer, or into that whole net-nutrality thing, this trend is not especially helpful.

31. Discussion? 30