Too bad about the iPhone pricing  |  July 9, 2008  

I've been eagerly awaiting the Canadian arrival of Apple's second-gen iPhone, partly to see if Rogers would hit the market with a great mobile data pricing deal. Well, so much for that: operating an iPhone here will cost you.

And that's too bad, specifically because iPhone pricing is a bellwether for the status of the mobile Internet in Canada. The iPhone is designed as a Web device: it's made to surf, to stream and to download. While all smartphones can connect to the Web, the iPhone seems born to it.

As such, iPhone owners need unlimited data plans. If you're an American, AT&T will sell you unlimited data for US$30 a month, coupled with any voice plan. In Britain, unlimited data is significantly more, costing about $90 from O2 (as reported in The Globe and Mail). But even at that price, at least unlimited is available, and the cost is manageable.

Then we get to Rogers: for $60, you get 150 daytime minutes and 400MB of data; the deluxe package buys you 800 minutes and 2GB of data for $115.

So what does this mean? Two things. First, the Canadian wireless industry has decided to keep prices high. They can cite reasons for this, and some of those may even have some validity, but the bottom line is Canadians pay more. Second, this pricing will continue to limit the use of mobile data in Canada. Mobile data access is used by salespeople to update product databases, by service techs to access manuals, by executives to edit PowerPoint presentations. These create significant business efficiencies, and the entry of the iPhone was a chance to push prices down and encourage mobile productivity, first for Apple owners and then for the more business-oriented BlackBerrys and Palm Treos. Now this won't happen.

And that has larger implications. Canadian productivity numbers are not good and, when asked, industry watchers always cite a continued under-investment in technology by Canadian companies as one factor. A 2007 Backbone article quoted Andrew Sharpe, executive director of the Canadian Centre for the Study of Living Standards, saying “Technological progress is the driver of productivity growth. New equipment embodies technological progress. You need new machines if you’re going to get gains in productivity.”

Further, in 2005 the average investment per worker in ICT-related equipment in the U.S. was $3,200; in Canada, just $1,800.

Rogers doesn't carry overall blame for those numbers, but for the mobile data portion the company's recent pricing announcement sure doesn't help.

Peter Wolchak