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Are Canadian Carriers Responsible for RIM’s Data Efficiency Focus?

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RedNightHawk pointed out a very interesting article Michael Geist in The Star. In it Michael tries to explain why the Canadian government stepping in to help RIM is not exactly what it should do. Instead he flips the argument on its head claiming that RIM is partially a victim of its Canadian environment. I don’t know enough about the Canadian market but his argument definitely has some truth to it.

Geist points out that RIM has been catering to carriers which is why they had such a focus on data efficiency. This was to please carriers especially Canadian carriers with limited spectrum and limited data plans. While limited data plans are coming to carrier in the US Geist points out that RIM used data efficiency to make their products attractive to carriers while others focused on customers “compared to bandwidth hogging deices such as the Apple iPhone.

Definitely worth a read. Check out “RIM’s woes partly based in Canadian telecom policy” and let us know what you think.

10 total comments on this postSubmit your comment!
  1. I read Mr. Geist’s report, and I find little basis for it. He does bring up some characteristics of the Canadian wireless industry to justify his arguments, but I can also bring up some arguments to justify RIM’s position too:

    1. In the early days of wireless, data was expensive. Period. It didn’t matter where you were. RIM started with a very aggressive plan to minimize data costs using compression techniques at their NOCs.

    2. Roaming charges are high no matter where you travel. I would like to find out how much higher they are in Canada versus the U.S. or Europe, but that really does not matter. Roaming charges are always an additional cost above and beyond your normal monthly contracted cost. Anything that the vendor/carrier can do to minimize those costs is a bonus!

    3. Mr. Geist also raises the well-documented point that RIM needs to bow a little less to carriers. Yay, we all agree! Nevertheless, Apple doesn’t because Apple is the #1 technology company in the world, #1 most valuable company in the world, #1 manufacturer of smartphones. RIM is much smaller than Apple but no less capable. RIM should still choose to put their customers first by pushing updates directly to their customers — this is what I would like to see!!!

    4. The iPhone is “bandwidth-hogging” because Apple come into the wireless world much later. They didn’t have the concerns RIM initially had, and they took the approach: “we’ll negotiate”. Indeed, wireless bandwidth (costs & caps) is still an issue in the U.S. and everywhere else in the world, especially! I will have to give kudos to Apple who have forced some carriers to lower bandwidth rates (or they don’t get to carry the iPhone!). Still, that hasn’t made a huge impact in some countries where providers have returned to higher charges once they get the iPhone.

    5. Making any comparison to Nortel is an insult to RIM. Shame on Mr. Geist for making that comment! Albeit, he suggests it is not coming from him, but he makes the statement nonetheless. RIM is not in the same league as Nortel was. RIM is very profitable and well-managed. Nortel was mis-managed by a few CEOs who valued profits over company growth — anything to please shareholders and their own pocket books!

    6. Finally, I don’t know as much of the wireless “costs to carriers” in Canada, but I do know that Canada is the third largest country in the world with a population of 1/10th of the U.S. With this in mind, it is easy to see how their carriers have a lot of distance to cover fewer groups of users. I can imagine the inherent costs of setting up expensive towers and antennas to cover larger rural areas and the huge distances they have to cover in difficult snow conditions. Those huge up-front costs will make it difficult for any new competitors to jump in. I still see no basis of this argument as to why RIM’s policy is out of touch with the reality today… as Mr. Geist suggests.

    • NorTel was mismanaged in the end, and I’m assuming that’s what you’re referring to. Long before that they were Northern Telecom, a Canadian company that focused on a particular industry they saw as being the future, and made highly-regarded products that maximized the abilities for the consumer within the limits of that industry. They built a solid reputation for themselves within the business world and were a success story that wound up exporting their products around the world. I think that’s what Geist was referring to – it does sound a lot like RIM.

  2. Honestly, working for AT&T I think BlackBerry has a good thing going for them with Data Effeciency. We get so many calls dealing with Androids and iPhones using so much data on limited data plans… It sucks trying to explain to them they bought a piece of crap that loves data… RIM just needs to focus on bringing QNX Superphones that are yet data effecient and they have this in the bag!

  3. I should add something else to clarify some other issues. RIM’s newer BlackBerrys will also have higher bandwidth demands that they will not be able to help with. The new BB7 devices are multimedia friendly in a HUGE way! Now you can watch streaming videos, download music from their new BBM Music service plus other music stores, and the web is now open season on BlackBerry devices with the awesome BB7 browser.

    Multimedia won’t be helped by RIM’s compression service at their NOCs. Music downloads, for example, are already compressed. HTML5 video is already compressed using MPEG4.

    Certainly, RIM will have to face up to the fact that folks are just putting more demands on their wireless devices. There is little RIM can do to help them cut costs anymore. Now, the carriers will have to start chipping in, and that’s where competition between the carriers becomes important.

    Mr. Geist suggests that it is the lack of competition in Canada that keeps data rates high. Perhaps this is the case, as it often is, but it is clear that this philosophy of bandwidth efficiency was ingrained in RIM from the very beginning.

    Now that RIM has these huge and expensive NOCs all around the world to manage data, provide push mail services, etc., Mike & Jim have to sell the benefits of these NOCs as an additional free service to all BlackBerry users & carriers. It is still a competitive advantage to RIM and their users.

    Even though the BlackBerry browsers still work with compressed data and go via the RIM NOCs, the BlackBerry browsers in the PlayBook and BB7 devices are still very fast in comparison with the competition. They also use 1/3 less data too 🙂

  4. My “in plan” included data is higher then most users carriers hidden 5GB cap on their “unlimited” plans. That’s about all I really need to say.

    • Yeah but from what I understand that is a promotion and not a regular plan right? Also keep in mind I think they are talking historically not currently. I just never thought of it this way so I thought I would share. 🙂

  5. IMO this article has zero validity. The fact is even at the time the guy is talking about RIM was a fairly large multinational company. Any Canadian multinational knows you don’t design for the Canadian market, it’s just too small.

    This is something every Canadian knows and something few of them get miffed about. This just simply would not be the cause of RIM’s decision. <–Period.

    • Agreed, kiddo2050! Indeed, it is foolish to even think that RIM does not view themselves as a multinational company. How many countries was BB7 devices released to simultaneously? 220+?

  6. Joe257 I agree with your points especially given the geography vs population base in Canada. You can fit all the population of California into Canada and California probably still have more people.

    However, the Canadian carriers recently have more friendlier Rim plans than they do for other smartphones even when not on promotion.

    For example Rogers has a $40.00 BB plan that gives you unlimited access to personal email, BBM, all social networking sites and 500 mb of data on top of that.

    Historically the US carriers have cheaper plans but not any longer. They’re almost on par with the Canadian plans due to all the bandwidth hogging out there from other devices.

    I also forgot to mention regardless of carriers (in Canada) there is no tethering charges for data plans over 1GB.

    As Joe357 stated Rim’s compression of data was created to help their pagers be more efficient and when they launched the smartphone data was incredibly expensive then.

    To say that Canadian carriers negatively impacts Rims business is short sighted and to me another version of “bash Rim” cuz it’s the in thing to do now.

  7. I didn’t wholly buy into Geist’s arguments, but found it an intriguing way of looking at RIM. I think Geist was saying two main things:

    The first, that the mentality of bandwidth conservation served RIM well back in the days when they were using two-way pager technology and as they moved into providing services on EDGE/EVDO technology, but carriers here have updated their networks to support consumer demand for things like mobile video and music, and it’s less of a concern to their shifting market of consumers. I don’t think he was faulting RIM for their early mindset since it was obviously necessary and a key selling point at the time. I think he’s just saying it’s not as big a selling point as it once was, especially to the consumer market.

    I usually have more than one BlackBerry and buy and sell them online frequently (as an aside it’s interesting to watch how the prices keep value or devalue compared to other manufacturers as the interest demands or wanes for BlackBerry phones). No one ever asks how much bandwidth does it use, cause they don’t care. If they have to pay to watch YouTube while they’re on the bus they will (doesn’t make sense to me, but if that’s what they want, that’s what they want).

    We’re starting to see the results of shifts RIM is making now, towards more and more multimedia and social media friendly phones that emphasize end user experience more and more (not just e-mail!), but I still recall when the first camera phone was dragged kicking and screaming out of RIM years after other phones had cameras and video cameras. I don’t know if we’ll ever see a phone capable of recording calls (something I’m asked about routinely when I sell one). And some of the things that have come out or occurred in the past year or so were things a group of us were asking for back in 2008 (and then we were being told RIM was listening and would address those things). I recall when they went on their hiring spree a few years back and I hoped they were going to use a bunch of those new hires to redesign the OS from the ground up. Instead we got a slew of FCC filings for possible designs including phones with wings, and an eventual OS upgrade that opened up the camera API (woohoo!). I wonder if they are prepared to shift as quickly as the markets shift, and if the changes we’re seeing now with things like the social media team is an actual sign of them being more willing to move in new directions. In the mobile industry you can be strong one day and down and out the next. Motorola, Nokia, Ericcson and others have all found this out through the years.

    I think Geist was also saying that the Government here should be doing more to open up more spectrum and more opportunities for other carriers to become involved. A couple of years ago we had an auction in Canada for some spectrum that they opened up. Thanks to this we got Wind and Mobilicity and some other small carriers. None could be considered truly nationwide at this point (partly cause spectrum in Quebec wasn’t open to everyone, and largely because it makes more sense for new carriers to focus on large markets first), but the plans they introduced had a huge interest in them and forced the other carriers to change up their plans as a result. Also, as Joe257 pointed out, when the iPhone came here they actually were responsible for Rogers adopting a better data plan that would allow it to be used more fully. That made other smartphone owners here clamour for a similar deal for their phones and did change the rules at least temporarily. The larger carriers here usually only evolve when they’re forced to, and that happens infrequently.

    Bandwidth for home networks also has been changing over the past couple of years too with more and more demand as things like YouTube, Netflix, P2P, etc. make it increasingly necessary to have more bandwidth in plans. Recently there was a push by Bell to limit the amount of bandwidth it’s resellers allowed (for the same price or less you get a much more generous cap). While historically other large ISPs usually backed this kind of thing, this time they didn’t, saying they had just increased their network capacity to deal with it or that it wasn’t really a justifiable concern. Bell wound up stymied.

    Overall, as Michael (in the comment above, not Geist) pointed out, it’s a challenge to convince a consumer that data efficiency is important when all they want to do is have an experience on their phone similar to what they have on their tablet or home computer, and the more RIM embraces that (within reason, they don’t have to start pinging the network constantly or anything) the more enticing they’ll be to consumers.

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