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Is the Prepaid Market in Canada Doomed?

WIND CEO Anthony (Tony) Lacavera recently said "the prepaid market in Canada is doomed" at the annual Canadian Telecom Summit in Toronto. It was a bold but fair statement, one that's justified for a number of reasons

This past week was a big one for telecom in Canada. Not based on actual announcements, but more because of the annual Canadian Telecom Summit that took place here in Toronto. More specifically, the charismatic, powerful keynote from WIND CEO Anthony (Tony) Lacavera; the man just knows how to keep a crowd engaged.

Among the many topics (spectrum) that were discussed during his keynote, he touched on something that has been an interesting point of discussion: prepaid vs. postpaid cellular plans and the struggle WIND has had with their previous prepaid strategy. Tony made no qualms about his feelings, going on the record with a very bold statement in regards to the current prepaid market in Canada:

“The prepaid market in Canada is doomed.”

A bold but fair statement.

Remember when WIND launched their service late 2009? They came out swinging with unlimited plans, offering customers no choice but to purchase a device outright. At the time it worked, as customers were disgruntled with the big 3 and needed an alternative. Looking back at this strategy, Lacavera stated, “In 2011 we determined that our original business plan of Metro PCS-style prepaid was doomed and have since shifted virtually all of our customer acquisition efforts to contract-free handset financing driven post-paid. We have all but abandoned any aggressive customer acquisition in the prepaid market.” 

Interestingly enough, since shifting their focus from prepaid to postpaid, WIND has experienced a 7.7% national market share of postpaid in their current coverage footprint in Q1, 2012, up 116% from the previous year. Even more interesting is that Mr. Lacavera gave a bit of insight into their ARPU (Average Revenue Per User), stating, “WIND post-paid ARPU has now passed $34, while prepaid lags at $23.”

The only thing that Canadian consumers are lacking (other than a prepaid iPhone) now is an affordable roaming option, prepaid and postpaid wise. This is another topic WIND has touched on, and since launched. WIND now offers a flat-rate European add-on, which offers customers the ability to make calls from anywhere in Europe to Canada or the US for $0.20/minute (no long distance fees) and data will cost $1/MB. Texts messages are still $0.15 each.

In regards to my iPhone statement in the last paragraph, I touched on this topic not long ago on my personal blog. Canada won’t see a prepaid iPhone for a number of reasons, the largest being the population: we don’t have a fraction of the users the US does. The other, until Apple launches an AWS iPhone (compatible with WIND or Mobilicity), it just doesn’t make sense price-wise. 

What are your thoughts on the prepaid market in Canada? Should it be phased out? Restructured? Weigh your thoughts below.

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