“Supercarriers” that can bundle product offerings have an advantage over smaller service providers in the increasingly competitive Canadian market, according to research released Friday by the Yankee Group.
“We can say with certainty that competition is increasing. It’s intense for high-speed services,” said Mark Quigley, a research director for the Yankee Group in Canada, based in Ottawa. “Bundles are going to become more and more important in the Canadian marketplace.”
Quigley said larger providers benefit from having a larger product line to pull from and more advanced back-office facilities due to their size.
The Yankee Group research shows 65 per cent of Canadian households currently have a single service provider for their local and long distance phone service and 39 per cent are at least somewhat interested in a single provider for their phone, cable and Internet service. Consumers, desiring convenience and simplicity, expressed an increased preference for single providers from 2000 to 2001 for landline phone, cable, high-speed Internet and mobile phone services.
The demand for bundled services was just one aspect of the Yankee Group’s 2001 Canadian Technologically Advanced Family survey, the results of which were drawn from a mail survey of 1,263 Canadian households. Using a point system based on use of technology products and services, the Yankee Group defines the most technology-friendly 16 per cent of Canadians as Technology Advanced Families (TAFs).
TAFs have higher income, higher education levels and more children under the age of 18 than average Canadian households. They are also much more likely than average Canadian households (57 per cent compared to 15 per cent) to have high speed Internet access. Quigley suggested there is a strong connection between the teen factor and the use of high-speed connections.
“The proliferation of programs such as Naspter and Gnutella (has resulted) in teens downloading mp3s ad burning them onto CDs,” he said, adding broadband connections are also necessary for playing advanced videogames like Quake. “If you have a dial-up connection, you can forget about using these services.”
TAFs are the prized market segment because they have the most disposable income and are the quickest to adopt new technologies. Thirty-one per cent of TAFs have a laptop computer and 39 per cent have a home network. The penetration rate among all Canadian households is only eight per cent for each.
Fifty-six per cent of TAFs have multiple PCs and 99 per cent have at least one PC.
“This puts the PC in the TAF population on par with TV in the general population,” Quigley said.
But Quigley stressed service providers need to look at all market segments, including the five million Canadian households without a PC.
Of those five million, 56 per cent subscribe to cable and 35 per cent to caller ID, according to the survey. Twenty-nine per cent of them are mobile phone users and 22 per cent are interested in a single service provider. Quigley said these customers are potential targets for Internet appliances and products such as voice portals.
“There are many ways to look at that marketplace and we can’t afford to ignore them,” he said. “There still is an opportunity to take those folks and transform them.”
The survey also revealed some trends relating to the use and adoption of high-speed Internet access and wireless phones. According to the survey, the more time spent online, the more likely a customer is to be interested in broadband access. Of those online for less than one year, only five per cent reported an interest in high-speed service, but that figure jumped to 22 per cent for those online more than three years.
“There’s a pattern people exhibit when they start to use the Internet,” Quigley said. “More awareness is being generated by the media, to really educate that segment of the population about what power the Internet brings to bear.”
The study shows wireless phones have become mass market tools, with 58 per cent of Canadians making up to half of their calls with a mobile phone. But landline phones are still dominant, as only one per cent of the country are using wireless phone for all their calls.
