What’s interesting is Shaw stated that wifi is free and they can more easily set up a wifi network than a cellular network.

“Given that Wi-Fi spectrum is free and there are no device subsidies, we can build extensive Wi-Fi coverage at a substantially lower cost relative to a traditional wireless network and still provide our customers with an excellent broadband wireless experience,” Shaw said.

Maybe this means a city-blanketing wifi network that you can pay to have access to. wifi capable devices such as iPhones and iPod touches can be activated using a VOIP client similar to Shaw’s home phone, and it would work anywhere in the city. Of course getting wifi stations in sparsely populated areas isn’t exactly practical, but for denser regions, a home phone that works in the city might be plenty for most people. Interesting idea.

The other option is that Shaw might choose to buy out one of the new wireless companies, or perhaps even merge. With the lines between mobile and home broadband becoming blurred, it may make sense for a wireless-only and wired-only company to merge in order to more effectively compete with the big three.

One thing is for sure, Shaw’s home broadband plans are second to none in Canada right now, so a buyout of Shaw by Rogers would be a terrible thing for consumers.

I try to stay away from regurgitating rumours, but this has interesting implications for Canada. Sprint runs a WiMax 4G network which has very little implication for Canadian carriers, but the fact that the new iPhone may be able to run on T-Mobile’s “4G” (I say that because it is in fact HSPA+ and not true 4G/LTE) network could mean big things for Canadians.

T-Mobile runs on the same AWS band that new entrants Wind Mobile and Mobilicity run on – whatever phones work with T-Mobile’s high-speed network should also work with Wind and Mobilicity. The new entrants haven’t had much trouble growing their subscriber base, but there are still potential customers waiting in the wings because they want the iPhone.

One only needs to look south of the border to see how big a boost an AWS iPhone will be for Wind and Mobilicity. When the CDMA iPhone 4 finally came to Verizon, it was the most successful phone launch in Verizon history.

This is potentially great news for Wind and Mobilicity.

Most previous talk about LTE/4G has centered around the 700 MHz band in the upcoming spectrum auctions both in Canada and the US. This spectrum is highly coveted because it penetrates buildings well. Currently, no network operators own this spectrum so the bidding process is expected to be highly competitive.

In Canada, the limited resources of the new entrants means that they would have to rely on the CRTC to block off a certain amount of spectrum for them, or else Bell, Rogers, and Telus would simply buy it all up. Even still, the allocated amount would likely not be great, and would still be quite costly for the new entrants. With their future networks on the line, this would be a significant investment which they would eventually have to recoup from their customers.

The new entrants can not afford to miss out on the prime spectrum, not because it is inherently good, but because of the devices that will be built for it. With all the large US telecoms going for 700 MHz LTE spectrum, this is where the iPhone (6,7,8?), the iPad (3,4,5?), the new BlackBerrys, and the best Android devices will operate. None of these companies is going to make a special version of their devices for a Canadian telecom with 300,000 subscribers.

However, the decision by AT&T to use the AWS spectrum to build out LTE in the US will make all the big device manufacturers plan for AWS capable devices. Wind and Mobilicity just got a big helping hand from AT&T. Furthermore, with AT&T being a GSM network, it opens up the possibility of bringing AT&T devices north with a SIM to operate on AWS networks here.

Then there’s the possibility of better roaming agreements for Wind and Mobilicity in the US.

It will be interesting to see what Bell, Rogers, and Telus do with their LTE plans. They currently each have some AWS spectrum sitting unused as well. Will Canada’s LTE use 700 MHz and 1700 MHz, or will we have an annoying split still?

The executive summary is this:

• Mobile video traffic will exceed 50 percent for the first time in 2011. Mobile video traffic was 49.8 percent of total mobile data traffic at the end of 2010, and will account for 52.8 percent of traffic by the end of 2011
• The top 1 percent of mobile data subscribers generate over 20 percent of mobile data traffic, down from 30 percent 1 year ago. According to a mobile data usage study conducted by Cisco, mobile data traffic has evened out over the last year and now matches the 1:20 ratio that has been true of fixed networks for several years. Similarly, the top 10 percent of mobile data subscribers now generate approximately 60 percent of mobile data traffic, down from 70 percent at the beginning of the year.
• Average smartphone usage doubled in 2010. The average amount of traffic per smartphone in 2010 was 79 MB per month, up from 35 MB per month in 2009.
• In 2010, 3 million tablets were connected to the mobile network, and each tablet generated 5 times more traffic than the average smartphone. In 2010, mobile data traffic per tablet was 405 MB per month, compared to 79 MB per month per smartphone.
• There were 94 million laptops on the mobile network in 2010, and each laptop generated 22 times more traffic than the average smartphone. Mobile data traffic per laptop was 1.7 GB per month, up 49 percent from 1.1 GB per month in 2009.
• Two-thirds of the world’s mobile data traffic will be video by 2015. Mobile video will more than double every year between 2010 and 2015. Mobile video has the highest growth rate of any application category measured within the Cisco VNI forecast at this time.
• The average smartphone will generate 1.3 GB of traffic per month in 2015, a 16-fold increase over the 2010 average of 79 MB per month. Aggregate smartphone traffic in 2015 will be 47 times greater than it is today, with a CAGR of 116 percent.

Early Adopters Penalized

My main comment is that Cisco’s study shows that video is becoming very relevant on mobile networks already, representing about 50% of mobile data transferred. That is only going to grow as more users get smartphones and view online video. Instead of implying “high traffic users” are leeches on the system, ISPs should look to them as a preview of what the average user will look like in 5 years.

The data show that the top 1% of users aren’t necessarily deserving of the negative stamp they get by ISPs. Their share of mobile data usage is going down as “regular” users adopt the habits of the top 1%. Regular users are downloading more video and streaming music.

The data use in wired networks probably follows a similar trend – average users are using more and taking up a larger share of the data as HD video increases in availability and appeal.

Is there any other industry where early adopters of new technology are penalized like this? Sure, your Prius might cost more because it’s a hybrid, but Toyota doesn’t charge you disproportionately more for one in an attempt to get you back into a Corolla like other “normal” users.

If anything, this presents an opportunity for network operators. Encourage the high-bandwidth users to use your network. Ask them what they use. Find out when they use it. How much, where, why. This information can then be used for network load balancing, QoS optimization, and forecasting. If you ignore and shun the high bandwidth users today, you’ll have no idea what your customers 3-5 years from now will look like.

The new entrants can offer lower prices and a better experience (although that can be debated), but they still suffer from two issues: lack of coverage area, and limited phone selection. If you stay primarily in one of the cities that they have coverage, then maybe the first issue isn’t really an issue for you. If you don’t need the latest and greatest phone, then maybe the second issue isn’t really an issue for you.

But for some people, the connection service is a secondary decision and the device comes first, and those are the people who the new entrants still can’t get. A Nexus S would bring a premium Android phone to them and would go a long way to satisfying those potential customers.

As mobile broadband data use demand climbs, the government needs to keep supply of the airwaves up or prices for monthly subscriptions will become capped, or increase in price. Because of the relatively little data use consumed by mobile VOIP, communications over mobile data networks should remain cheap and become cheaper, but VOIP traffic will have to compete for bandwidth with all other data traffic. One other potential issue relates to quality of service (QoS). It is possible that with increased demand and strained capacity, the lack of a bandwidth prioritization standard could leave voice over data communications choppy, laggy, and of poor quality.

The Globe and Mail has reported that the phone will also work with Wind Mobile, although as of yet there isn’t any information from Wind on this. Clues as to whether this might be true can be found on the Nexus One tech specs page, where the AWS band that Wind uses is clearly listed.

The Globe and Mail story also suggests that the Nexus One will work at full 3G speeds on Rogers and Wind (sounds right), but only at 2G and Edge speeds on the Bell/Telus network. This doesn’t seem quite right as there isn’t very much difference between the Bell/Telus 3G network and the Rogers 3G network in terms of frequencies, so maybe there is something else which crops up in this case.

It is nice to see an unlocked phone for sale directly from the (sorta) manufacturer here in Canada, one which you can take from service provider to service provider (okay maybe not due to Wind’s limited range and the possible incompatibility with the Bell/Telus network) by just dropping in a new SIM card.

If only one could get a data plan with a pay-as-you-go voice plan now.

On one hand, Anthony Lacavera, chairman of WindMobile’s parent company Globalive, has been very vocal, saying that in order to compete with the large incubments of Bell, Telus, and Rogers, new entrants desperately need access to foreign capital in order to build out their networks and survive. He has a point of course; there just isn’t enough interested investment capital in Canada to fully support a new wireless company, let alone two or three.

Few Canadians will argue that change isn’t needed. Wireless customers seem to be caught in a perpetual loop of being excited to get a new phone, signing a new contract to get the phone for ‘free’, praying that their $60 a month bill really is $60 a month, and then spending the next 3 years cursing their wireless provider while paying $87 a month after all the fees are added. Lather, rinse, repeat.

A shakeup of the wireless industry and relaxation of foreign ownership restrictions could effectively put an “open for business” sign on Canada’s front window, and while trying to blanket the second largest country in the world in wireless coverage is not at all attractive, Canadians have made it easy, especially for the big US companies. Much of the Canadian population resides in major cities close to the US border, easy expansion territory for amalgamation into US networks.

European and Asian wireless companies are only at a slight disadvantage. They can make tidy little businesses out of the urban centers themselves, marketing themselves as “city” plans for those who don’t often stray far from home.

The big three would have to lower prices, increase service, and change to adapt to customer needs, not their own constraints. Or else.

However, it isn’t all doom-and-gloom for the big three. In fact, they may benefit the most out of this.

In one article, the prospect of mergers and acquisitions is raised. The big three could raise huge sums of cash on the foreign markets. This could mean upgrades to networks, but could also fund a war chest to crush new entrants. Anti-competitive statutes would be there to regulate any blatant attempts to snuff out a new player, but ultimately the big three can do anything a new entrant can. They have the networks, they have the customers, and they know the market. Giving them access to foreign capital may tighten their stranglehold on the Canadian wireless industry.

But it’s the only option. It’s the only way a new entrant can survive. Ultimately, it will be up to Canadians to speak with their wallets when the time comes.