Many other countries have two-year contracts with cheaper rates and bigger device subsidies. This is because consumer price is not primarily a function of contract length or device cost, but rather marketplace competition. For example, Spain's wireless pricing has been dropping in recent months as their four major carriers find consumers more aggressively shopping for better prices or cancelling their wireless services altogether. In response, all four Spanish carriers are dropping prices to stop the churn and attract new customers. For example, BGR reports that Yoigo (owned by Telstra) has offered free iPhone 5's on two-year contracts for as little as 25 euros (C$34) per month (the article emphasizes how competition through innovative pricing has led to profit declines at incumbent carriers). The decline in price is illustrative of why it is competition, not "regulatory costs" or device subsidies, that are the key factor to consider.
[Update 7/27: A commentator below helpfully points out an inaccuracy in the
BGR article since the Yoigo price was for phone only and not service. A
fuller comparison of the Spanish offer is as follows: Yoigo for 24 months of 25 euro phone + 25 euro service (unlimited voice + 1
GB data) is C$1636.24. Add another 12 months of service for C$409.56.
Total three year cost is $2047.80. Bell's
current offer on an iPhone 5 with the same voice and data for three
years is $179.95 for the phone, $35 for the activation, and $70 per
month of the service for 36 months. Total three year cost (not including
taxes) is $2734.95.]
These wireless price rankings run from cheapest (1st) to most expensive
(34th). Canada ranks among the most ten most expensive countries within
the OECD in virtually every category and among the three most expensive
countries for several standard data only plans.
Unless you are feeling particularly exceptional, now’s not a great time to be raising money for your consumer internet startup. But there is money still out there.
Had the great opportunity to be invited to attend the private START in San Fran today put on by the folks behing f.ounders. One of the first panels on Micro VC I took a few notes. And I thought few of my friends would be interested in some inside scoop on the current valley funding environment circa mid-2013. If our rotating door on Ashbury st (aka The Unofficial Visiting B&B for Canadian Tech Nerds) is any indicator, there’s still lots of opportunity down here.
Here’s my speed notes on the session, errors or crazy-talk is probably my fault in typing.
Panel: Micro-VC – 4 Small Funds Focused on seed through series A software VC
Mike Maples (Floodgate), Aileen Lee (Cowboy Ventures/KPCB),
Jeff Clavier (SoftTech), Alex Mittal (Funders Club)
Moderator: Tomio Geron (Forbes)
For some reason, the panel started backwards – talking about big liquidity events and working backwards to seed funding.
Snapchat’s crazy round and founder liquidity
Current Funding Environment
The conference is now in its second week with growing fears that there
will be no deal. The major hold-out appears to be the United States,
which is blocking consensus on a range of issues. According to documents released over the weekend, the primary source of the U.S. opposition comes from the motion picture association, which has engaged in months of behind-the-scenes lobbying designed to dismantle the treaty. For example, the MPA is trying to block the inclusion of a fair use/fair dealing provision, despite the fact that many countries (led by the U.S.) already have such a rule.