Thursday, July 10, 2008

Consumers Speak - Rogers Listens

Wow - chalk one up for free speech and the power of the Internet! Just before the official launch of the iPhone in Canada, Rogers has caved to the mounting consumer backlash and revamped their price plans.

I think it's a great story showing how well people can rally about something they really care about. The iPhone is such a must-have gadget, especially here in Canada where we've been watching our U.S. neighbors lap it up in no time. Clearly Rogers realized it has mis-judged market sentiment and is making some concessions to avoid losing face altogether. Today's Globe & Mail has a good piece about this, and refers to other well-known Rogers gaffes - such as their "negative billing option" - which they had to go back on once they realized how strongly the market felt about it. As I've said before, they behave like this because they can, but when consumers speak with a strong unified voice, they simply had to do something. Once again, the online versions of articles in the Globe are the best barometers of Main Street - with almost 200 reader comments, this is a pretty strong validation that Rogers came half-way in a nick of time.

I say half-way, of course, because while the rate plans are more competitive, they still won't follow the U.S. model of unlimited usage pricing plans. And you still have to take out a 3 year contract to get the phone, so why lock them in from the start with the best possible plan?

I'm sure unlimited usage is the last straw for them, and I can see why they're holding back. No doubt, once we have new competitors following the spectrum auction, all the mobile operators will have to be more price competitive. I'm sure Rogers is holding unlimited as their trump card for when that time comes. For now, though, the plans are atractive enough that the iPhone will have a healthy debut, but probably not as strong as it could have been.

While we're on the topic of pricing plans, I'll point you to a nice post that Mark Evans wrote yesterday comparing pricing plans in various countries. There's a great comparison chart showing just how out of line Canada's pricing plans are for the iPhone.

Finally, I can't help but mention one other factor that may be at work here. Just after Rogers first announced its pricing plans last week, Bell countered with much more attractive pricing to go with its upcoming launch of the very hot Samsung Instinct smartphone. This is the closest Bell can come to the iPhone, and for people looking an alternative, this is a pretty good choice. Not only is the phone comparable feature-wise, with better pricing options, but they also offer 2 year, 1 year and no contract deals. I didn't see any takeup on this news, and Rogers cannot afford to ignore the competitors in its own back yard. Bell may still be in lame duck mode until the privatization deal closes, but Bell Mobility is the #2 mobile provider and is in a great position to offer something more interesting to counter Rogers. In mind view, this had to have played a role in Rogers's thinking around today's news.

Sure will be interesting to see how busy the Rogers stores will be tomorrow.

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