With the anticipated arrival of new entrants in the Canadian wireless market next year, analysts are expected to keep a close eye on established players Rogers, Bell and Telus, paying particular attention to their "churn" — the measure of how often customers leave a carrier — to see how the competition affects each company's subscriber base.
Based on headlines, one might expect competition to be no less fierce in the world of internet service providers in Canada.
Bell Canada has been in a number of legal and commercial disputes with wholesale ISPs that rent portions of its network, most recently when it asked for and got approval from the Canadian Radio-Television and Telecommunications Commission to implement usage-based billing for the wholesalers. Bell and Rogers were involved in a dispute overseen with the Advertising Standards Council over who could claim the "fastest" internet speeds. And Rogers and Videotron have both in the last year begun making major upgrades to their networks to bring faster speeds to Canadians, particularly in urban markets.
But if you're looking volatility in the ISP market in Canada, you won't find much evidence of it, if for no other reason than none of the companies disclose "churn" for internet services.
Instead, ISPs in Canada report internet numbers in "net additions" — and those numbers suggest a market with little or no movement.
'Net additions' relatively stable
According to their last quarter results, Telus had a net gain of 3,000 high-speed subscribers, Bell added 2,000 and Rogers had a net loss of 4,000 high-speed customers; all three companies lost dial-up customers, but those numbers are miniscule given the three companies have a combined 4.8 million subscribers.
Only Shaw Communications appears to have made strides in the last quarter, adding some 24,625 internet customers to bring their total subscribers to about 1.65 million.
If this surface calm is hiding a market seething with customers switching providers in search of better deals, the ISPs aren't disclosing it.
But in testimony given at a CRTC hearing into traffic-management practices, representatives from Bell and Telus both invoked the fear of customer turnover as one of the reasons for traffic shaping certain applications during peak internet hours.
"Us being Bell, when we do something wrong for the customers, we hear about it pretty quickly, and we hear about it in a number of ways," said Peter Vandenengel, director of strategic planning at Bell. "We do churn research. Customers say they would leave us if we had problems."
David Neale, a senior vice-president at Telus who deals with the company's technology strategy, echoed that concern.
"If we had made decisions that ended up degrading the public internet service, our customers are in a situation where they can get alternative services from other people," Neale said. "So, there is no wisdom at all in us degrading a service that actually causes churn because, as you know, that is very damaging."
Shaw last to report internet churn
Disclosing those numbers is another matter. Shaw, Rogers and Telus would not comment on why they don't publish internet churn, and Bell Canada spokeswoman Julie Smithers said that internet churn is "simply not part of the standard disclosure policy in the industry."
"Internet churn is a difficult measure to find," said RBC analyst Jonathan Allen. "Unlike wireless, where it was considered common practice, internet was reported only ad hoc."
Shaw was the last major ISP to report churn, Allen said. In 2007 they showed churn of about 1.2 per cent, about the same rate wireless companies including Bell, Telus and Rogers report for customers paying for mobile phones on a monthly basis.
And as Allen points out, it's also about the same rate "that Canadians move homes."
Though the numbers for postpaid wireless churn and internet churn are likely similar, telecommunications consultant Mark Goldberg said wireless churn is more important to investors because of the cost of mobile handsets, which wireless carriers often subsidize in order to sign up customers to longer-contracts. As a result, he says, the cost to acquire a new customer is higher in wireless than for an internet customer, and so the measure takes on more importance.
Churn also isn't a bellwether for small ISPs, as many operate in one or two company markets with little competition, said Tom Copeland, the chairman of the Canadian Association of Internet Providers and a small-ISP owner himself.
"Users don't switch for any reason other than price," Copeland said. "If the incumbent offers some loss leader or a sweet bundle we might see a few weeks of activity, but generally it's not a big factor."
CRTC ruling could hurt competition
Which isn't to suggest Canadians are satisfied with their ISPs. When readers of CBCNews.ca were asked how often they've switched, some said they had been with the same provider for 15 years while many others reported they had recently switched to a smaller ISP after frustration with an incumbent.
Copeland said there are a number of factors that will keep churn down in the near future. One is the recent decision by the CRTC to allow Bell Canada to implement usage-based billing for wholesale customers, which he says threatens to make smaller ISPs indistinguishable from the companies they rent from.
"They are making it so we are all offering the same flavour of vanilla," he said.
Older consumers also remain accustomed to ISP-provided email addresses and may be loath to change, Copeland said, though that reliance is changing as consumers get web-based mail addresses through companies such as Google and Yahoo.
Internet churn is also less of a factor because the market is still growing, Copeland said, particularly as broadband slowly spreads to rural communities and the last dial-up holdouts connect to faster speeds.
But Copeland said as the market matures, it will likely to become a bigger factor.
"Years from now we could be like the wireless industry, where churn is of significant interest and a yardstick of performance," he said. "But we're still growing and bringing on new people. We may lose two but we're gaining three."