Mapping Ontario's Mobile Industry

Innovation and Insight:
Mapping Ontario’s Mobile Industry
Mobile Experience Innovation Centre, April 2009

Innovation and Insight:
Mapping Ontario’s Mobile Industry

Mobile Experience Innovation Centre
April 2009

Innovation and Insight: Mapping Ontario’s Mobile Industry 2

Innovation and Insight: Mapping Ontario’s Mobile Industry
April 2009
All content developed and coordinated by the Mobile Experience Innovation Centre via
the MEIC Steering Committee, Working Groups and Additional Partners. Phase One of the
Mobile Experience Innovation Centre was led by the Ontario College of Art & Design, and
managed by Michele Perras, MEIC Project Manager.

The MEIC is grateful for the funding provided by the Ontario Media Development
Corporation through the Entertainment and Creative Clusters Partnership Fund.

Phase One was also supported by the following Secondary & Additional Partners:

33 Magnetic Ltd Aesthetec Achilles Media Ltd
Bitcasters CFC Media Lab Canoe.ca/Quebecor
Decode Entertainment Inc The Delvinia Group Design Exchange
Ecentricarts, Inc George Brown College Gesturetek, Inc
IBM Interactive Ontario marblemedia
MEF Canada Microsoft Canada MobileMonday
Motorola Mypetbrainstorm RBC Canada
Ryerson University Silverback Wireless Sweet Caesar
Telus Mobility Triptych Media TVO
UOIT WirelessNorth.ca Yahoo! Canada

The content of this report is licensed under Creative Commons Attribution-No Derivatives
License. For more information on this license, please see http://creativecommons.org/
licenses/by-nd/3.0/

For more information on the MEIC, please go to http://meic.ocad.ca
For more information on the Entertainment and Creative Clusters Partnerships Fund,
please go to http://www.omdc.on.ca/Page3231.aspx

The Mobile Experience Innovation Centre is a public-private consortium engaging leaders
in mobile research, design and innovation. Funded by the Ontario Media Development
Corporation and the Entertainment and Creative Clusters Partnership Fund, the MEIC
includes 5 academic institutions and over 30 organizations from across the mobile
industry, and is led by the Ontario College of Art & Design (OCAD).

The MEIC has launched Phase 2, as of March 2009, to facilitate research and prototyping
between industry and academic partners. Through 3-month initiatives in mobile design,
user experience, foresight, and business model development, etc, the MEIC develops
partnerships to link students, faculty, non-profits, small and medium sized enterprise,
and corporations.

To learn how to become involved, please contact Michele Perras, Project Manager, at
mperras@ocad.ca.


Table of Contents
5 Innovation and Insight: Mapping Ontario’s Mobile Industry – Recommendations

13 An Analysis of Global Trends, Impacts and Opportunities in the Mobile Industry, applied
to the Province of Ontario – Ray Newal, with the Mobile Experience Innovation Centre
Working Groups

37 Portrait of the Ontario Landscape: A Survey – Led by Michele Perras, MEIC Project
Manager, with the MEIC Steering Committee, Working Groups and Additional Partners


Innovation and Insight: Mapping
Ontario’s Mobile Industry –

Recommendations


Overview
In many ways, the current state of mobile and wireless industries resembles that of the
early years of any new, disruptive media. Just as the internet of 1990, although difficult to
see at the time, subsequently transformed human behavior, communications and business
in a ubiquitous manner, mobile and wireless technologies are leading the next revolution.
We are rapidly moving towards an era where everyone will be a mobile entity moving
through a robust, interconnected landscape. Our window of opportunity is to decide what
we would like that landscape to be.

Mobile capacity is a key factor for growth across industries, being the technological,
organizational and human thread that will link all activities in coming years. The current
Canadian context is lacking in terms of preparedness to embrace the next generation of
networked enterprise, educational and cultural activity – data rates, though becoming
more accessible, are still quite high compared to global standards, mobile penetration is
lagging, and access to capital, distribution[1] and markets are the largest inhibitors to local
entrepreneurial growth in this sector.

However, solutions are within reach. Specifically, Ontario has the potential to become a
global mobile and wireless leader, and has a long tradition – and continued willingness –
to collaborate on initiatives aimed at leveraging current capabilities and future potential.
We believe that future potential must be realized by developing convergence strategies
for Ontario’s entrepreneurial and educational activities. Around the world, Convergence
Centres of high cultural-economic activity, innovation and commercialization of products
and services operate according to the mantra of Build Local, Aim Global. Building capacity
to the convergence advantage in areas such as the Southern Ontario Triangle (including
Waterloo, the Golden Horseshoe and Ottawa) will leverage our existing strengths and
facilitate opportunities for future growth. The MEIC has identified the following factors and
recommendations to do this:

Led by the MEIC and drawing upon its pool of industry and academic resources, a strategy
has been developed to leverage and enhance Ontario’s Virtual, Physical and Human
Infrastructures, targeted at the mobile and wireless industries, through networks, consortia,
partnerships and investment into the entrepreneurial community.

This strategy will continue to leverage Ontario’s strong tradition and continued willingness
for cross-sector, cross-platform collaboration, and facilitate continued support of Ontario’s
Convergence Advantage. This aims to strengthen local business and consumer markets and
attract venture investment while creating a branded platform and increased channels to
global marketplaces.

As advocates and partners, the MEIC will work towards developing government procurement
strategies in capital investment, increased tax credit initiatives targeted at mobile content,
services and application developers.

The development and implementation of agile and lightweight architectures must be
framed and collaboratively built for the 3 largest inhibitors of local growth: Lack of Access
to Capital, Markets and Distribution.

The MEIC will continue its support and facilitation of Agile & Rapid Prototyping, Strategic
Foresight, Adaptive Innovation and Applied Research initiatives in mobile and wireless
technologies, via an industry-academic centre or virtual consortium.

[1] While application marketplaces provided by Apple, Nokia and Blackberry are providing some opportunities for developers of content, they are currently not

the drivers of economic and innovative growth.


Key Phrases

Virtual, Physical and Human Infrastructure; Tax Incentives for Mobile; Government
Procurement and Capital Investment Strategies; Innovation and Convergence

The following research report and survey conducted by the Mobile Experience Innovation
Centre in 2008-2009 has resulted in a series of strategic recommendations for both the
MEIC in its future iterations as well as towards industry, government, academic and
other leaders in Ontario. By focusing on four main areas, the MEIC long-term strategy
has developed a flexible, wholistic perspective that encourages collaborative innovation,
educational engagement in the digital sector and economic growth at all stages of the
mobile value chain.

The four areas for the long term MEIC strategy are outlined and further developed below:

Innovation andand Insight: Mapping Ontario’s Mobile Industry
Innovation Insight: Mapping Ontario’s Mobile Industry 13

An Analysis of Global Trends,
Impacts and Opportunities in the
Mobile Industry, applied to the
Province of Ontario

Ray Newal, with the Mobile Experience
Innovation Centre Working Groups
March 2009


Methodology

The following document was developed collaboratively through the Mobile Experience
Innovation Centre Working Groups, Independent Research Consultant Ray Newal and
Michele Perras, MEIC Project Manager. Over the course of 6 months, two Working Groups,
focusing on Mobile Behaviour and Emerging Business Models, led by Gabe Sawhney of
33 Magnetic, Ltd and Avi Pollock of RBC Applied Innovation, respectively, worked with
the larger MEIC group as well as Ray Newal in developing this report’s content. Continual
discussions and revisions ensured the document was truly a collaborative venture.


Introduction
Through recent innovations in mobile and country, city, state, or province that invests
web technology, the world finds itself at the heavily in creating a work-force with the
fulcrum of a major shift in the way people right combination of skills and creativity,
consume information. These innovations will become a proverbial battle-field
will result in the elimination of borders be for emerging mobile platforms. These
they political, geographic, economic, social, battle-fields will attract large amounts of
language-based, or otherwise. Information investment from multi-nationals and other
will be readily accessible everywhere, by players from within the funding eco-system,
anyone, and will be presented in ways and will thrive on the spending power of a
that are socially, culturally, and locally highly-skilled and sought-after work-force.
familiar. Already, mobile devices are
being used to remotely monitor patients’ The purpose of this report is to analyze the
health. And closer to home, cell phone shift that is occurring within the mobile
tower activity is being used to determine industry on a global scale, making light of
traffic patterns along busy highways. impacts as they relate to consumers and
businesses within Ontario. Our analysis
Within the shift that is taking place, lays draws from a landscape of recent research,
significant opportunity for innovation industry blogs, news articles, and working
and ultimately, wealth creation. A few group documentation that has been
companies, namely RIM, Microsoft, Google, prepared by members of the MEIC initiative.
and Apple among others, will supply the The report will look at the changing mobile
platforms for which this shift will occur, but landscape with specific focus on the areas
they will not be the only entities to prosper. of consumer behaviour, business dynamics,
Carriers, old and new, are investing millions funding activity, and education. Through
of dollars into next generation networks that this analysis of the changing landscape,
will enable rich multimedia content to flow and through our perspective of the way in
at broadband speeds regardless of location. which business eco-systems are evolving to
Throughout the world, media companies, accommodate the shift, it is our hope that
health care services, utility companies, this report will help to inform the way in
transit services, game publishers and a vast which the Ontario government engages with
array of others, are already beginning to rely all inhabitants of the broader mobile eco-
on a fertile green-field of talent to develop a system. In the interest of disclosure, the
long-tail of applications through which this author of this report is an Ontario-based
shift will occur. While some applications will entrepreneur who is currently in the midst
receive more usage than others, ultimately of establishing a business centred on mobile
it is the breadth, quality, and usability of content distribution and monetization. His
available applications that will allow the background includes close to fourteen years
winning platform to prevail. The platforms of business development, marketing, and
which emerge will see unprecedented levels sales experience within technology and new
of usage. These emerging industry dynamics media companies that include Microsoft,
have created a gold rush of sorts, as each new Yahoo!, and DoubleClick among others.
mobile platform competes for compelling
content and for talented content creators.

Today, due to the relative newness of
the shift that is taking place, a scarcity of
talent exists to create applications for these
new and emerging platforms and devices.
Therein lays an opportunity for the creation
of geographic centres of innovation. The


Mobile Usage
Mobile usage is in the midst of a sea change developers, entrepreneurs, artists, educators
transformation. For years, mobile offerings and ordinary Canadians to create, share
in North America have lagged those of other and distribute their own content using
developed and, in some cases, developing mobile devices or across mobile networks.
countries as well. North Americans were
late to implement 3G networks, slower to As a result of all these forces, the pace of
adopt SMS, slower to introduce smartphones innovation in the industry, particularly
and other advanced features. Historically, in Canada, is accelerating rapidly. With a
particularly within North America, incumbent broad base of creative talent, educational
mobile network operators (MNOs) were and industry resources, one could argue
able to establish a powerfully dominant that Ontario is already transforming itself
role within the mobile value chain. The from laggard to leader in almost every
accessibility of mobile services and pace segment of the mobile industry value chain.
of mobile innovation was entirely gated
by the service, price levels, and offerings The transformation which is under way
made available by the MNOs. For many in the mobile industry will expand the
years, North American mobile subscribers ubiquity of smart, networked devices to the
in particular, looked on as Europeans used market. Indeed, most of the first world has
cell phones to purchase goods and services; been deeply penetrated with ubiquitous
citizens of Asian countries experienced new access to mobile for a while now. By the
ways of connecting and sharing content first quarter of 2006, over thirty countries
with one another; and in the third world, had already exceeded 100% per capita cell
consumers who couldn’t afford land-lines phone usage (meaning in those countries,
and automobiles were all of a sudden gaining some users had more than one phone) .
access to cheap mobile voice and data services. Canada, which among developed countries
sees one of the lowest mobile penetration
In recent years, the forces of technological rates, at 61.6%, will see growth happen at a
change have suddenly begun to disrupt the quicker pace thanks to the entrance of new
historical patterns of the mobile industry. competitors in the carrier arena. Developing
Canada and North America are catching up countries such as India and China still have a
to the rest of the world. We are beginning ways to go before they see similar per capita
to see the market power of incumbent penetration, but it is these countries among
MNOs erode slightly, as players at almost all other developing nations that will see the
stages of the value chain are finding new highest number of new aggregate subscribers
ways to assert themselves. Thanks to “killer added every month. As a testament to this,
devices”, vendors like RIM and Apple are according to the Telecom Regulatory Authority
gaining more clout with consumers. Thanks of India, in January of 2009 India saw a
to new distribution channels and device record of 15 million new mobile activations.
capabilities, publishers and mobile content
creators are finding ways to deliver content The transformation we are currently
directly to mobile users without necessarily experiencing will also have a dramatic
negotiating deals with network operators impact on the way residents of urban,
for access to “decks” or walled gardens. rural, and even war-torn areas use and rely
Consumers too, are becoming savvier and on their mobile devices thanks to cheaper
more aware of “what they are missing”. In and more accessible data services, feature
June of 2008 10’s of thousands of Canadians laden devices, and more informative,
signed a petition eventually influencing compelling, and accessible mobile content
Rogers to change their pricing plans for the and applications. Features such as location
iPhone to be competitive with global rates . awareness will create dependency on the
Ever-improving mobile technology has made mobile phone for orientation in unfamiliar
it increasingly commonplace for independent places, be they across town, or on the other


side of the planet. Mobile technology is also
transforming journalism. The front page
photos of the 2005 London bombings were
taken with mobile phones. In January 2009,
when a US airliner crash landed in the Hudson
River, the first photos and media reports
were delivered by Twitter, an SMS-based
mobile social networking platform. In San
Francisco, a group called Mobile Millennium
(a partnership between Nokia, Navteq,
and UC Berkley) have found a way to fuse
GSM data from cell phones with data from
existing traffic sensors to build a functional
traffic monitoring system. Residents of the
Bay Area can participate by downloading
an application free of charge. Contrast this
application of real-time, location specific
data with those originating in areas such
as Uganda, or East Timor, or even London,
UK, where SMS is used to alert residents of
hostility breakouts and locations, along with
instructions to those who happen to be in
the vicinity of attacks that are taking place.

As data speeds increase to broadband
levels and device processing and interface
capabilities allow devices to display rich data
in graphical and tactile ways, mobile users
will begin to store all of their ‘life’ content
within external network repositories, or in
current lexicon: ‘the cloud’. Ubiquitous
access to personal data and content stored
in ‘the cloud’ will mean subscribers, both
consumer and corporate, are never away
from their desk, filing cabinet, television,
or music collection. Medical, financial,
and educational records will never get lost.

And above all, thanks to the changing
dichotomy of influential players within
the mobile industry, and the axis of
control moving from incumbent carriers to
wireless platform, media publisher to social
network, proprietary operating-systems
to open-source operating-systems, and
proprietary software publishers to developer
communities; the price of usage will come
down. Ubiquitous access to ‘life’ information
and content will no longer be restricted.

Canada will not be insulated from this
transformation.


Mobile industry With established Global Examples
Value Chain presence in Ontario
Mobile users / Subscribers >7B mobile phone users >1B mobile phone users

Mobile content 100s of Freelance Independent developers,
Developers, Small Content Music, Film and Gaming
Studios with 1-5 employees, industries, consumer
Cross-Platform Interactive and enterprise software
Agencies, Digital Games, industries, Public sector:
National Media Outlets Government, Education,
(Canwest Media, CBC, healthcare and 911 services.
Canoe.ca etc.) Financial Financial services. Media:
Services (all of Canada’s News media, social media,
largest banks and card user-generated media.
associations), Health Care,
Advertising and Marketing.

Distribution and Content RIM AppStore, Viigo, Apple AppStore & iTunes
Creation Tools Glassbox, Mythumb, etc. store, Microsoft Skymart,
Yahoo Gears, Google
Android Market, Nokia
Marketplace

Mobile Platforms & RIM Blackberry platform, Windows Mobile, Nokia
Operating Systems Windows Mobile S60, Apple iPhone, PalmOS,
Google Android

Mobile Device RIM, Motorola Nokia, Apple, Palm,
Manufacturers Samsung, LG, Ericsson,
Motorola, NTTDocomo, HTC,
Asus

Mobile Network Operators Rogers, Bell, Telus,
(MNOs) Globalive, MTS

Equipment suppliers Nortel, RIM, AMD Nokia, Ericsson, Motorola,
Qualcomm

Academic Institutions OCAD, George Brown College,
University of Ontario
(Active in Mobile Research Institute of Technology,
and/or skills training) Ryerson University, CFC
Media Lab, University
of Toronto, University
of Waterloo, Carleton
University, Conestoga
College, etc.

Source: WirelessNorth.ca, 2009

Innovation and Insight: Mapping Ontario’s Mobile Industry Innovation and Insight: Mapping Ontario’s Mobile Industry 19

Mobile Data
Evolution
Until very recently, Canadian consumers comparison to that of businesses. Despite
ranked among the lowest in the world in the high cost of data, businesses seem to
terms of data usage. Consumers for the still be able to justify the expense. In a 2006
most part ignored the mobile web. Younger survey of 300 SME’s (Small and Medium-
or more technologically adept demographics Sized Enterprises), IDC Canada (on behalf
had in recent years begun to embrace SMS of International Technology Association of
as a substitute communications tool, but Canada) found that 79% of respondents
for the most part Canadian consumers were reported that improving productivity and
restricted to Voice services. Employees of efficiency within the organization is a leading
businesses that could justify the purchase of business priority. Perhaps it is thanks to
expensive data plans became the primary, these increases in productivity through
and for all intents and purposes, the only mobile devices, and the overall accessibility
users of data services in this country. of employees beyond the traditional 9 to
5 work day that businesses are able to
As recently as April 2007, the cheapest justify the high cost of data transfer. Or it
Canadian mobile data plan was more than 6 could be because business owners have the
times more expensive than T-Mobile’s service ability to write-off mobile fees as business
plan in the US, 5 times more expensive than expenses. Regardless, while mobile services
data plans offered by Terracom in Rwanda, may drive real value to business owners,
and 9 times more expensive than the data higher Canadian mobile fees have been
plan offered by Vodafone in New Zealand. driving a higher cost of doing business in
Canada across all segments of the economy
Carriers have, until very recently, tightly that rely on BlackBerries and other mobile
controlled the Canadian mobile industry. services. Thanks to a lack of competition,
Consumers in Canada have been trained to until the recent shift of control within
make mobile subscription decisions based the mobile eco-system, Canadian carriers
on plans and services, particularly those have felt limited pressure to reduce rates.
bundled with land-line and broadband
services, not mobile hardware. According Part of this expected shift is due to the
to a recent (May, 2007) document submitted approach the government employed to
by the British Columbia Public Interest release AWS (Advanced Wireless Services)
Advocacy Centre to the Director General of spectrum. This approach has made it
Telecommunications at Industry Canada, possible for new entrants to compete with
the average cost of residential land-line the incumbent carriers, by reserving space in
service offered by a monopoly provider in the spectrum as well as guaranteed roaming
BC is $23 to $29 a month, compared to the access to incumbent cell towers for a period
average monthly cost of mobile service of 5 to 10 years (the life of the license). The
which is $79. Canada sees a particularly auction, held in mid-2008, is expected to be
high penetration of land-line usage, with the last major Canadian spectrum auction
over 92% of the population having access for a number of years. Specifically, this
to land-line services offered by regulated auction dealt with the licensing of chunks of
monopoly providers. Indeed, perhaps due frequency between the ranges of 1670 MHz
to a combination of price, accessibility, and and 2155 MHz, the largest block of spectrum
perhaps even influences such as the aging ever released in Canadian history. This part
population, a very high percentage of the of the spectrum range provides an attractive
population end up relying on their land- balance of coverage and bandwidth
line phone as their ‘primary’ telephone. capabilities. In general, the lower the
frequency within the radio spectrum, the
Add to these factors the cost of data transfer, better the coverage of the signal ranges,
and it becomes quite apparent why consumer but the lower the bandwidth capabilities.
demand for data-rich devices has paled in

Innovation and Insight: Mapping Ontario’s Mobile Industry 20 Innovation and Insight: Mapping Ontario’s Mobile Industry
Though Canada conducted its auction of AWS
Though Canada conducted its auction of AWS
spectrum a full two years after the US, it
should be noted that the average Price/MHz
for each potential customer came in at $1.41
after 331 rounds of bidding. This compares to
an average price of $0.54 in the US. Canada
had been expected by analysts to generate
a mere $0.40/MHz per potential customer.

The new entrants which emerged through
the spectrum auction include Globalive
Wireless (which paid CA$442m for a national
licence), Data & Audio-Visual Enterprises
(which won licences for Ontario, Vancouver,
Edmonton, Calgary and Victoria at a cost of
CA$243m), and Shaw Communications (which
paid CA$190m for access to spectrum in British
Colombia, Alberta, Winnipeg, Saskatchewan
and northern Ontario) among others.

Though most of these ‘new’ players already
offer services of some kind to consumers,
they are expected to deploy a plethora of
new ‘bundled’ services which will help to
boost Canada’s mobile penetration rate. It
is widely expected that as Canada’s mobile
penetration rate surpasses the 80% mark, a
scarcity of new subscribers will force increased
levels of competition among all carriers,
which will almost certainly put downward
pressure on mobile voice and data plans.

Source: Wired Magazine, 16-10-2008

Innovation and Insight: Mapping Ontario’s Mobile Industry 22 Innovation and Insight: Mapping Ontario’s Mobile Industry

Canadian AWS Spectrum Auction Winners -
2008

Bidder and Legal Bidding Total of Winning Bids Population Spectrum Acquired/Region
Name Coverage
Rogers - Rogers Communications $ 999.4 M 30M National - 20 MHz

Telus - Telus Mobility $ 879.9 M 30M National - 10 to 20MHz
Bell / BCE - Bell Mobility Inc. $ 740.9 M 29M National - 10 to 20MHz except no
licenses Manitoba, Saskatchewan.
Quebecor/Videotron - 9193- $ 554.5 M 29M Regional - Quebec 40Mhz, 10Mhz
2962 Québec Inc Toronto and southern, Eastern
Ontario
Globalive Wireless - YAK Com- $ 442.1 M 25M National – 10 MHz each province/ter-
munications ritory except Quebec

DAVE (Data & Audio-Visual) $ 242.1 M 17.5M National/Urban – 10 MHz in
Southern/Eastern Ontario, Calgary,
Victoria, Vancouver, Edmonton
Shaw 1380057 Alberta Ltd. $ 189.5 M 12M Regional – Western Provinces 20MHz
from BC to Manitoba except 10MHz
in Saskatchewan
SaskTel $ 65.7 M 3M Regional – 30 MHz Saskatchewan

Manitoba Telecom - 6934242 $ 40.8 M 3.5M Regional – 20Mhz Manitoba
Canada Ltd.
Bragg a.k.a. Eastlink Bragg Com- $ 25.6 M TBA Regional – Atlantic Provinces 30MHz
munications across NFL, NB, NS, PEI and 10 to
20MHz some areas of northern
Alberta and Ontario
Celluworld $ 0.5 M TBA 10 MHz Chatham, ON
Rich Telecom $ 0.4 M TBA 10 MHz Huntsville, ON and Dawson
Creek, YT
BMV Holdings $ 52.4 M 18M 10 MHz Urban Southern Ontario,
Quebec

Source: WirelessNorth.ca 2008

The leading business metric for MNOs is the other countries in the world. In fact, when
Average Revenue per User (ARPU). ARPU data related revenues get spread out over
is a closely monitored benchmark which all mobile subscribers, Canadian carriers
indicates how much revenue an operator rank as one of the lowest earners of data
is making from every user, every month. related ARPU of all developed countries.
In Canada, ARPU fluctuations between our Perhaps this is due to the historically
three major carriers can mean significant narrow market for data services among
changes in revenue. ARPU is sometimes business subscribers. Today, thanks to the
segmented by analysts into Voice and proliferation of devices and applications
Data related ARPU. In 2006, while in most that make data services compelling to
developed countries, data-related ARPU was consumers, the carriers see an opportunity
on the decline, Canada led the rest of the to expand their data services portfolio to a
world in net data-related ARPU increases. much wider audience. Data transfer prices
And it wasn’t because our typical mobile have dropped significantly, as carriers opt for
subscribers were consuming more data than consumer-targeted multi-year data plans
as a method to boost data-related ARPU.

Innovation and Insight: Mapping Ontario’s Mobile Industry 23a

Impacts of the With the advent of the iPhone in 2007, Apple
introduced a device that would for the first

iPhone on Data time make rich data services compelling for
consumers. Through being the first device

Usage to incorporate features such as location
awareness, a large touch screen, a powerful
processor, an easy to access third party
application platform, and a browser that
allows full web pages to be accessed and
Aside from the cost of data being an inhibitor browsed in a quick and intuitive manner,
to mobile data usage among Canadian the iPhone has set the standard by which all
consumers, there was also a lack of any smartphone devices are being compared. This
apparent or practical consumer need for data will likely continue for the foreseeable future.
services until the iPhone and high speed The result of all this has been a significant
3G data transfer came along. Historically, impact on the mobile eco-system in almost
consumer’s found mobile devices to be all markets that the iPhone is offered.
unintuitive when it came to doing anything
other than checking email, sending text Though Canadians weren’t able to purchase
SMS messages, or in some cases chatting the first generation of iPhones through
via mobile messenger/SMS applications. legitimate channels, thousands of unlocked
Browsing the mobile web meant navigating phones made there way into the market
through multiple screens and menus; anyway, priced at well over $500. To the
entering or searching for web pages that chagrin of most Canadians, the iPhone is
usually didn’t exist in MOBI or WAP form; only designed to work on the GSM mobile
and then waiting for text laden, graphically platform. This meant that unless users of the
poor, pseudo-web pages to download at a first generation of unlocked iPhones were
snails pace. Once the page was loaded, these willing to pay the hefty data rates charged
devices lacked an intuitive way to interact by Rogers in 2007, they would have been
with the content. Restricted to low-speed relegated to using their devices via Wi-Fi,
GPRS or 2.5G networks, even devices that or to using them as glorified iPods. When
could browse conventional web pages, or Apple announced in spring of 2008 that the
multi-media content were never practical. 3G iPhone was coming to Canada through
Rogers, most consumers expected Apple to
For the most part, consumers restricted their have asserted its newfound and growing
mobile web usage to applications or sites that influence over carriers, to Rogers. The
were situated ‘on-deck’. On-deck meant 3G iPhone is the second generation of the
the page or content was situated within one iPhone which supports the third generation
or two sub-menus, making it much easier of GSM platforms and claims speeds that are
to access. Unfortunately it didn’t make the at least twice as fast as the EDGE capable
content easier to interact with. It also didn’t first generation iPhones. If form factor was
ensure a better experience for the consumer. the cause of the first generation iPhone’s
In most cases, on-deck deals were driven by success, then functionality and speed are the
fees paid by portals, or applications developers drivers of the second generation’s success.
to the carriers or device manufacturers. As In many countries, Apple had become
consumers became increasingly accustomed notorious for holding out on deals with
to the limitless world of multimedia content, carriers unless packages were offered that
and applications which were available via would let consumers take advantage of the
broadband connections on the PC Web, they full potential of the device without worrying
couldn’t help but feel restricted on the mobile about data charges. In a few of these, Apple
web. Between the lack of content, services, had managed to do the impossible. They
and applications available to consumers pushed carriers to offer unlimited data plans
via the mobile web, the impracticality of at a reasonable monthly price. This wasn’t the
viewing and interacting with content on case in Canada. A couple of weeks before the
mobile devices, and the slow bandwidth July 11th launch of the 3G iPhone in Canada,
speeds available via 2 and 2.5G wireless Rogers announced it’s pricing, resulting
platforms, consumers understandably saw in an uproar of disenchanted consumers.
relatively little need to demand better
data packages and services from providers.

Innovation and Insight: Mapping Ontario’s Mobile Industry 23b

Perhaps due to the onslaught of publicity via And yet the devices themselves are only
sites like ‘ruinediphone.com’, where 50,000 a part of the shift that is taking place.
consumers protested the pricing of the
original iPhone data plans, shortly before
launch, Rogers introduced a 6 GB data option
for $30 a month. As consumers for the first
time started to show an interest in purchasing
monthly data plans for a reasonable price,
Bell and Telus decided at about the same
time to begin charging consumers without a
plan, $0.15 per received text message. Having
awoken to the necessity of a cost effective
mobile data plan, Canadians now demanded
better data rates. And carriers have
woken up to this opportunity, responding
receptively with a range of moderately
priced multi-year data plans that have
become the focus of intense competition.

Though consumers have been somewhat
successful at putting pressure on the carriers
to reduce data rates, there is still a disparity
in the way consumers use mobile data, due
largely to the device selection available on
each platform. The 3G iPhone is still one of
the only devices on the Rogers Network to
make the usage of rich data and applications
practical to consumers. The BlackBerry
Storm, Samsung Instinct, and HTC Touch
are new entrants to the 3G smart devices
category and share many of the iPhone’s
features and form factor. These handsets,
offered by Bell and Telus, and have been
the center of an intense marketing battle
between Canada’s top three carriers.

Devices such as BlackBerry’s Storm, and
others developed to run on Google’s Android
operating system will provide functionality
that is similar to the iPhone to consumers
and business people alike. Consumers
have voted with their usage, that they
are willing to embrace mobile features
such as location awareness, full-page web
browsing, and third party application stores,
if the device makes usage: easy, intuitive,
and therefore practical. Within 6 months
of the launch of the first generation iPhone,
its proprietary browser accounted for 0.09%
of total browser market share, compared to
Window’s CE which had only 0.06% market
share despite having been on every Windows
Mobile device shipped. In February of 2008,
Google announced that the iPhone was
accounting for 50 times more searches than
any other mobile device. Within 30 days
of Apple launching the App Store, over 60
million applications had been downloaded.


3G and the Future at this level are LTE (Long Term Evolution),
which will begin to see commercial roll

of Wireless Data outs by carriers in 2011 if not sooner, and
WiMAX, an open, worldwide standard that
covers both fixed and mobile deployments.
Carriers see WiMAX as a threat because it can
be offered today by network providers that
focus specifically on data. WiMAX providers
offer both high-bandwidth and broad
If it weren’t for 3G network capabilities, smart coverage, which mobile carriers can’t provide
devices would see their most compelling cost effectively, until they’ve deployed 4G
features restricted to WiFi enabled hotspots. technology. Leveraging this competitive
The migration path from 2G (offered in advantage, providers are already making
Canada since the mid 1990’s) to 3G has not inroads by offering fixed WiMAX services to
been a smooth one, perhaps owing in part many rural regions of Canada that do not have
to a plurality of network systems (CDMA access to broadband telecom, or cable wire-
and GSM). While the Rogers GSM network line services. The long term threat of WiMAX to
needed to employ W-CDMA technology to mobile carriers is enhanced by mobile WiMAX.
upgrade its 2G systems to 3G; Bell and Telus,
seeking to avoid the cost of migrating to a
GSM system, opted to deploy CDMA2000-
EVDO in order to offer competitive high speed
data services. With current 3G deployments,
all three carriers should be able to support
data transfer speeds of up to 2 Mbps, but
in most cases speeds of 160 Kbps to 380
Kbps have become the norm. Contrasted
with the speed of previous 2.5G offerings
(CDMA20001x, and Edge) which offered
download speeds in the range of 80 to 160
Kbps, this is still a substantial increase.

Despite the availability of 3G services in many
metropolitan areas throughout Canada, it is
widely expected that the impact to mobile
data usage will pale in comparison to the Source: Techware Labs, LLC , 2002-2008
changes which come about through the
next evolution of Canada’s mobile network A mobile WiMAX standard was ratified in
infrastructure. Already, all three carriers are 2005 which allowed providers to build
getting ready to deploy the next generation networks which allow for signal transfer
of network improvements, enabling what between base stations, effectively allowing
some are referring to as 3.5G. HSPA is a subscribers to ‘roam’. Even though WiMAX
protocol that improves data transmission is data focused, mobile broadband services
speeds for W-CDMA (GSM) networks and could easily layer a VOIP (Voice Over Internet
can support download speeds of between Protocol) application for marginal network
4-14 Mbps. While HSPA would be a pretty cost, thereby giving them the ability
costly upgrade for Telus and Bell who to push Voice and Data services below
currently employ CDMA networks, CDMA the breakeven point of mobile carriers.
carriers are experiencing growing pressure
to convert to GSM platforms given the lower Looking forward into the next decade,
cost and higher selection of GSM handsets. Canada will also see another important
radio spectrum auction take place. The
In the not too distant future lies 4G UHF spectrum, a range of 60MHz which
deployment. 4G is widely seen as a game is currently dedicated to the broadcast of
changer for the wireless industry because it analog television is particularly valuable
promises speeds of 50 Mbps while mobile, because of its superior ability to circumvent
and up to 1 Gbps while standing still. The two obstacles such as walls, buildings, or
key technology standards that will compete mountains. The US held its auction of the


UHF spectrum in 2008, generating record weren’t taken. Nokia responded to the
proceeds of close to $20 billion. Industry MS threat by investing heavily in the
Canada is expected to follow the same path Symbian OS. Motorola diversified its use of
as the US, allowing UHF licenses to be used proprietary third party operating systems,
for mobile, wireless, and broadcast services. Symbian and Microsoft included. And
Out of the US auction, two of the major license conversely, some OS manufacturers became
winners (Qualcomm, and Aloha Partners) device manufacturers in their own right.
are already pursuing the development
of systems based on WiMAX technology. With a battle for control raging between
the carriers, handset manufacturers, and
So what does all this mean? For businesses operating systems, ultimately it was the user
seeking to address the mobile market, the experience that suffered. The sheer number of
rules have changed. Opportunities exist device/OS/platform/carrier combinations that
that didn’t a year ago, and the pace of developers needed to accommodate for any
this transformation will quicken. The next specific application could only be described
section of this report will examine the role as massively fragmented. Aside from SMS
local stakeholders should play in order and related server side technologies, no
to establish Ontario as a world-leading silver bullet solutions existed for developers
center of excellence for mobile innovation. to use in order to address large scale markets.

Until recently, this food chain of carrier,
handset manufacturer, and operating system
sat in a paralyzing dead-lock. Ultimately,

Mobile Business thanks to this fragmented landscape,
applications providers were having a

Landscape hard time finding sustainable business
models, at least in North America. As this
fragmentation increased, so did the cost of
building and launching viable applications
to a mass audience. Only applications
providers with deep pockets could afford
to develop the near thousands of iterations
The Mobile business landscape had of an application needed. And even if an
been established around an eco-system applications provider could fund this level
and balance of power which until very of development effort, the devices for
recently, has made it difficult for start- which these applications were developed
ups without deep pockets to penetrate. were not simple to use for the consumer.

At the top of the food chain, lay the carriers And then the question of getting on the
and handset manufacturers. In the past, handset arose. Applications or content could
such power and control existed between either be installed by the factory, before
these two players that a veritable force-field the handset was shipped – which became
made it extremely difficult for other members known as ‘on-deck’ – or accessed by the user
within the eco-system to exist without via the mobile web – conversely known as
paying penance. Over time, as the market ‘off-deck’. The sheer difficulty of accessing
for smartphones developed, so did a new content from the mobile web through
category of carnivore at the top of the food cumbersome device interfaces made off-
chain: the operating system. For many years, deck applications and content a non-starter
Microsoft, Research in Motion, Palm, Symbian for providers hoping to generate revenues
and others have been accumulating greater through advertising, or other models that
control as developers of operating systems, depended on critical mass. The volume of
and in some cases handsets. As Microsoft’s usage would never scale enough to support a
plans to roll out a mobile phone operating viable model via the off-deck approach. The
system began to take shape in 1999, many alternative meant paying significant fees per
carriers and handset manufacturers looked handset or subscriber to the manufacturers
to the history of the Personal Computer or carriers for on-deck integration, and
market and Microsoft’s ensuing dominance, even that approach didn’t guarantee usage.
and foresaw a similar destiny if precautions


In recent months, with the advent of the iPhone which was one of the first brands to create
and its open marketplace for developers of an iPhone specific game. The A4 Driving
third party applications; Google’s roll-out Challenge Application was designed to assist
of Android, it’s open source smartphone with the launch of Audi’s new A4 model by
operating system which is supported by leveraging the accelerometer features of
Motorola, Samsung, LG, and HTC; and the the iPhone to highlight superior handling
recent trend among smartphone OS providers abilities of the new car. Networks such as
such as Research in Motion, and Symbian AdMob have begun to establish models that
to establish their own applications store- aggregate advertising space among multiple
fronts for third party developers, similar to applications and mobile platforms in order
Apple’s; the eco-system has changed. With to establish critical mass. Local businesses
the advent of open-source operating system are also beginning to take advantage of
API’s (Application Programming Interfaces), opportunities which allow them to promote
and third party App Stores, it is no longer themselves via location-aware applications
as difficult for applications providers to get that relate information based on proximity.
their software on-deck. It is also apparently
less difficult for developers to make money.
These are two critical needs that have always
been lacking within the mobile eco-system.

Mobile business models are beginning to
emerge within three distinct categories:
Premium Content, Advertising, and Paid
Applications. In the Premium Content
category, publishers now have a way of
accessing consumers directly via app stores
if they choose. Open Door Communications
is a company that has taken on the task of
adapting book formats of travel guides for While Advertising and Premium Content are
the iPhone, and charges consumers $1.99 themselves significant business models,
per download. But premium content is an interesting new phenomenon is the
now becoming a more promising business opportunity presented to developers seeking
model even on phones that don’t have to charge for their mobile applications.
access to App Stores. As a testament Obscure applications such as ‘Pull My Finger’
which simulate sounds of flatulence, and
to this fact, Bell Mobility recently launched Smule’s Ocarina, which allows consumers
a service that makes premium NHL content to transform their iPhone into a musical
available to subscribers of an NHL Mobile wind-instrument are generating significant
Content package. Beginning at $8 a revenues from curious consumers. Now
month, subscribers to the service will that RIM has unveiled the BlackBerry App
have access to NHL video highlights; audio Store we can expect a similar phenomenon
broadcasts of every game; and a feature with a host of new and exciting business
called NHL Centre Ice, which streams applications that take advantage of the
video of a full game to mobile handsets. features of devices such as the Storm.
Though available on a wide selection of
Bell phones, subscribers with large screen
3G handsets such as the Samsung Instinct,
BlackBerry Storm, and HTC Touch Diamond
will inevitably enjoy the best experience.

Advertising-based business models have
also begun to take shape in a more impactful
way due to better interfaces, 3G data
speeds, and compelling device features.
In some cases advertisers have taken to
creating applications as a method to engage Factoring the sheer usability of devices
consumers with their brand. An example is such as the iPhone, Blackberry Storm
an application recently developed by Audi, and other devices; and the onslaught of


compelling new device features such as needs of finicky US and international film
location awareness, cloud connectivity, and studios. As observed in the first half of 2008,
accelerometer telemetry which third party this type of reliance can have an inherently
developers can easily incorporate in their negative impact resulting from influences
applications via OS-specific APIs, and the such as fluctuations in the Canadian
opportunities for exploration are infinite. dollar versus other world currencies.

While the eco-system of the new mobile If we are to establish a world-wide center
world still includes some of the same of excellence in the mobile industry, our
players, the balance of power has changed investments and training infrastructure
dramatically. Within North America, need to foster innovation and concepts
opportunities have opened for new that are relevant at a global level. This
businesses and business models to emerge. means public and private funders need
to be prepared to take greater risk on
If the Ontario Mobile Industry is to capitalize concepts that apply outside of the Canadian
on these recent changes in the mobile stratosphere. For example, while the
landscape, the time to act is now. The Canadian market might not have the ability
question is, where do we start? If we’re to sustain applications developed to address
situated in the midst of a proverbial Gold the entertainment needs of Bollywood fans,
Rush, do we focus on mining; do we focus we should still be willing to fund initiatives
on building mining tools; or do we invest in like these. Perhaps a specific platform or
creating a world-class training system for device capability is uniquely available in
miners? It is our opinion that we cannot do markets such as Japan. Does this mean
any of these things in isolation, and do them Canadian developers and businesses would
well. In order to set the stage for Ontario as a be better-served by ignoring markets such
center of excellence in the training of the new as these? Perhaps global market potential
mobile industry workforce, we need to also and the ability to gain insights that are
establish best of breed businesses here, and ahead of our market development curve
we can only do that by establishing a funding need to be factors that are taken into
infrastructure that supports, nurtures, and consideration as investments are made.
promotes ideas and innovation. To date,
our funding infrastructure be it government This means our educators need to include in
run, or private, has always embraced ideas their curriculums a focus on platforms that
and business models that apply to the exist in Asia and abroad, not just Canadian
Canadian market exclusively. This approach platforms. And it means that we should
restricts our ability to amortize innovation seek input and involvement from leading
based on the size of the Canadian market. mobile industry players outside of Canada to
foster trade relationships that make it easy
This same phenomenon is endemic to for those companies to tap into local markets
adjacent industries such as film and television as a source of innovation. Bridges need to
production. Canadian broadcasters are be forged now. This is not to say that local
the triggers for funding that gets placed businesses shouldn’t invest in or benefit
via government channels into Canadian from our approach. Indeed, by having a
content. Due to our consumers’ propensity workforce that is intimately familiar with
to consume US content, the mandate of foreign platforms, business models, and
most Canadian broadcasters is to focus user behaviours as they apply to the mobile
their restricted content acquisition budgets industry; our local businesses will be in a
on the purchase of US content. Whatever position to compete much more profitably,
is left over (and mandated by the CRTC), is and on a much larger playing field. If we
used to make conservative investments in were to choose a theme to rally under,
Canadian content. The fact is, we do not it would be: ‘Think Global, Invest Local’.
have the market ability to amortize the
volume of content, or the quality of content
that American broadcasters do. The value
of Canadian content on a world stage suffers
as a result. Without a global demand for
Canadian content, our local film production
industry is forced to rely on serving the


The Funding and are perceived to be much more accessible
than government funders. This might follow

Eco-System a similar template to the way the government
works with banks to administer student loans.

A distribution partnership via Ontario banks
might solve the problem of accessibility, but
that in isolation will not drive innovation
within the mobile industry. Government
From an entrepreneur’s perspective, the funding initiatives need to broaden their
Canadian funding eco-system is comprised mandate to reflect a global perspective,
of banks; government; venture capital as opposed to the national or provincial
funds; private equity funds; institutions; and mandates that these funds often operate
high network individuals (angels) among by. Government funding initiatives need to
others. For the purposes of this report, also simplify the scope through which they
we will briefly examine several of these apply themselves. In a recent request, made
funding groups from the perspective of the in the process of conducting research for
entrepreneur, with the purpose of extracting this report, a call to the Canadian-Ontario
insights to inform the methods used by Business Centre resulted in an email which
the government to foster innovation and included links to just under 20 sources of
growth. Deliberately, tax programs such as related information and applications. For an
SR&EDs (Scientific Research and Experimental entrepreneur to make sense of the funding
Development program) will be excluded approach, they need to stop developing,
from this list of funding vehicles. In our and focus their efforts on navigating
view, SR&EDs are not funding sources, but through the red tape. Simply put, no young,
are essentially incentives for entrepreneurs eager entrepreneur wants to spend their
or established businesses who have received time this way. Nor do these young, eager
funding, to conduct or extend research and entrepreneurs have the resources through
development activities within Canada. While which they can hire government agents
important for that aforementioned purpose, to navigate through the red tape on their
SR&EDs and similar programs will not behalf. Furthermore, should we really
expand the base of entrepreneurial activity be placing investments in people based
in a region. If our purpose is to engage new on their ability to navigate bureaucracy?
generations of entrepreneurs, who are less
versed in navigating the national tax system, The Ontario Centres of Excellence and the MaRS
and more skilled in their understanding Discovery District, based in Toronto, created
of new mobile platforms, technologies, the Investment Accelerator Fund (IAF) which
and applications, then emphasis needs is directed at emerging early stage technology
to be shifted to the accessibility of companies. Over 600 companies in the last
start-up focused funding initiatives. year applied for funding from the IAF, of
which about 14 were successful in attaining
Following family and friends, banks often access to funds. The most remarkable aspect
provide the first level of funding to any of the IAF is that it relies on a board which
entrepreneur seeking to boot-strap their consists of VC’s, angel investors, and members
way to a proof of concept. Often, a line of of industry to make funding decisions. In
credit, or similar lending vehicle will provide that way, the IAF embodies an effective
the quickest and most efficient dilution- partnership between government and
proof approach to raising money. Banks for other members of the funding eco-system.
the most part do not take risk on seeding
early stage businesses that lack operating
history, especially those that lack tangible
capital assets. The risk falls entirely on
the entrepreneur. One solution might be
for banks to co-operate with government In regards to the Venture Capital community,
funding initiatives, providing distribution VC’s make themselves much easier to find
of low/no-interest lines of credit to than governmental institutions, and they
entrepreneurs. Banks provide a known, and make the steps to funding much easier to
easy to access front-line to entrepreneurs, comprehend. Indeed some VC’s are flexible


in their approach to funding relationships financing which is provided by a mixture
if they believe in a concept or technology. of banks, government, institutions, and
The mandate of VC’s causes them to be much themselves. A good example of this kind of
more aggressive when it comes to casting partnership is the JumpStart program which
their nets. However, as many entrepreneurs is offered by the BlackBerry Partners Fund and
can relate, the cost of raising funds from a matches investment made by government
VC can be significant. Cost in this context organizations such as the OCE. This could
entails equity which VC’s ‘purchase’ by way allow VC’s to place the focus on engaging
of the investments they make. Despite the a larger group of investments, thereby
chance that the cost of raising money through increasing the funnel size through which their
a VC will possibly outweigh the desire of the deal flow occurs. The greater the capacity
entrepreneur to establish a business they at the top of the VC’s funnels means more
‘own’, the chances of landing VC funding local successes will come out at the bottom.
are tantamount to winning a lottery. As this Perhaps assembled this way, a co-operative
report is being written, VC investment activity between banks, government, institutions
in Ontario has fallen to record low levels, and VC’s might be better able to compete
perhaps due to a hampered ability to exit with funding power-houses that exist in
investments given current market conditions. Silicon Valley, Boston, New York and abroad.
In 2008, Canadian VC’s saw a total of one IPO
take place. The VC model, which is designed
to operate based on the velocity of deals
that get entered and exited, is suffering.

If the act of filtering the number of businesses
that receive VC investment results in funding
the best start-ups, the local market would
logically benefit. The size of the investment
is predicated by the size of the funds from Institutions can also provide a valuable
which they come. Funds in Canada are contribution to the funding process as
proportionate to our market size, as are the demonstrated by the $150 million BlackBerry
size of the investments they make. This Partners Fund, which was recently established
means that at the onset, investments in through a partnership with Royal Bank of
Canadian businesses hoping to compete Canada, and JL Albright & Associates. The
with other similar start-ups funded in the mandate of the BlackBerry Partners Fund is to
US or elsewhere, is often fractional at best. place investments in early stage businesses
How can start-ups build to be globally that are creating applications and services for
competitive when the investments they the BlackBerry and other mobile platforms.
receive are often barely sufficient to make While the BlackBerry Partners Fund isn’t
a dent in the local market? Or perhaps the first to invest in companies that are
the answer is not in raising the size of the creating mobile applications and services,
investments, but rather broadening the size it is the first to maintain a neutral stance
of the funnel, i.e. expanding the number of regarding the platforms for which the fund
businesses that receive early stage funding. supports. In contrast, the $100 million iFund,
launched by Kleiner Perkins in March 2008 in
Many Canadian entrepreneurs meet with partnership with Apple, is focused entirely
Canadian VCs as part of the search for on applications and services developed for
investment. Therein lays an opportunity for the iPhone platform. Similarly, the Google
the VC community to play a role in taking the Android Challenge was initiated as a contest
level of innovation within the Ontario mobile by Google in November 2007 to seed interest
industry to a higher level. Rather than among the developer community in creating
focusing on investing significant capital, and applications for the Android platform.
taking significant equity stakes in just a few While these funds were established to add
businesses; perhaps an opportunity exists incentives to the developer community
for VC’s to cast a wider net, by leveraging the in creating applications that traverse the
resources committed by government funding landscape of smartphone operating systems,
institutions. Perhaps VC’s should be enabled similar and related activity is happening
to act as a more active and easier to engage in the web-based social networking world
front-line, distributing pre-seed stage where Facebook, MySpace and others have


have established themselves as ‘social network
OS platforms’. They too are establishing
funds to win over the hearts, minds and
wallets of the developer community.

In order to have greater impact, government
funding initiatives should explore closer
partnerships with the banks, VC’s, multi-
nationals and others that make up the funding
dichotomy. While the government may play
a role today in encouraging investment
from established businesses into the mobile
industry, government funding initiatives have
massive amounts of unrealized potential.
Our suggestion is that government ministries
and associations aggregate their investment
budgets and apply them with the help of
established players such as the banks or VC
community. By focusing on the pillars of
reach, engagement, and scope, government
funding initiatives have an opportunity to
significantly impact the pace of innovation
within the mobile industry in Ontario. Rather
than setting up the tools and infrastructure
needed to properly deploy its grants and
other forms of financial stimulus, the
government should focus on developing win-
win partnerships with established channels.

What is also becoming clear from the
funding activity illustrated above is that
the developer community (consisting of
designers, programmers, user experience
architects, etc) is clearly becoming a force
to be reckoned with in the platform wars.
Also notable is the fact that the platform
wars are no longer limited to mobile
operating systems. Platforms will traverse
social spaces, content, business models, and
devices. Perhaps this is what puts Google,
Apple, Microsoft and others in a position of
strength, over the mobile platform titans of
the past. A nod to this possibility may lie
within a recent landmark announcement
by Motorola, which stated that they’ve
decided to adopt Google’s Android
operating system on all of there flagship
handsets, thereby discontinuing the support
of operating systems such as Symbian.


The Role of funding agencies need to be aligned with
the direction of funders and multi-nationals

Educators within if we are going to properly equip the
province to capitalize on this opportunity.

the Eco-System One of the issues uncovered in conducting
research for this report is the void that exists
with respect to programs or courses which
focus on mobile and/or wireless technology.
While there is a high probability that facets
of mobile and wireless technology get
Platforms, developers, handset manufacturers, addressed within the context of broader
funders, and in some cases even the computer science and engineering courses,
carriers are in a race to win over the the fact that we do not treat mobile and
support of the developer community. wireless technology as an area of specialty
Today’s consumers expect smart devices to underlies the way corporate recruiters see our
do more than handle email, text, and voice workforce. Consortiums, collaborations and
communications. Analogous to the way other public or non-profit organizations are
the web changed the way we use personal an important first step towards addressing
computers, the mobile web as defined the gaps, especially in increasing the dialogue
by Apple, Google and RIM have opened between the public and private sector,
consumers’ minds up to the potential that and developing strategies for growth and
lies within a smart device. In doing so, it cultivating opportunities for entrepreneurs
has also created new found expectations and emerging graduates. How should
of what a mobile device will achieve. these relationships evolve, with the aims of
Consumers expect a wide assortment of establishing Ontario as a center of excellence
applications that in effect, allow them to and innovation in the mobile industry. To help
personalize the way they use and interact shape our perspective on this topic, we can
with the device. look to markets such as San Francisco, where
the relationships between education and
If we look to the personal computer industry, industry sees heavy investment in preparing
wars also ensued between platforms, most their workforces for the future of mobile.
notable of which was the war between
Apple and Microsoft. Until recently, there Starting in the fall semester of 2008,
has been a lot of debate over whether Stanford University began offering a course
developer support, or the decision to focused on developing iPhone applications.
partner with hardware manufacturers made Entitled iPhone Application Programming,
Microsoft the winner. However, it appears the course enables students to develop and
that consumers have come to recognize test applications that have been created for
the relative seamlessness of an operating students. By late September, Stanford was
system that runs on the device for which it already testing 5 of its own applications
was built. As recently as October of 2008, which enable students to register for courses,
Apple announced a 17.5% share of new units pay bills, view the campus map, look up
sold within the personal computer sector. sports schedules and scores, and search
the university’s online directory. Perhaps
The seamlessness by which applications reinforcing the opportunity this provides for
work on a device is now a base expectation businesses, the Stanford course was offered
by consumers. But equally important to at the same time as Apple rolled out the
consumers, is the selection of applications iPhone Development University Program
from which they can choose. Therein lays the which offers a toolset to university teams
battle that is being waged between Google, of up to 200 students, to develop iPhone
Apple, RIM, and others. The battlefield lacks applications. While Apple was apparently
a particular location at this point. Thanks one of the first major platforms to offer this
in part to investment vehicles such as the type of a program to students, offerings from
BlackBerry Partners Fund; an opportunity Google and other OS providers are likely in the
exists for Ontario to engage in continued works, if they have not already been rolled-
and critical growth. Ontario post secondary out. In Ontario, the University of Ontario
educational institutions and government Institute of Technology is currently the only


institute to offer iPhone-focused courses. secondary institutions. As a testament,
VeloCity has already been successful at
The application-centric eco-system that attracting several business sponsors.
is evolving will require more than just
development skills to build market leading
applications, it will require a workforce
which has specialized knowledge in the
areas of interface and experience design,
content production, marketing, business
development, and entertainment law
among others. As such, the chances of one
school or program being the silver bullet
for Ontario’s mobile workforce by offering a
crash course in new mobile applications is Moving beyond post-secondary training,
slim. In order to succeed, Ontario requires graduates should be encouraged to continue
a well-coordinated and orchestrated mobile the development of projects/applications
workforce development strategy which started pre-graduation. Perhaps upon
spans relevant post-secondary institutions, graduating, students should be provided with
and capitalizes on each of their specialized access to government grants or investments if
areas. In instances where students require they’d like to continue with the development
some degree of training which is outside of an application or business concept. By
the scope of their home school, easy access pushing students to large companies via co-
should be provided to supplementary courses op programs prior to or directly following
within other schools. Institutions such as graduation, we will in fact limit the potential
OCAD which specialize in advanced forms of of fresh, eager, and well-trained students
visualization and application interface design by constraining their thinking to the local
have already started to lead the charge in market needs of most Canadian businesses.
this area by providing students with the This would in fact result in a direct reversal
opportunity to engage in partnerships with of our intended outcome. We must think
faculties at Ryerson University, University global. If the government were to provide
of Toronto, University of Waterloo and the an incentive for recent graduates to think
University of Ontario Institute of Technology. and act on ideas that are relevant on a
global stage, our local market will become
By assembling a dream team of facilities, much more fertile for ideas and businesses
focused on training students with core skills, that play on a world stage, allowing them to
but broadening the depth of knowledge amortize innovation at a much higher level.
and access to disciplines taught in other
schools, Ontario may be better equipped to
develop a mobile technology work force that
is armed with a breadth of knowledge that
sets it apart from other sources of talent.

The big opportunity lies in establishing
educational environments that foster idea
germination. An example of this is an
experiment called VeloCity. The University of
Waterloo has invested more than $800,000
to transform a small residence into what
it hopes will become a hot-bed for
innovation in mobile and web technologies.
By attracting upper-year students who
come from a plethora of disciplines and
have aspirations of starting a business or
pursuing an idea and giving them access
to the latest technology, industry mentors,
and potential investors, the University of
Waterloo is fostering an environment that is
becoming a template for other Ontario post-


Conclusions
As the balance of power shifts within the These will stimulate usage, and result in
mobile-ecosystem, a significant opportunity the creation of more effective business
has emerged for communities that possess models which could spur flow-through
the skills, knowledge, and global insights to economic benefit to other local industries.
develop best of breed applications for the new The Canadian consumer is indeed, an
breed of smartphone devices and platforms. important player within the eco-system.
To fully capitalize on this opportunity, local
businesses need to have access to funds and The time to act is now. Though the
a work-force that apply at a world-scale, emergence of organizations such as the
not just a Canadian one. As a market, it is MEIC, and mandates such as those driven by
no longer sufficient for our work-force to be the OMDC are important first steps, we need
versed on Canadian or North American usage to continue to establish the framework for
trends and behavioural insights alone. our local eco-system. The opportunity, as
lucrative as it may be, is not Ontario’s for
Canadian funders need to work together the taking and requires transformation
to broaden the reach of our new-business of the approach as well as organizational
funding initiatives while simplifying the relationships. With certainty, as we set out
process through which entrepreneurs can to establish Ontario as a centre of excellence
achieve early-stage funding. At the same and innovation for the mobile industry,
time, funders need to broaden their scope many other cities, states, provinces and
to include local ventures that may apply in countries are trying to achieve similar states
foreign markets. Post-secondary educators of readiness to capitalize on recent shifts in
need to embrace partnerships with local the mobile landscape. The potential and the
and multi-national mobile players, funders, caability are poised to inform and speed the
and each other to prepare a workforce development of our local mobile eco-system.
that leads the world in its ability to apply
its skills through informed perspectives.

None of these efforts can happen in isolation.
Essentially, Canada needs to further establish
its own eco-system to feed and capitalize on
opportunities that exist within the larger
world mobile eco-system. Trade relationships
need to be further developed with foreign
multi-nationals, and governments to
ensure our access to the global eco-
system. The opportunity to secure these
relationships will occur by demonstrating
to the world a model that sees businesses,
educators and funders collaborate.

This is not to say that the Canadian consumer
should be ignored. As demonstrated through
the recent availability of the iPhone; when
provided with the opportunity to purchase
mobile data plans at reasonable rates, the
Canadian consumer has a definite appetite
for smartphones and third party applications.

By establishing a local eco-system that is
capable of global innovation, Canadian
consumers will benefit by gaining access
to world-class applications and services.


Section One Endnotes
http://wirelessnorth.ca/2008/06/30/tens-of-thousands-sign-rogered-iphone-petition/, Tens of Thousands Sign Rogers
iPhone Petition (June 30, 2008)

http://www.smrb.com/uploads/mobile_whitepaper_04.21.08.pdf, Experian Consumer Research: U.S. Closing Mobile
Usage Gap, Ellen Romer (2008)

http://www.cellular-news.com/story/33535.php, Canada’s Mobile Penetration Rate Rises to 61.6% (2008)

http://traffic.berkeley.edu/, The Mobile Millennium Project: Using cell phones as a mobile traffic sensor, The Mobile
Millennium Project (2008)

http://news.bbc.co.uk/2/hi/2757017.stm, Text service warns of attacks, BBC (February 13, 2003)

http://www.thomaspurves.com/, Where is the ‘app store’ for the greater internet?, Thomas Purves (October 23, 2008)

http://www.ic.gc.ca/epic/site/smt-gst.nsf/vwapj/dgtp-002-07-The-British-Columbia-Public-Interest-Advocacy-
Centre.pdf/$FILE/dgtp-002-07-The-British-Columbia-Public-Interest-Advocacy-Centre.pdf, Re: Canada Gazette Part 1
Vol. 141, No. 7 published February 17, 2007 Notice No. DGTP-002-07 - Consultation on a Framework to Auction Spectrum
in the 2 GHz Range including Advanced Wireless Services, BC Public Interest Advocacy Centre (May 25, 2007)

http://www.itac.ca/uploads/research/06idc.pdf, Special Study: Does ICT Matter to SMBs Canada?, Michael Hyjek and
Jamie Sharp (2006)

http://www.cellular-news.com/story/33535.php, Canada’s Mobile Penetration Rate Rises to 61.6% (2008)

http://www.chetansharma.com/biz_ARPU.indd.pdf, Perspectives: Wireless Data APRU, Chetan Sharma (Jan Feb 2007)

http://blogs.computerworld.com/iphone_browsing_marketshare_closes_in_on_1, iPhone browsing marketshare closes
in on .1%, Seth Weintraub (December 3, 2007)

http://us.ft.com/ftgateway/superpage.ft?news_id=fto021320081404398122, Google homes in on revenues from phones,
Majia Palmer and Paul Taylor (February 13, 2008)

http://apple20.blogs.fortune.cnn.com/2008/08/11/steve-jobs-60-million-iphone-apps-downloaded/, Steve Jobs: 60
million iPhone apps downloaded, Apple 2.0 Mac news from outside the reality distortion field by Philip Elmer-DeWitt
(August 11, 2008)

National Bank Financial, Canadian Telecom Services: The Economics of Wireless Broadband, Canada, January 24, 2008.

http://mobileopportunity.blogspot.com/, App stores and APIs: It’s the ecosystem, stupid, Michael Mace (September 10,
2008)

http://online.wsj.com/article/SB122523624204277979.html, Motorola Speed Dials Cell Overhaul, Sarah Silver (October 29,
2008)

http://havemacwillblog.com/2008/10/28/apple-market-share-the-sound-of-breaking-windows/, Apple Market Share:
The Sound of Breaking Windows, Robin Bloor (October 28, 2008)

http://blog.wired.com/gadgets/2008/09/stanford-offeri.html, Stanford Offers iPhone 101: App Developing Workshop,
Brian X. Chen (September 24, 2008)

http://www.globecampus.ca/in-the-news/globecampusreport/but-will-they-still-eat-kraft-dinner/, But will they still
eat Kraft Dinner?


Mobile Experience Innovation Centre
Industry Survey Results

Conducted by the MEIC, September-November 2008.


Mobile Experience Innovation Centre – Industry Survey Results
Conducted by the MEIC, September-November 2008.

Methodology:

This survey content was collaboratively developed and iterated through ongoing
discussions of the MEIC Steering Committee and Working Groups, and aggregated through
the MEIC Coordinator. It was released publicly in mid-September, 2008, and distributed
via the MEIC industry partners, including personal mailing lists, associations such as
interactive Ontario, MobileMonday and Achilles Media, for a period of 2 months. The
following summary and insight is based on survey respondents from this period, raw data
is available upon request.

Overall Statistics
• Number of Participants 366
• Completion Rate: 31.76%

Innovation and and Insight: Mapping Ontario’s Mobile Industry
Innovation Insight: Mapping Ontario’s Mobile Industry 39

Section One:
Professional and Business Information

Section One:
Professional & Business
Information

Other locations include: Australia, Denmark, India, UK, USA.


Other locations include: Australia, Denmark, India, UK, USA.


Please describe those partners:

• Subsidiaries in the US; Commercial Banking Centres in Europe, Asia.
• Telstra, Vodafone, AT&T, ZTE Corporation, UK-based Wireless Software Suppliers
• Application Providers, Device Manufacturers, Consulting Firms (Telecom Industry)
• Wireless Resellers / Carriers/Operators, also Researchers/Marketers/Technology Cos
• Global Carriers, Manufacturing Partners, etc
• Research in Motion
• Partners in Asia, Europe, Africa and Australia.
• Ecosystem of Complementary Partners, such as IBM, HP, etc.


Our activities also include:

• Understanding how this shift to always-connected devices is changing behaviours,
beliefs and the social structure which guides our sense of self.
• Creating marketing for wireless services and building end-user applications for
wireless devices.
• Commenting on wireless trends in the media; Hosting/Speaking at industry events.
• Producing Customer-facing or Employee-facing productivity solutions.
• Hosting and maintaining wireless provider franchise web sites
• Developing revenue management software; OSS/BSS software; CRM software; etc.


Please describe your experience in funding your wireless projects – what’s worked,
what hasn’t worked?

• In Canada there is a general lack of awareness and opportunity. The market
is controlled by a tiny few operators who have secured bizarre deals with the ISPs
and TelCos, meaning there is limited opportunity for innovation or new services
like we are seeing elsewhere in the world.
• The availability of financing in Canada is poor. We are constantly told to relocate
abroad.
• Paying for mainstream content is difficult as most of the distributors are seeing
up-front fees - this is not a good business model to adopt by a Telco since there’s
a strong chance of losing investment and not recouping. The media industry
puts high value on the content yet has a hard time creating a business model that
is profitable.


Section Two:
The Mobile Ecosystem


Additional Comments:

• Acceptability of this type of technology comes from the consumer level, in respect
to exposure and comfort. Consumers have only started to get exposure to mobile
internet (other than home wi-fi) in the last 12 - 14 months.
• Canada boasts one of the least advanced wireless industries of developing and
developed nations – a slow and conservative approach prevents the wireless
application market from growing and thriving, although this
• Canada is behind when it comes to the global market and people adapting mobile
as a platform for entertainment delivery.
• Carriers don’t provide adequate subscription options for providers; fragmented
and multiple integrations required; content platform providers are inefficient,
slow and have no sense of accountability.
• Strong R&D but weak leadership to ‘globalize’ innovations.

Mapping Ontario's Mobile Industry

Mapping Ontario's Mobile Industry

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