Canada Market 2010

According to a recent study by Phone Play Plus, the premium rate services market in the United Kingdom has dropped to 810 million pounds in 2009, down from $1.08 billion just two years earlier (Analysys Mason).

Amidst all of this gloom, could there possibly be a bright spot?

Consider Canada.

In 2006, Telus (then BC Telus), the second largest 900 number carrier in Canada, exited the premium rate services business, thus leaving staid Bell Canada as the lone premium rate services provider in the nation. Soon after, new regulations from the Canadian Radio-television and Telecommunications Commission (CRTC) moved to accelerate deregulation of the local telephone services market. Inter-Exchange Carriers (IXC) were no longer regulated and subject to tariffs. The unanticipated benefit to deregulation efforts was an improvement in the premium rate services market.
It seems like whenever a government deregulates an industry, competition flourishes and improvements occur in the marketplace. Canadian 900 numbers were no exception. Entrepreneurial companies were now able to enter the premium rate services 900 number market and compete directly with Bell Canada. Independent companies that understood the industry better at the retail level entered from both the service bureau and the carrier end of the business. Such smaller companies were able to move more swiftly with market conditions and provide both a cheaper and a more reliable 900 number product.

Start up costs at the carrier level for new 900 numbers were eliminated and carrier holdbacks were no longer required, except in the case of a problem account. Limits on charges per call were no longer a factor.

Content restrictions were also eliminated. Concerns over chat and psychic programs, once mainstays of the industry, were no longer considered problem applications.

Chargebacks, which were always the scourge of the North American market, were suddenly under control. When a consumer called requesting a chargeback, he was no longer met by provincial carrier customer service agents who were happy to provide a quick and immediate refund rather than get hollered at by the caller. After all, the carrier was collecting its fees whether the consumer ultimately paid or not; it simply passed along those costs to the service bureau.

Today, things are much different. When a consumer requests a chargeback, the customer service function is being provided by an entrepreneurial company that has a direct interest in seeing that the consumer bills are paid. Paul Hehn, CFO of Advanced Telecom Services, reports that chargebacks at his company have been significantly reduced. "Before deregulation, our overall chargeback rate at the service bureau level had climbed to 13%," said Hehn. "Today, with the ability to interface directly with the consumer, we have reduced overall chargebacks to approximately 4%, and that's with a program mix that includes slightly riskier services than in the past." All of this means more money going back into the pockets of the information provider and media partner.

Most important, however, was the influx of new business from successful European companies in the Call TV business. North America had never seen Call TV programs to any great degree, as previous efforts had usually failed. Not this time. The Call TV market is especially strong in Canada and with a struggling advertising industry, many TV stations have embraced the idea of making money off of its late night inventory that used to be a money loser for them.

It was television programming that also initially embraced the pound code (voice short codes) and opened up an entirely new billing mechanism for Canadian phone calls. Prior to Call TV shows, the pound code was nothing more than a cool idea that very few Canadians even knew about. Today, the public has embraced the pound code technology through its prominent exposure on television.

"Canada has been a pleasant surprise for us the last few years," said Bob Bentz, president of Advanced Telecom Services which has been active in the Canadian market since 1993. "The 900 number business is much stronger and the pound code has opened up the cell phone market since consumers in Canada are not able to dial 900 numbers from a cell phone."

Anytime a government gets out of the regulation business, industry flourishes. The premium rate services market in Canada is proving that.


Anthony Wayne works in the marketing department at Advanced Telecom Services.

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