Why RIM’s woes are partly a reflection of Canada’s backward telecom sector

BlackBerries were created for a low-bandwidth mobile world

“This company is not ignoring the world out there, nor is it in a death spiral.”

-Thorsten Heins

Yesterday, RIM’s CEO chose magical thinking as his corporate strategy, stubbornly insisting that “there’s nothing wrong with the company,” despite a 95 per cent drop in the company’s stock, thousands of layoffs, and last week’s announcement of both a $512 million quarterly loss and a crippling delay of the Blackberry 10. Thorsten Heins knows that as bad as all this news was, the perception it created of Blackberry’s inevitable demise is far worse. Who’ll buy a phone that we all know will soon cease to exist? So the company line is that nothing is wrong. But RIM might go belly up whether or not its CEO keeps his chin up.

Clearly, the time has come to point fingers. I blame Canada.

Not entirely, of course–Blackberry has certainly made its share of mistakes, particularly in ignoring the explosion in smartphone usage among everyday consumers. But the larger national context RIM exists in was as much part of its initial success as it is now a factor in its coming demise. Simply put, Canada’s telecom constraints are incompatible with a robust, innovative tech sector.

As far as I know, Michael Geist was the first to point out that RIM was a direct product of the limitations of Canada’s telecom sector: BlackBerries were originally created for a low-bandwidth mobile world, pushing teeny files like text and BBMs quickly. In a world of usurious “overage” charges, “data efficiency” was a key selling point, and RIM also relied on the perception that wireless spectrum was a scarce and finite resource. But fictions like “data roaming fees” have been abandoned in more rational countries. Mobile networks have greatly improved, and will soon rival the high speed connections we have in our homes.  Spectrum isn’t as limited as we used to think, and new technologies are emerging that allow us to use previously vacant “white space” spectrum while extracting far more capacity from the spectrum already in use.   Think of the Blackberry as a homely and humble yet fuel efficient car in a world where gasoline is quickly becoming free and limitless.

The developing markets that Blackberry covets have built mobile networks (using foreign capital) that make ours look pathetically sluggish. Small files matter less these days than phones with cool, data-hogging apps. But RIM missed the boat on apps, and it’s easy to understand why. In Waterloo, as in the rest of Canada, you couldn’t even buy an iPhone until a year and a half after any American could.

It’s remains more expensive to use a smartphone in Canada than in just about any OECD country. And the list of services unavailable to us grows longer and longer all the time. All of this has an impact on innovation. Think that a country that can’t even use much of technology will somehow be on the cutting edge of creating technology? Well, that’s also magical thinking.

Follow Jesse Brown on Twitter @jessebrown

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