As either a long-distance provider or an MVNO, Yak is coming to wireless

On September 21, Toronto-based Globalive Communications Corp. announced it had entered a definitive agreement to acquire all of the outstanding shares of Yak Communications Inc. with the intention of selling Yak’s American operations and concentrating on growing the company in Canada (NL, Sept. 28/06). While Yak’s 10-10 long-distance business – which makes up about 75% of Canada’s dial-around market – will likely remain the staple of the Yak brand under Globalive’s leadership, Canadians should start looking for the Yak name in the wireless sector in about six to nine months, according to Globalive chairman and CEO Tony Lacavera. "Wireless is obviously high on our radar screen with the current environment of wireless in Canada," Lacavera says. "At minimum, we see offering our Yak long-distance services to wireless users and…we are hopeful that we can enter into a mobile virtual network operator (MVNO) relationship with either Bell or Rogers." Last September, following the launch of President’s Choice Mobile, Brian Sharwood, principal with the Seaboard Group, told Report on Wireless that relatively low wireless penetration in Canada made the market ripe for MVNOs and branded wireless offerings (RoW, Sept. 8/2005). A year later he says the market is lively with entries from Vidéotron ltée and Amp’d Mobile, and a new ad campaign from Virgin Mobile. "I think there’s still a lot of opportunity for growth," Sharwood adds. Contrast that with the US where a major MVNO player, Walt Disney Company-owned Mobile ESPN, says it is ending its service, raising questions about the potential viability of MVNOs there. "There’s scepticism in the financial community right now about MVNOs because of ESPN," Sharwood says. "But I just think was very targeted and niche and it was hard to get customers to pay for that kind of thing up on the level they were looking for." He adds that ESPN offered a good service with good sports content, but its targets of $70 in ARPU were its downfall, not necessarily the branded wireless market. Mobile Virtual Network Operators: Blessing or Curse?, a new book from Nera Economic Consulting echoes that statement; its authors say the cessation of ESPN’s mobile service is the exception in the MVNO market. The book adds that US MVNO subscribers as a percentage of all cell phone subscribers should almost double from 6.6% in 2005 to 12.5% in 2010. But will Canada follow a similar trend? While offering long distance service to wireless users and launching a Yak-branded phone are two entirely different ventures, Sharwood says the greatest potential for Yak perhaps lies in offering cheap long distance because the wireless carriers make such good margins on their long distance right now. "The long distance on my Fido phone is at like 50 cents a minute, which in my opinion at that price there should be somebody buying you a coffee," he adds. But Yak could be hard-pressed to negotiate rates close to what it could offer specifically as a long-distance provider through a Canadian MVNO agreement. Sharwood continues: "Rogers isn’t going to make the MVNO deal with Yak in order to open up their access and move their long-distance minutes off, especially because they just increased their long distance prices about 100%," says Sharwood. Exactly what Yak’s wireless offering will look like remains to be seen, but Globalive’s Lacavera assures he has no visions of being the fourth national carrier. "Globalive is not an infrastructure player, so we will never start throwing up towers," he says. "I am ambitious, but I’m not crazy. We’re going to see if we can put something on the ground in the wireless market. I’m excited about it."

As either a long-distance provider or an MVNO, Yak is coming to wireless

News | 10/06/2006 4:00 am EDT

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