Is Telus going to adopt GSM and introduce a new youth brand?

Faced with a maturing mobile market and slowing net subscriber additions, Telus Corp. appears set to make a major change in strategy. Rumours are circulating that the western-based incumbent cell phone operator will introduce a new brand, called "Koodo Mobile", in an effort to attract more of the youth market - those interested in ringtones and downloads. Analysts also suggest Telus is considering a move to the GSM network. "I do wonder if Telus won't be coming up with a different brand," says Michelle Warren, senior analyst at Info-Tech Research Group in London ON. "'Telus has been using The Future is Friendly for a couple of years, but there's an argument that the future is now. They are an innovative company and could look more progressive." Independent telecom analyst Jon Arnold agrees. "Telus is the smallest of the three, and with the weakest national brand. They are still a year or two out from their flagship office building in Toronto," he tells Report on Wireless. Arnold adds that Bell, with its ‘everyman' beaver theme, and Rogers youth-oriented advertising, suggest that these two companies know their market. The Telus branding, by contrast, is not disagreeable but does not address a demographic. Customer retention, a stated key focus for CEO Darren Entwistle, while important, is only a partial solution. "It doesn't tell me that it is leading edge, with the Facebook crowd," says Arnold. "Telus needs to find, and then address, the sweet spot with their subscribers." The launch of Telus's youth-oriented cellphone brand, "Koodo Mobile", may be step in the right direction, but will likely function as a sub-brand rather than a complete overhaul. While Telus may launch a new brand to more effectively attract a greater portion of the youth market, the company could be giving serious consideration to a network upgrade. Speculation has surfaced several times in the past that the company would either abandon its CDMA network in favour of GSM or overlay a GSM network across parts of the country. The reason is obvious: the Olympics are coming to Vancouver in 2010 and with the majority of the world's subscribers using a GSM-based service Telus would be able to compete with Rogers Communications Inc. for some of the roaming revenue from international visitors. "Rogers is in the best position of them all - GSM is carrying the day," says Arnold. "CDMA has some advantages for voice, but not necessarily for video or data, and GSM is a global platform and a global trend." Warren notes that Telus generally gets credit for good customer service. They are an aggressive player, too, but that might not be enough. "They need to reflect on 2007 and distinguish themselves in 2008," says Warren. "If they can pull out GSM for the 2010 Olympics, and deliver better service on Internet TV, that would make a difference." That, however, would be something of a long shot. Telus, which is battling Bell and Rogers in central and eastern Canada, would be hard pressed to build out its own GSM network, and has already invested millions in CDMA. The thing to do would be to buy time on Rogers' network and provide access on dual mode handsets, something that Rogers may resist. "This could be stuck in the rumour mill because it is bogged down with the legal teams," says Warren. "What could happen is a regulatory ruling that would force Rogers to give access to their GSM network." Certainly this would have appeal, given that an independent roll-out of an alternate GSM network would be prohibitively costly. It would also have huge implications for the Canadian market, as a second GSM player would put the pressure on Bell, drive down data pricing, and add a new ripple in the iPhone debate. "At present because Telus, like Bell, is CDMA, it doesn't have the iPhone card to play," says Arnold. "I expect Rogers will time an iPhone announcement with the spectrum auction." The auction , which opens on May 27, has attracted applications from 30 bidders including the three incumbents and Quebecor Inc. , MTS Allstream Inc. (part of a combined bid with the Canada Pension Plan Investment Board and the Blackstone Group LP), Globalive Communications Corp. (parent company of Yak Communications Canada Corp.), Shaw Communications Inc. and other smaller bidders.

Is Telus going to adopt GSM and introduce a new youth brand?

News | 03/17/2008 1:59 pm EDT

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