Consumers expected to jump at Public Mobile’s $40 flat rate plan: SeaBoard Group

A new report from telecom consultancy the SeaBoard Group says that Public Mobile’s $40 per month unlimited voice and text plan is going to fair well against the Big Three’s flanker brands. However, Public Mobile won’t be the only one offering a low priced alternative for cost-conscious customers. Public owns 10 MHz of G-band spectrum covering approximately 19 million Canadians living in the Quebec City to Windsor ON corridor. Canadian Wireless Stakes: The Shape Of A Market To Come details a number of reasons why Public Mobile is set up to succeed in the competitive wireless market. The SeaBoard Group says that among other things, the company doesn’t have to worry about the impact of its pricing on legacy customers, whereas the incumbent wireless operators do. The economics of Public Mobile’s $40 per month plan are governed by adoption rates, marketing costs and network management issues. “A pure-play provider positions its single service-set based upon its limited product portfolio and looks to exploit opportunities without regard to the sort of cross-service impact that characterize more integrated competitors,” reads the report. “Wireless pure-player provider pricing decisions are not influenced by product cannibalism risks.” The incumbent wireless carriers on the other hand have to take into consideration pricing changes on existing customers, particularly when the mobile plan offers unlimited minutes. “Unlimited wireless plans on offer (that undercut the existing wireline price-points) will increase the speed of landline-wireless substitution. All pain, no gain,” says the report. “Replicating the new-entrant offer will merely exacerbate the rate of landline erosion while decreasing the revenue stream derived from the old copper infrastructure.” This isn’t to say that it’s going to be easy for Public Mobile, according to SeaBoard. Its report points to the different business metrics that the new entrant has to work under, including lower average revenue per user and lifetime customer revenue. But these are offset by lower customer acquisition costs and a profit margin similar to the wireless industry average. The report goes on to say that just as Public Mobile is going to have success in the market, so will Globalive Communications’ wireless service. The Yak Communications owner plans to launch two levels of plans – a low-cost pre-paid service costing as little at $15 to $20 per month and an all-you-can-eat voice and data plan for about $40 per month. Despite what appears to be a solid business case for Public Mobile, Globalive and others entering the market with similar price plans, the incumbent providers aren’t about to cede market share to the new entrants uncontested. In a recent conference call with analysts, Bell Canada’s president and CEO George Cope said Solo – Bell Mobility’s discount brand – is going to match competitor price points. He added that it’s going to be difficult for the new players in this segment. “There are seven brands in Canada now. One silver lining, is good luck to the eighth in terms of trying to enter the marketplace on what’s happening. So I think the capital markets and the development of the discount segment in Canada by the carriers themselves may have an interesting implication to what happens going forward,” he said.

Consumers expected to jump at Public Mobile’s $40 flat rate plan: SeaBoard Group

News | March 25, 2009

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