Host of new wireless entrants expected to shake up pricing, data plans

Canada’s cell phone industry is bracing for a major shakeup as a number of new carriers are expected to compete with new pricing and “all you can eat” data plans, experts say. As Videotron, Shaw, Wind Mobile, Dave Wireless—and potentially Public Mobile—become active in the Canadian wireless market, experts say incumbent carriers Rogers Communications Inc., Telus Corp. and Bell Canada are going to face new challenges. “The Videotrons and the Shaws are very well positioned to beat up the incumbents,” Brownlee Thomas, a Montreal-based telecommunications analyst with Forrester Research, told The Wire Report. Videotron, a division of Quebecor Inc., announced the creation of 600 new jobs last week, many of which are related to the company’s wireless venture planned for launch this summer. “The new players will be all about alternative plans,” Thomas said. “They’ll do some creative things on the pricing. They’ll change their pricing.” Calgary-based Shaw Communications Inc. bought wireless spectrum licenses in Western Canada and Northern Ontario and plans to take initial steps to roll out its new regional wireless service this year. Videotron has purchased spectrum across Quebec and Eastern Ontario. Videotron and Shaw are expected to take advantage of established customers who subscribe to their cable and broadband Internet services and bundling wireless plans with those services. Videotron has also purchased spectrum covering Toronto but for the moment says it does not have plans to use it. Wireless companies WIND Mobile and Dave Wireless have started to enter the Canadian market. WIND has opened shop in Toronto and Calgary, and says it will offer wireless service in Ottawa, Edmonton and Vancouver later this year. Dave Wireless bought spectrum licenses in large Canadian markets like Toronto and Vancouver, and also plans to roll out its service this year. Public Mobile, another new entrant, continues to lobby the government to operate in Canada under the country’s foreign ownership rules. “I think with our arrival the landscape has changed,” Wind Mobile CEO Ken Campbell told The Wire Report in an interview. “You’ve got a lot of disenfranchised customers. A lot of customers who are pissed off with the incumbents and are willing to switch.” Both WIND and Dave Wireless say they have abandoned the idea of long-term contracts and gone with a European model where customers buy the handset at retail and follow a plan from there. The presence of new carriers could mark the end of the incumbents’ practice of three-year contracts as competitors roll out more flexible, short-term contracts. “It remains to be seen whether a substantial number of Canadians are willing to pay the full price for a handset,” Mark Goldberg, a telecommunications industry consultant with Goldberg & Associates Inc. in Thornhill, Ont., said in an interview. “But there’s always a benefit to consumers from having increased choice.” Wind’s website says it is selling a Blackberry Bold 9700 for $450, with contract-free voice plans ranging from $15 to $45 per month and an unlimited data plan at $55 per month. The Wire Report contacted Bell and Rogers for comment but neither was available Monday afternoon. Thomas said that—due to their established company structures and customer bases—she expects Videotron and Shaw to pose more of a threat to the incumbents than other new entrants. The threat of competition can be almost as effective as competition itself, she said. In response to competition on the horizon, incumbents have already started getting rid of system access fees to access their networks. Duncan Stewart, director of research with Deloitte Canada in Toronto, said he does not expect new players like Wind and Dave Wireless to be legitimate threats to the incumbents until they expand their networks to cover more cities. Still, he said the new players in the wireless market could drive the incumbents to adopt “all-you-can-eat” data plans, which have become common in the United States. Such plans, however, are not be sustainable beyond a year or two because they would slow down or even cripple networks, he said. “We’ve got to move away from all-you-can-eat,” Stewart said.

Host of new wireless entrants expected to shake up pricing, data plans

News | January 25, 2010

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Host of new wireless entrants expected to shake up pricing, data plans

News | January 25, 2010

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