Rogers’ discount Chatr brand a reaction to new entrants: Public Mobile

Rogers Communications may not be the only incumbent telco to launch a contract-free, unlimited talk-and-text wireless brand. Bruce Kirby, vice-president of strategy and business development with Public Mobile, told The Wire Report in an interview that the incumbents are reacting to new wireless entrants on the scene. Kirby said the incumbents are trying to prevent new players like Public Mobile from succeeding. “The incumbents are … inclined to sort of do a knee-jerk reaction to anything that they see as being competitive in the market,” Kirby said. Carmi Levy, an independent technology consultant, said that the landscape is changing “seismically” in Canada’s wireless industry. “I think it’s easy to see that the incumbent carriers are very aggressively adjusting their offerings for this emerging new reality,” he said. Rogers said the new service will launch this summer. Industry watchers agree that a new talk-and-text-only brand is meant to compete directly with new wireless entrants Wind Mobile, Public Mobile and Mobilicity. Each of the new carriers have also rejected long-term contracts and offer various unlimited text and calling plans. “Now our presence in market is affecting the business plans of the big three,” Ken Campbell, CEO of Wind Mobile said in an email to The Wire Report. “If others follow our lead, that's ultimately better for the consumer,” he wrote. "We've been watching this niche but growing category closely and it's clear that some Canadians want to use their handsets for voice and text only, but want a network they can trust," John Boynton, executive vice-president and chief marketing officer for Rogers, said in a release last week. Greg MacDonald, a telecom analyst with National Bank Financial, said in an interview that Rogers is expected to launch the brand in the same large urban markets that the new carriers have entered. “I think the product will be used in a targeted manner in markets that Rogers feels it is most vulnerable in,” MacDonald said. “So you can think urban markets in particular, where wireline substitution is probably the highest.” The new brand will be Rogers’ third in the wireless sector, in addition to Rogers Wireless and Fido. Fido was traditionally Rogers’ more consumer-focused brand, but MacDonald said its focus will increasingly shift to smart phones and Chatr will target consumers who are not interested in data plans. But Kirby said Fido was never really a discount brand, and that it would have been a bad strategic move for Rogers to offer Fido customers further discounted prices. “That just takes their revenue down,” he said. “Chatr, the way I see it, is entirely focused on voice and text. So it’s essentially a communications product,” MacDonald said. “The reason you can now see that segmentation is because data services are becoming so prolific in the industry that you can see a separate segment for the communications alone.” Levy said Chatr is a niche service that will fill consumer demands. “If you look at a lot of the criticism that Rogers and its competitors have come under in recent months, it’s that they are not offering enough choice to consumers,” he said. “Essentially, what they’re doing is they’re stratifying their different brands and establishing a new, all-you-can-drink plan for folks who are more interested in talk-and-text than they are in data.” Canada’s other wireless incumbents, Telus Corp. and Bell Canada, have “flanking brands” similar to Fido. Telus offers Koodo and Bell offers Virgin Mobile and Solo Mobile. Levy said he expects both companies to follow Rogers’ lead with bare-bones talk and text brands—but MacDonald disagreed. “Chatr will be a product that will be immediately appealing to landline replacement and the other incumbents have considerable landline businesses,” MacDonald said. “Essentially you could argue that they would be cannibalizing themselves .” Rogers offers voice-over IP telephony, but Bell and Telus offer traditional landline telephone services. Kirby said the incumbents should focus on their segments of the market and leave basic wireless services to new entrants like Public Mobile. “They do a decent job at serving the high end of the market. It doesn’t benefit the three of them to get into a price war amongst themselves,” he said. The new Chatr brand also raises the question of why Rogers didn’t change Fido’s offerings to reflect more competition in the marketplace. Levy offered his theory. “It’s easier to get a bigger marketing bump when you launch an entirely new brand than when you reposition an existing one,” he said. “Fido has already had its fair share of repositioning over the last couple of years, so perhaps Rogers didn’t want to go to that well yet again.” Boynton wasn’t available for a phone interview Wednesday. jmigneault@thewirereport.ca

Rogers’ discount Chatr brand a reaction to new entrants: Public Mobile

News | July 5, 2010

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