Shaw’s $100-million wireless network investment only the ‘tip of the iceberg’

Shaw Communications Inc.'s $100 million deal with Nokia Siemens Networks is only the “tip of the iceberg” in the cableco's network build out, which is expected move quickly to compete against wireless players in Western Canada, Greg MacDonald, a telecommunications service and media analyst with National Bank Financial, said in an interview. “Certainly a big part of the network build is the network equipment, but there's also the labour involved in setting up the network, getting access to rooftops, and building towers where they need to build a wired connection between the site and the other network,” MacDonald told The Wire Report. He added that Shaw has not yet accounted for customer service, call-center capacity and other human-resource costs, and that he expects to see much more than $100 million invested. Amit Kaminer, a telecommunications analyst at the SeaBoard Group, added in an interview that Shaw's $100 million investment in a service covering a large swath of Western Canada is, so far, only one-fifth of a recently announced Videotron Ltd. investment of $500 million in a wireless network in Quebec, which represents a smaller area. Shaw announced an agreement on June 28 that will see Nokia Siemens provide key equipment for the company’s network build in Western Canada. Nokia will provide the radio network and core equipment for the operations. Shaw noted in a release that its new wireless network will be 3G and next-generation Long-Term Evolution (LTE) capable, "giving Shaw a variety of options to deliver broadband wireless services to customers." Shaw spent about $190 million in wireless spectrum during Industry Canada’s 2008 spectrum auction. Its wireless launch is scheduled for late 2011, the company says. In the West, Shaw will have to go head-to-head with Telus Corp., Rogers Communications Inc., and new entrants Wind Mobile and Mobilicity. The competition is expected to encourage Shaw to keep prices down as it bundles wireless with other services. MacDonald said that, later in the decade, he expects Shaw, like other wireless companies, to move call volume from overcrowded wireless networks to wireline and other home connections like those offered by Rogers and its subsidiary Fido. Nizar Assanie, vice-president of research at IE Market Research Corp, said in an interview that Shaw will have to prove that it has enough value and service for customers to choose it over other providers, and that the company will be looking to draw customers through bundling. “Their target market would be the Telus customers, and Telus has been around for a number of years. Their mobile division is not a startup. Shaw is late to come to the market, and it certainly will be more difficult and crowded, but their customers as only fashionably late," he said. Analysts say they expect Shaw to first roll out its service in urban areas to take on the competitors. Shaw will try to distinguish itself from others by focusing on quality, Assanie said. That would mean the company will wait until its network is secure—with few dropped calls—before launching its service. Assanie said he also expects Shaw to offer discount pricing through bundling, as Telus and Rogers do. “If you look at the relative strength of all of the players engaged in the telecommunications field, it's the incumbent telcos that are moving into each other's place,” said Assanie, himself a Shaw customer. “How would Shaw would distinguish between themselves and Wind Mobile for a customer using some Shaw services? They'll call up and say, 'We noticed you don't have cellular service with us. We will offer you that service and we'll reduce all costs by 10, 20 per cent. That's more economical than you having a separate bill from Wind.' And the customer will do that.” Shaw’s launch will come when most carriers are expected to switch to LTE, Kaminer noted. If Shaw initially launches with a lower-cost 3G network, he added, the network will be capable of a quick switch to LTE. Shaw, Nokia Siemens and competitors Rogers and Telus did not respond to requests for comment for this story. news@thewirereport.ca

Shaw’s $100-million wireless network investment only the ‘tip of the iceberg’

News | July 14, 2010

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