Bell, Telus expected to launch competitive discount plans: UBS

Bell Canada and Telus Corp. are expected to launch mobile plans to match Rogers Communications’ Inc.’s upcoming Chatr wireless brand, says a new research note by UBS Investment Research. Bell operates secondary wireless brands Virgin Mobile and Solo Mobile, and Telus offers Koodo Mobile. Rogers offers Fido and has plans to launch a discount brand, Chatr, this summer. Bell and Rogers could offer new discount plans through their secondary brands, but so far the companies are mum on any potential business plans to compete with Chatr. “Bell is going to likely launch with Solo because they already have that brand, and I think the subscriber base on that brand is relatively small,” Phillip Huang, and analyst with UBS and one of the note’s authors, told The Wire Report. “For Telus, I think it’s going to be a little bit more of a wait-and-see approach,” Huang said. Huang said Telus has the flexibility to use Koodo to match offers through Chatr. But if Chatr launches aggressively and gets more traction in the market, Telus could launch a third brand. Otherwise, Telus would only have two brands while Rogers and Bell would each operate three. Rogers new wireless brand Chatr is expected to do away with contracts and offer more affordable, bare-boned talk-and-text plans. New, talk-and-text-only brands would compete directly with wireless entrants Wind Mobile, Public Mobile and Mobilicity. All of the new entrants offer various unlimited text and calling plans that Rogers is expected to adopt through Chatr. Spokespeople for Telus and Bell told The Wire Report Monday that they are not commenting on potential new services. “Bell doesn’t comment on products or services we haven’t officially announced yet,” Marie-Eve Francoeur, a spokeswoman for Bell, told The Wire Report in an email. “I can confirm Bell will always be competitive in the marketplace.” Some industry observers say Bell and Telus could hurt their bottom line if they follow Rogers’ lead. Unlimited talk-and-text plans favour wireless substitution of landlines, and the telcos could cannibalize their landline phone businesses. “They don’t want to substitute the fixed with the mobile because they are telcos, whereas Rogers is not,” Brownlee Thomas, a principal analyst at Forrester Research Inc. in Montreal, said in an interview. Earlier this month Greg MacDonald, a telecom analyst with National Bank Financial, echoed Thomas’ point of view. “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 .” But Huang said wireless substitution is happening regardless and that it is better for Bell and Telus to cannibalize their own business than to lose it to competitors. “It’s kind of the lesser of two evils,” Huang said. “I think wireless substitution is an inevitable trend. It’s just a matter of what’s the best scenario you can make of it from this point forward.” Some of the new wireless entrants have already responded to Rogers’ Chatr brand. Wind Mobile is offering a $150 credit to Rogers customers who make the switch to its service. Mobilicity has said it will challenge Rogers under the Competition Act’s “fighting brands” sub-section. That sub-section of the act defines fighting brands as those that are “introduced selectively on a temporary basis to discipline or eliminate a competitor.” jmigneault@thewirereport.ca

Bell, Telus expected to launch competitive discount plans: UBS

News | July 19, 2010

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