New entrants not likely to carry iPhone before 2014, analyst says

Canada’s new entrant carriers are not likely to carry Apple Inc.’s popular iPhone smartphone before 2014 after their network configurations were shut out of Apple’s newly released iPhone 5, said Johanne Lemay, co-president of media and telecom consultancy Lemay-Yates Associates. In technical specifications posted on Apple’s website, the Cupertino, Calif. company says its new iPhone 5 will not be compatible with HSPA and CDMA networks Canada’s new entrant carriers run over the AWS and G Band spectrum they purchased during Industry Canada's 2008 wireless auction. Apple's website says the phone's fourth-generation LTE technology works with those bands as well as HSPA on other bands not used by the new entrants. None of the new entrant carriers now offer LTE services. In a Sept. 13 research note, Lemay said the new entrants would need to roll out LTE networks using their AWS or G Band spectrum to carry the iPhone 5, and that those LTE networks would have to “co-exist” with the carriers’ existing HSPA or CDMA networks to support their current HSPA wireless users. In a telephone interview, Lemay said she doubted that any of Canada’s new entrant carriers would take that route. She said some of those carriers, such as Mobilicity, Public Mobile, and Globalive Wireless Management Corp., do not have enough spectrum to roll out co-existing networks. Another new entrant, Quebecor Media Inc. subsidiary Videotron Ltd., has enough spectrum to roll out concurrent networks in Quebec but is not likely to do so due to costs and complications such as striking a deal with Apple to sell the phone, she said. “Typically, you don’t put two technologies on the same band,” Lemay said. “Public Mobile really doesn’t have a lot of spectrum. Videotron has more spectrum, but it’s a question of rolling out LTE, doing a deal with Apple—it’s very complicated.” Lemay said “the most likely scenario” is that the new entrant carriers continue without the iPhone until they get more spectrum in the upcoming 700 MHz spectrum auction, which Industry Canada says will take place in the first half of 2013. The carriers must then roll out LTE networks compatible with the iPhone and negotiate carriage agreements with Apple, she said. “The first half of 2014 is probably the earliest you could think that it would be there,” she said. “It’s unfortunate , but that’s the case.” Apple said this week it sold two million iPhone 5s during the first 24 hours of a worldwide online presale. Jean-François Pruneau, chief financial officer at Quebecor Media Inc., said at a CIBC investors’ conference in Montreal Wednesday that the company would have more subscribers if it could offer the iPhone. “We’re probably 15 to 20 per cent behind because we don’t have the iPhone," he said. Pruneau said Quebecor is comfortable with the lineup of Android devices it now offers. The iPhone is "an expensive handset. You have to subsidize it and the lifespan is getting shorter and shorter,” Pruneau added. “Even credit agencies said that, from a credit perspective for a carrier offering the iPhone, it’s credit negative.” New entrant and incumbent Canadian mobile carriers have said they need 700 MHz spectrum to help them roll out LTE networks that could mirror the networks deployed by large U.S. carriers, such as Verizon Communications Inc. and AT&T Inc. They argue that the “beachfront” spectrum will carry cell signals across further distances and will penetrate buildings and other obstructions more easily and with fewer towers needed. The iPhone 5 also works on LTE technology used on the 700 MHz band, its technical specifications say. Independent technology analyst Carmi Levy said in a phone interview that Canada’s new entrant carriers could sell the iPhone 5 if Apple modifies the phone’s internal chipsets—used to detect signals on different technologies and spectrum bands—to include HSPA technology on the AWS band. “It’s not outside the realm of possibility that they would support it in a future version, but right now the smaller players are locked out,” he said. In a follow-up email, Levy said Apple is “highly secretive” about its future product plans and estimated the company would not release an updated version of the iPhone 5 until “at least 6 months into the current product cycle.” He added: “Unfortunately for carriers invested in the technology—here in Canada, the newer entrants—they're simply not at the top of Apple's priority list.” Tony Lacavera, CEO of Globalive, operating under the Wind Mobile brand, said the inclusion of an AWS chipset for LTE in the new iPhone would be a “definite positive” for his company and other new entrants. He said his company may have enough spectrum to roll out an LTE network on AWS in the Toronto area, where Wind has 20 MHz of spectrum, but that the company cannot do this while maintaining its current HSPA+ network. He said his company has a long-term plan to convert its HSPA+ network to LTE and will need more spectrum to do so. “The negative for us is that we don’t have sufficient spectrum to effectively roll out LTE speeds with our existing spectrum holdings,” he said. “We have no clear path to rectify the situation, including in the upcoming auction.” Wind told The Wire Report in the spring that Industry Canada’s proposed rules for the 700 MHz auction could prevent it from getting the 20 MHz per market it wants to support an LTE network. Iain Grant, managing director with the Seaboard Group, said it's unlikely Apple will update its iPhone specifications “to build something specifically for Wind or Mobilicity.” He said manufacturers typically build their phones to operate on the networks of large, big market carriers, and that companies in smaller markets like Canada must build networks aligning with those device ecosystems. “Once again, they will hope that next year it will be there with the iPhone 5S,” he said of the new entrants. Grant said it is unlikely any of the newer entrants could use newly acquired 700 MHz spectrum to build out networks they need to carry an iPhone by this time next year. “I think all of our new entrants need to have additional spectrum … but whether or not that’s going to be available by next September, and in place, is still moot,” he said. The good news for new entrants, the analysts said, is that not carrying the iPhone is less of a disadvantage than it was a couple of years ago due to the rising popularity of Google Inc.’s Android-powered smartphones that compete for market share with the iPhone. “Even though the iPhone is still as big of a juggernaut as it’s ever been, and continues to grow, the alternatives to the iPhone are powerful in their own right and they are really powerful draws to consumers,” Levy said, adding that Android-based phones now account for more than half of all smartphone sales. An Ipsos-Reid poll released this week said Android devices accounted for 36 per cent of the Canadian smartphone market as of August 2012, while iPhones had 29 per cent market share and Research In Motion Ltd.’s BlackBerrys 27 per cent. —With files from Danika J. Grenier nkyonka@thewirereport.ca

New entrants not likely to carry iPhone before 2014, analyst says

News | September 19, 2012

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New entrants not likely to carry iPhone before 2014, analyst says

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