Carrier Competition in Canda

Originally posted April 5, 2010
There have been endless rumours about new carriers coming into the market in Canada - rumours that have at times made sales difficult as a result of new and existing customer hesitation to sign any contracts.

As a result of recent spectrum auctions, there is a new "Three" set to enter the Canadian wireless market - WIND Mobile, Mobilicity and Public Mobile. The first two carriers are set to provide coverage in major areas across Canada, but Public Mobile is set to focus just on Quebec and Ontario for the time being.

Mobilicity (also known as DAVE Wireless):

• Set to launch in the spring of 2010
• Simplistic pricing is a dominant focus, with an intention to provide all-encompassing plans (the company has yet to provide specifics at this time)
• Will offer no contracts, no credit checks, and unlimited calling and data
• Will offer a selection of Smartphones from RIM and Nokia as well as USB Internet sticks
• Service will roll out in major cities, beginning with Toronto, and moving into Vancouver, Edmonton, Calgary and Ottawa later in the year
• Mobilicity feels that its simple services will be what really set the brand apart from the other emerging brands

Public Mobile:

• Will not be offering data services at launch (spring 2010)
• Service plan pricing will be extremely simple - pay $40 and get unlimited talk and text within the company's coverage area
• Services will be set up and running in Toronto and Montreal with plans to extend to core cities and urban areas over the months following
• Phones can be purchased outright, with entry level devices costing less than $100 and "high end" models still remaining under $200
• Phones will include four or five at launch - there will be no BlackBerry devices or other Smartphones
• Over time, the intention is to add more features, functions and handsets as consumers demand them
• Public Mobile functions on the G-block of spectrum, which is a CDMA band - this means that only handsets that support the band will function  on the Public Mobile network

WIND Mobile:

• Service up and running in Toronto and Calgary since December 2009. Services in Ottawa and Edmonton are in progress and Vancouver will follow in Q2
• There are 40 stores in Toronto and Calgary, including 16 store-within-store concepts in Blockbuster locations
• Social and laid back feel defines the brand and is translated through the customer experience
• Target customers are the youthful, socially connected folks aging from 18 to 30 years old
• Second target market is the ethnic markets that have just come to Canada
• Premise behind WIND is the customer's ability to buy a phone outright, without a contract, and then select which plan options they require - for example, a BlackBerry Bold 9700 is $450 through WIND, compared to only $150 with Rogers (and a three year contract). There is question as to whether the higher price is worth the lack of contract, especially if the phone only works on the WIND network and nowhere else.
• WIND has roaming agreements that allow its devices to work outside coverage areas - postpaid customers are able to roam in the US; still working out issues to allow pre-paid customers to do the same
• Long-term goal is to become a national carrier
• WIND plans to expand its handset lineup, and is looking at third-party retailers

The common elements between each of these new providers, is the desire to reduce the need for contracts, provide simplified pricing options and to target the 30% of Canadians who still don't have a mobile phone.

What does this mean for the existing carriers? Incumbent providers - Rogers, Bell and TELUS - have to take steps to better their services, which have so far included remove the System Access Fee from customer bills. In addition, "The Big Three" have made it possible for customers to purchase devices outright, i.e. without a contract.

Aside from having to compete with the new carriers, Rogers, Bell and TELUS have to deal with their own situation - the introduction of Bell and TELUS' high-speed networks has the three carriers competing directly with one another now.

As a whole, the introduction of more competition is definitely a plus for the consumer, providing more choice, simplicity, and competitive pricing. Nadir Mohammed, President & CEO of Rogers Communications Inc has stated that "Competition will keep everyone on their toes, drive innovation and hold down prices. All of this will be good for the consumer." But what does this mean for the present carriers?

Only time will tell as we move further into 2010, and see the full emergence of these new companies. Wireless is about to get a shakeup unseen to date.