By Jamie Sturgeon 04.10.10Shaw Communications Inc. is embracing the future of the wireless business well ahead of its rivals, but it doesn't mean its acting on it any timesoon.
Calgary's swashbuckling cable and Internet giant has stymied investors and mystified industry analysts for months by keeping tight-lipped about how -- and when -- it planned to use the $189-million worth of airwave licences it picked up from Ottawa nearly two years ago.
Those spectrum licences, which cover more than nine million people across Western Canada, will allow Shaw to round out the so-called "quadruple play" that modern telecommunications firms have moved to offer by enabling Shaw to sell Internet, wireline phone, television and now wireless products.
Analysts say a timely wireless launch is an imperative for Shaw if it wishes to avoid being outflanked by rivals now aggressively going after its traditional TV customers, such as Telus Corp. (which is unrolling its IP-based product rapidly out west).
By building out a modern, data-centric wireless network that can offer appealing devices like the BlackBerry or iPhone, Shaw will be able to bundle services and compete on an even footing.
A timely entrance into the cellphone market would also help stamp out upstart carriers like WIND Mobile, which also acquired airwave licences during the federal government's spectrum auction in mid-2008 and began offering cellphone services in Calgary and Edmonton -- Shaw's backyard -- months ago.
Yesterday, Shaw tipped its hand slightly and revealed when it will launch:In late 2011. Timely was not a word bandied about much on a earnings call with analysts.
"Waiting is actually not a bad thing < its the right thing to do," Michael D'Avella, senior vice-president of planning at Shaw, said.
The delay has analyst suggesting that Shaw is holding off on spending hundreds of millions on a current 3G+ network like the ones operated by Canada's incumbent carriers in Rogers Communications Inc., Telus and BCE Inc., and instead move directly to a fourth-generation technology known as Long-Term Evolution (LTE).
Fuelling the speculation, Mr. D'Avella added: "LTE is going to be a much better technology once its fully deployed. And bear in mind that there will be a very robust ecosystem around LTE and all kinds of devices that have those 4G capabilities."
Carriers the world have begun preparing for the arrival of LTE, a system that will bring ultra high-speed broadband to a person's smartphone. Verizon Wireless in the United States plans to introduce the next-generation network in 25 to 30 cities in that country by the end of the year.
Yet not in Canada. Carriers here, with the exception of Rogers, have just finished pouring colossal sums of money into new 3G+ networks. BCE's Bell Mobility and Telus turned on their HSPA networks in November, while WIND Mobile and Videotron Ltee. in Quebec are still erecting theirs. No domestic carrier is in the mood to spend more on another upgrade any time soon.
Waiting another 18 months or so may prove a shrewd move, but it also carries risks.
Shaw will save itself the expense of playing catchup and give it a first-mover advantage in offering the most data-ready devices on the planet, capable of processing video and multimedia far beyond today's devices.
However, the wait will provide Telus plenty of time to lure those would-be smartphone to its "quad" offering, while handing WIND and by then Mobilicity time to pick off cellphone customers at the margins.
"Wireless penetration is growing everyday in Canada," warned Dvai Ghose at Genuity Capital Markets.
Shaw said it lost 1,055 basic cable subscribers last quarter as profit fell 11% from a year earlier to $139-million (32 cents a share) in the three months ended Feb. 28. However, revenue grew by 11% to $929-million.
Financial Post
jasturgeon@nationalpost.com
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