Telecom: Mobile operators take battle to new front

By Jamie Sturgeon | Postmedia Network | Nov. 18, 2010

Far removed from the marketing carpet bombs new and established mobile operators are raining down on one another in cities across the country this fall, another front is opening up — political and regulatory scraps.

The latest salvo in this emerging battle was fired Thursday when startup carrier Mobilicity filed documents with Industry Canada urging the department to endorse laws recently brought on in Quebec and now tabled in Ontario curtailing what the carrier calls “anti-consumer” behaviour from market incumbents Rogers Communications Inc., BCE Inc.’s Bell Canada and Telus Corp.

“Without government legislation, incumbents will continue to avoid competition by employing ... anti-consumer tactics,” Toronto-based Mobilicity wrote in a letter to Industry Minister Tony Clement.

Mobilicity, which launched cellphone and mobile data services in Edmonton, Vancouver and Ottawa this week, alleges multiple transgressions from Rogers, Bell and Telus resulting in higher bills for customers, as well practices designed to unwittingly lock clients into longer contracts that remain costly to terminate.

The firm, which launched in Toronto in May as a low-cost alternative to the big three, said it “encourages the government to explore the introduction of consumer protective legislation similar to that enforced by the province of Quebec or recently introduced in the province of Ontario.”

Dave Dobbin, Mobilicity’s CEO, said the firm is rallying behind a private member’s bill introduced by Liberal backbencher David Orazietti in the provincial legislature this week that aims to reduce cancellation fees as well as make advertising and billing more transparent.

The move follows on the implementation in Quebec of Bill 60, legislation that makes similar demands of carriers in that province.

Mobilicity’s letter is the latest in a series of official complaints from new mobile entrants.

The startups, including Wind Mobile and Public Mobile face considerable in-market challenges against their well-entrenched foes, and are looking for any means of “relief,” Lawrence Surtees, senior analyst at IDC Canada said. “They have a number of frustrations.”

So-called “hard handoffs” of calls, where a signal is dropped once a customer leaves a new entrant’s home zone, is another point of contention made by Wind to regulators at the Canadian Radio-television and Telecommunications Commission.

There are no rules mandating seamless call transitions, and incumbents have used that to advantage by advertising that their larger networks experience fewer dropped calls, which is true. Rogers defended itself in a response to the CRTC dated Nov. 12 that its customers faced the same dilemma.

“Seamless handoff is not the norm for roaming arrangements,” the company said. “When Rogers’ customers pass from Rogers’ network to third party networks, their calls also drop.”

Yet Rogers’ launch of Chatr Wireless (and to a far lesser extent, a response from Bell’s Solo Mobile brand) is drawing the heaviest fire. Rogers introduced Chatr in July to directly vie for customers targeted by Wind, Mobilicity and Public Mobile.

Mobilicity and Wind are now challenging the brand’s legality through the Competition Bureau, a process still underway.

“They are not behaving politely, but no one expected competition to be a polite, gentlemanly sport,” Mr. Surtees said of Rogers and the other incumbents, recalling a quote from Theodore Vail, the U.S. architect of the AT&T phone system a century ago.

“He said competition is strife, it’s warfare and contention to the highest degree that the conscious of the contestants or the laws will allow.”

Financial Post
jasturgeon@nationalpost.com

Newser: Wireless startups taking share from Rogers, Bell, Telus: report

Jamie Sturgeon | Victoria Times-Colonist | July 28, 2010

TORONTO -- Canada’s new wireless providers are luring subscribers from incumbents Rogers Communications Inc., Bell Canada and Telus Corp., rather than attracting customers who are picking up a cellphone for the first time, according to one of the first detailed looks at the new competition.

The revelation, among other developments, may revive concerns among investors that upstart players will wreak more havoc in the country’s traditionally staid $16-billion mobile market than has been assumed, while the established firms are likely to hit at their own bottom lines to guard market share, analysts say.

“Hide from wireless,” Jeff Fan at Scotia Capital recommended to clients in a note published Monday. “We expect competition risk.”

About three-quarters of all subscribers with Wind Mobile, Mobilicity and Public Mobile have been cherry-picked from the three major incumbents, a report from Scotia Capital says. It is a higher percentage than some thought would prevail, and could contribute to more aggressive efforts to retain customers at Rogers, Bell and Telus, which together currently control about 96% of the wireless market.

One rumour is that Rogers is set to introduce a new discount brand called “Chat.r.”

Rogers’ new brand would be aimed directly at the area in which new entrants are having the most success: low-income, city dwellers and immigrant communities that want cheap, unlimited voice and text services.

Chat.r will launch during the all-important back-to-school season, typically the highest selling period for a carrier alongside Christmas. Unlike Rogers’ current discount brand Fido, the new service will be completely prepaid with no contracts, closely mirroring the most attractive plans offered by the three new entrants, sources said.

Chat.r will stem subscriber losses for Rogers but at a price. The telecom behemoth will take a hit on the average revenue per user (ARPU) it generates per month, which currently stands at $62.02, the highest among Canadian carriers.

Rogers declined to comment on Chat.r.

“We’re always working to innovate and better serve Canadians, but have nothing to announce at this time,” said Odette Coleman, Rogers’ director of communications.

A new launch would have broad implications for the market. Bell and Telus will almost certainly move to match any repricing while new entrants will also react, threatening all with a punishing price war. “Our concern is that it will ignite retaliations,” Mr. Fan said.

After much uncertainty and — unfounded — anxiety last year, the market has mostly dismissed the new-entrant risk through fiscal 2010. Rogers, Bell and Telus have all seen their stocks rally (as much as 20% in Telus’s case) as ARPU has stabilized and performances have rebounded against weak year-ago comparables.

There may be room left in the run-up as solid second-quarter results are expected again at the end of the month. Yet after that, valuations will be hard-pressed to justify such levels, some say.

“We urge incumbent wireless investors not to be complacent,” Dvai Ghose, analyst at Canaccord Genuity said in a note late last week. The analyst also foresees downward price pressure ahead, especially in Eastern Canada.

In Quebec, Vidéotron Ltée. will launch wireless at the end of summer with aggressive discounts, particularly on data plans which could come in 40% cheaper than current incumbent pricing. Vidéotron operates in Montreal and surrounding areas, but a price cut there could prompt restive customers in other areas to barter for the same.

“Rogers and Bell are particularly susceptible as they enjoy industry leading market share in Ontario and Quebec,” Mr. Ghose said.

With the ability to bundle Internet, phone and TV services, Videotron is expected to experience more sustained success in the wireless market than Wind, Mobilicity or Public Mobile. Despite garnering most of their customers from incumbents, new entrants are believed to be tracking below their own estimates and even the more tempered expectations of analysts.

All four firms won licences to operate cellphone businesses at the 2008 wireless spectrum auction. Wind has been rolling out services across Canada since its December launch, while Mobilicity and Public Mobile began operating in Toronto in May.

jasturgeon@nationalpost.com

Telecom: Rushed launch takes wind out of new wireless carrier

By J. Sturgeon | Vancouver Sun | 03. 10. 10

TORONTO -- Conventional wisdom for Canada’s newest cellphone carriers has been to be first into the market. With fierce competition overhead from established incumbents such as Rogers Communications Inc., the thinking was that the earliest in would hold a key leg up against other newcomers and reap the rewards of consumers’ pent up demand for choice.

Three months after the launch of WIND Mobile, the conventional wisdom is now being undermined by some. “WIND it seems has missed the first-mover advantage,” said Iain Grant, principal analyst at SeaBoard Group, an industry research firm.

Mr. Grant said a hasty launch by WIND has led to spotty network deployment and subsequently weak wireless coverage. Limited distribution channels and advertising have also led to a “lost message” with would-be subscribers.

“Certainly reports of network faults ... and a small retail presence have dampened some consumer enthusiasm for the new entrant’s services,” he said in a new report.

Tony Lacavera, chairman of WIND’s parent Globalive Wireless Management Corp., acknowledged the firm was having some difficulties.

“We can see the weaknesses in the Toronto and Calgary networks and we’re adding sites, adding towers to try and strengthen the coverage. It’s the big operational focus,” he said in a recent interview .

Mr. Grant said other startup carriers such as Mobilicity and Public Mobile would do well to delay their respective launches until their networks are complete and a wide retail presence is secured. Ignoring that could cost customers.

According to Seaboard estimates, WIND has picked up about 30,000 subscribers in Toronto, Calgary and Edmonton, the three cities it now offers services in.

The uptake has not been as brisk as some predicted and indeed likely below WIND’s estimates, which are for 1.5 million subscribers within three years (that would require 41,500 new customers a month).

Analysts say WIND was rushed out of the gate in early December after Industry Minister Tony Clement overturned a ban from the regulator over its controversial ownership and capital structures. Parent Globalive is backed by Egyptian carrier Orascom Telecom, who has provided hundreds of millions in financing in exchange for a 65% economic interest and representation on Globalive’s board.

Mr. Grant said the company likely moved before the decision could be revisited. But things were rushed. Its network was incomplete and only one distribution deal, with Blockbuster, had been signed.

Evidence of unrest at WIND itself -- perhaps emanating from Orascom -- came last week when two senior executives, chief information officer Scott Waller and head of customer service Chris Robbins, pictured, were removed.

Still, others say WIND maintains an upper hand against other wireless newcomers. “The fact that [other entrants] haven’t even launched yet is a testament to the fact that they’ve got a huge competitive advantage because of Orascom,” said an analyst that asked not to be named. Orascom has given Globalive heft in negotiating network and handset agreements that other new entrants lack.

Moreover, new deals with big box electronics retailers Future Shop and Best Buy are rumoured to be in the offing, which would balloon WIND’s distribution.

Meanwhile, neither Mobilicity or Public Mobile, which will compete in major urban centres with WIND, have definitive launch dates.

“No launch is ever going to be perfect,” said the industry analyst. “If you wait for perfection you’ll never launch.”

Financial Post

jasturgeon@nationalpost.com