More services, packages and rates hit Canadian wireless market

There was a flurry of activity on the wireless pricing front in the early part of August with new pricing plans, new entertainment services and even a new competitor entering the market. But will this recent activity affect competition and penetration rate growth? According to two industry analysts, the simple answer is no. Jeff Fan, executive director, research analyst for telecom and media at UBS Securities Canada, and Brian Sharwood, principal with the SeaBoard Group acknowledge that the Canadian wireless industry might experience a slight increase in growth, but will generally remain relatively stable despite the initiatives from Telus Mobility, Fido and Vidéotron ltée. On August 4, Telus Corp. announced that it had reached an exclusive licensing and servicing arrangement with US-based Amp’d Mobile to bring its innovative entertainment content to the Canadian market. In addition to making entertainment content available, Amp’d will be in charge of bringing handsets optimized for consuming this type of content. Telus will control sales and distribution, billing, client care, network operations and pricing. Four days later, Rogers Wireless introduced a new rate plan for Fido customers. Dubbed "Urban", it is suited to urban dwellers who rarely travel outside of the area where they live and work. According to Fido research, more than 60% of subscribers use 97% of their minutes in a limited geographic area. The package runs for as little as $30 per month and offers 400 outgoing anytime minutes and unlimited incoming calls in a particular urban area. For an additional $5 per month, subscribers can add another area outside of their main urban zone. And only two days after the Fido announcement, Vidéotron unveiled its plans as a mobile virtual network operator (MVNO) with Quebec City being the first city to receive the service. Quebec’s largest cable company says it will roll out the wireless offering to the remainder of its service territory by the end of this year. Banking on its successful cable telephony offering, Vidéotron is offering a quadruple-play bundle for $94.95 per month and a triple-play bundle for $79.95 per month. Subscribers receive 300 anytime wireless minutes. In addition, both rates include the $6.95 monthly access fee and 911 charges. The company is also offering individual rate plans, starting at $14.95 with 50 minutes of airtime per month and up to $43.95 with 700 minutes of airtime. The system access fee and 911 charge are extra. As well, Vidéotron is offering a shared plan that offers 900 minutes of airtime to be used by a maximum of five people for as little as $42.95 per month. For both the individual and shared plans, airtime prices decrease as more optional features such as voice mail and call display are added to the subscription. While Bell Mobility didn’t make any big splashy announcements, the company did make a significant hiring that could go a long way in changing how the venerable wireless operator is perceived in the market. On August 2, the company hired Wade Oosterman, formerly a Telus Mobility executive and long-time colleague of Bell Canada president and COO George Cope (RoW, Aug. 25/06). Fan explains that from a consumer perspective, there will be more choices in the market, which will have a positive impact on growth, but from a competitive landscape position the industry won’t change too much. "I think penetration will continue to stable increases, like the 4% to 5% that we’ve been seeing," he tells Report on Wireless. "I don’t expect it to go to 7% next year because of these new services." The growth that the industry will experience will be minimal and will likely come from previously untapped markets, Fan says, adding that content from Amp’d might appeal to a certain segment of the population that doesn’t yet subscribe to wireless and this will lure them into the wireless world. The same should hold true for Vidéotron, he notes, highlighting the following possible scenario: there are very loyal Vidéotron customers that have recently taken the company’s phone service to go along with Internet and digital cable, and wireless now becomes an attractive offer. "The combined strength of Vidéotron with its phone, Internet and digital cable bundle…might help Vidéotron grab the extra wireless customers that wouldn’t have picked up a wireless service plan," Fan says. Sharwood agrees with Fan that growth will jump slightly when a new entrant joins the market. "You can go back and look at the entrance of Clearnet, the entrance of Fido and you can see these jumps," he explains. "But really apart from that, I think the landscape will change where there’s new spectrum released and I think it will probably end up being going directly to 3G or 4G. If is going to build a network now, they’re going to build it all ." The large cable companies represent probably the best bet for new competitors to the existing big three wireless operators. Both Fan and Sharwood suggest that Vidéotron and Shaw Communications Inc. could be in the market for acquiring spectrum in the next auction, which is likely to take place in either late 2007 or early 2008. A consultation paper on the auction should be published this fall (RoW, July 27/06).

More services, packages and rates hit Canadian wireless market

News | September 8, 2006

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