News

BCE Inc.'s BCE-T Bell Canada and Telus Corp. T-T will begin selling the iPhone next month, breaking the stranglehold on the iconic device that rival Rogers Communications Inc. has held for more than a year.

The country's two largest incumbent telecom companies, under pressure to re-ignite growth as new wireless competitors begin operations this year, are banking on Apple Inc.'s ground-breaking smart phone to help them sign up bigger-spending customers and shift the balance of power in Canada's mobile market.

Bell announced Monday that it will launch national service in November on the $1-billion next-generation wireless network it has been building with Telus, months ahead of schedule. The project extends the two companies' existing third-generation (3G) networks to include the same technology standard employed by Rogers, the nation's largest cellphone company.

Until now, Rogers has enjoyed a Canadian monopoly on that standard – and with it, one of the hottest products of the mobile age.

The iPhone has helped drive Rogers' wireless growth through the recession by 7 per cent this year. Rogers has said its iPhone customers spend 11/2 times more than its average wireless subscriber.

Until now, Rogers has been the exclusive iPhone dealer in Canada.

Bell and Telus confirmed Tuesday morning they had deals with Apple to start selling the iPhone in November, after the Globe reported the news Monday.

Wade Oosterman, president of Bell Mobility, said the company would be adding several new devices at launch time.

“We have a very strong lineup of manufacturers,” he said. “We're going to expand the options for Canadians. Those that require, for example, international roaming now have a viable alternative.”

Bell and Telus announced a year ago that they would put aside their historic rivalry to build the high-speed packet access network, or HSPA, together. Market conditions forced the pair to extend their networks, in part because the precursor technology to HSPA, known as GSM, is the global wireless standard, allowing Rogers to collect the lion's share of lucrative foreign roaming deals in Canada.

In addition, some of the most popular mobile phones, like the iPhone and Nokia Corp.'s N-series devices, are designed exclusively for this standard. Several new wireless carriers are also planning to launch in Canada by next year using the HSPA standard.

Bell and Telus said their partnership would allow them to split the approximate $1-billion construction cost and to get to market sooner.

Even though the two carriers are breaking Rogers' hold on GSM and the iPhone, the fact does not necessarily mean there will be discount deals on Apple's device.

Apple, based in Cupertino, Calif., demands strict terms from wireless companies carrying the iPhone, which limit the carriers' ability to cut prices or differentiate their subscription plans significantly. But for consumers, the news will, at the very least, mean greater supply of the device as well as more choice in terms of service providers and bundled offers for other services, such as home phone, Internet or television connections.

The iPhone has proved a double-edged sword for Rogers and other wireless operators around the world carrying the device. The smart phone attracts more customers, and specifically users who spend more money than the average mobile phone client. But it requires a heavy subsidy from the carriers, which eats into their profitability.

Apple's fortunes have soared with the iPhone. But the phone companies are realizing that they have to balance the cost of their subsidies with the value of the customers the device brings in.

For Bell, which has managed to cut its customer acquisition costs recently, the iPhone should help spur much-needed growth. The company added only 45,000 new mobile phone customers in the second quarter, compared with 142,000 for Rogers and 111,000 for Telus.

For Telus, Apple's smart phone should help it bolster its average revenue per user, which declined nearly 7 per cent last quarter.