Canada’s new wireless players gain few subscribers

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New entrant wireless carriers that launched cellphone services after buying licences in Canada's last spectrum auction failed to pick up significant market share last year.

The Canadian Radio-television and Telecommunications Commission released a report on Thursday showing the newcomers adding few new subscribers despite generally undercutting the Big Three carriers on price. Consumers were either unwilling or unable to sign up for the cheaper services despite the fact that service provided by new carriers was available to 58 per cent of the population in 2012.

In its most recent snapshot of the wireless industry, the telecom regulator's Communications Monitoring Report found that newer carriers, which include wireless-only independents as well as regional cable operators, collectively increased their subscriber market share to 5 per cent in 2012 from 4 per cent in 2011. Their wireless revenue market share, meanwhile, improved to 3 per cent, from 1 per cent, over that same period.

Rogers Communications Inc., BCE Inc. and Telus Corp. together accounted for 92 per cent of all wireless revenues and 90 per cent of the country's 27.9 million wireless subscribers in 2012. Other carriers, such as Manitoba Telecom Services Inc. and Saskatchewan Telecommunications Holding Corp., accounted for the remainder.

The CRTC's findings raise more questions about the long-term business prospects of some new-entrant carriers. Out of the wireless-only independents, only Wind Mobile has registered for next January's auction of the 700 megahertz frequency – valuable airwaves small carriers need to build faster LTE (long-term evolution) networks. Underscoring their competitive challenge, about 72 per cent of Canadians had access to the incumbents' LTE networks last year.

Without access to 700 MHz spectrum, the respective fates of Public Mobile and Mobilicity remain unclear. But, more broadly, tepid consumer interest in new entrant carriers could present a hurdle to the federal government's goal of having a fourth stable competitor in the key markets of Ontario, British Columbia and Alberta.

CRTC chairman Jean-Pierre Blais said he was unable to elaborate on the pace of new-entrant market share gains.

"There are different market strategies of entrants," he said in an telephone interview. Mr. Blais, however, questioned whether the inability of wireless-only players to offer packages that include other services such as video or Internet played some role.

At 10 per cent of subscribers, new entrants in Quebec have been the most successful, the CRTC's report found. Quebec is home to Quebecor's Vidéotron Ltée division, which offers other telecom services including Internet and television, while also owning a stable of media assets.

Although new entrants had no market share in the Atlantic provinces in 2012, the subscriber data was collected before regional cable provider Eastlink launched its LTE wireless service earlier this year.

Carriers including Wind Mobile have long complained about market challenges that make it difficult for new entrants to gain share, pointing to three-year contracts for wireless services that make it tough for consumers to switch providers.

Earlier this year, the CRTC unveiled a new code of conduct for the wireless industry. Among the many measures that will take effect on Dec. 2, is a provision that effectively limits contract terms to two years. Already some incumbents have started to adjust their plans in anticipation of the change.

"When I look at what is happening in the market place and what carriers are currently offering, even though the code is not technically in force, they're already making adjustments," said Mr. Blais, in reference to new marketing plans for subsidized devices on two-year contracts and changes to roaming rates. "So, I think that the wireless code is already, in a sense, having an impact."