René Mansi
On the Prairies, gophers chew through buried cables and disconnect entire rural communities. In B.C., landslides rip out poles and drag wires in a tangled mess down the mountainside. Maritime fog has been known to cripple service and heavy snow and rain can disrupt satellite signals, while in southern Ontario, it's another story: If you plant a cell tower down in a place that disrupts someone's view, better be ready to paint your tower green or dress it up like a tree.
Canada is not a simple place to build a wireless network. The vast country creates a host of challenges, from feisty small-town mayors to wild swings in population density (and temperament: one man in B.C. chained himself to an old-growth tree set to be chopped for a tower).
Because of this, it has always made sense for Canadian telecom companies to share the building and operation of cell towers.
But as a new surge of wireless competition begins to wash across Canada, divisions and competitive concerns are keeping the new entrants from teaming up and saving cash in the war for market share and survival.
Building completely separate networks across Canada means the new entrants are incurring higher costs. In days gone by, many new entrants threw themselves at the incumbents with expensive attacks, only to stumble and eventually get bought out.
Ganging up on the big boys
Facing the might of the wireless incumbents, today's three new wireless players are looking to save by sharing the cost of building networks where they can.
"The economics of co-operating amongst the new entrants are irrefutable and very compelling," says Anthony Lacavera, chairman of Globalive Wireless Management Corp.
"There's nothing that the incumbents would like better than to see all three of us [each]try and build a network while they beat up on us."
The pure wireless new entrants like Globalive, Public Mobile Inc. and Data & Audio Visual Enterprises (DAVE) Wireless Inc. have had to start from nothing. Globalive is the only one even claiming to be building a "national" network, though it has no wireless spectrum in Quebec. The task is monumental.
Blanketing Canada is an expensive proposition for any operator. Carriers have thousands of relay devices across the country, made up of costly cell towers and antennas fixed to corporate rooftops or the sides of mountains.
Aside from the cost of the equipment, geographic factors such as the need to helicopter in supplies and workers onto a mountainside, or digging into the Canadian Shield, add to the expense. Some carriers, though, have found ways to cut corners. Churches, for example, often request to host antennas in their steeples to pull in extra cash, which saves on tower-building costs for telcos.
Krista Jones knows the challenges well from an earlier era in Canadian telecom. As vice-president of network planning and engineering at MetroNet Communications in the 1990s, she convinced her company that building a cross-country fibre-optic phone network was impossible - without help.
"You have to cover the costs of the Canadian terrain through infrastructure sharing," says Ms. Jones, who now works with start-up telecom companies at MaRS Discovery District in Toronto. "Competitors had to get together."
MetroNet was part of a wave of providers hoping to compete against the incumbent providers, like Bell and Telus. It was known as the age of the CLECs, or competitive local exchange carriers, an era of hope among upstarts aiming for cross-country build-outs.
"I would say nine out of 10 failed," she says.
The wave crashed. Even those who cut costs by sharing failed against the might of the incumbents, and then passed on expensive infrastructure to them at pennies on the dollar
Who wants to help a rival?
Mr. Lacavera, Globalive's chairman, remembers the destruction of the CLEC days. He almost lost his holding company, which operates other telecom businesses, when many of the largest telcos he did business with filed for bankruptcy.
With that memory in mind, he has repeatedly extended tower-sharing agreements to his fellow new entrants, Public Mobile and DAVE Wireless - which has branded itself Mobilicity - but has been rebuffed. Public Mobile has competition concerns. DAVE's business plan is such that it might not benefit from sharing. And the process of entering into sharing agreements with the incumbents is too lengthy, Mr. Lacavera says.
It remains unclear if the new entrants can strike a deal before the majority of the three networks are built. And recent management shifts at Globalive's Wind Mobile - including the "mutual" departure of its No. 2 man - may hint that subscriber and revenue growth so far are not recouping the company's massive expenditures as quickly as hoped.
"While you benefit from infrastructure-sharing from a cost perspective, strategically I don't want to help somebody get to market," says Alek Krstajic, chief executive officer of Public Mobile.
The matter isn't helped by Public Mobile's legal challenge of the government decision permitting Globalive to launch wireless services. Still, Mr. Krstajic said he wouldn't mind infrastructure-sharing with Globalive's Wind now, but he doesn't want to inadvertently help DAVE.
However, Mr. Lacavera said forging allegiances to try to prevent DAVE from launching is pointless. And DAVE president Dave Dobbin said he doesn't even need to share infrastructure, since he focuses on urban markets and rooftop cell sites, in contrast to the broader reach of Wind and Public Mobile.
"I'm happy to share infrastructure with anyone, at any time, if it reduces costs," Mr. Dobbin said. "Our build is a little different ... It's [sharing is]not really a big deal for us."
Incumbents are dragging out infrastructure-sharing discussions, analysts have said, a claim the incumbents dispute. Jim Johannsson, a Telus spokesperson, said the company is waiting on the new entrants to respond on technical details. He explains that simply adding a new entrant's antenna to an existing tower is a lengthy, complicated process filled with local bylaws, public consultations, local concerns and compromises - all of which may delay new entrants from crucial launch dates.
However, in April of last year, Industry Canada was forced to issue revised guidelines for tower and infrastructure sharing after it received numerous complaints related to "negotiating in good faith" and responding "in a timely manner." The incumbents view their infrastructure as a strategic asset, an advantage over young upstarts. They wouldn't share at all if Industry Canada didn't regulate them to do so, one incumbent source said, adding the current process favours new entrants, since established providers must force their own engineers to respond in detail to numerous sharing requests, which the new entrants make at little cost to themselves.
Another industry source said both sides are at least partly to blame. New entrants, because of financial or regulatory uncertainty, may hold off on building networks until the last minute, then become frustrated by the drawn-out process of reaching agreements. Incumbents, meanwhile, have little interest in helping competitors launch service and every interest in ensuring the process takes a long time.
Regardless, in an era where competitors' networks are becoming increasingly similar, in terms of both speed and price, no analyst thinks a wireless carrier's infrastructure will be its key selling point in the future. Bell Canada and Telus, by sharing an entire network, seem to have the right idea.
"Infrastructure will never be your special sauce," Ms. Jones of MaRS says.
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By the numbers
$250,000 to $1-million
The rough cost of one cell tower
2,000
Average number of cell sites Bell and Telus each have across the country.
20 to 100
In metres, the rough height of
average cellular towers.
100
Percentage of sharing requests Telus has responded to, from the new entrants.
98
Percentage of DAVE Wireless cell sites that are on rooftops, not requiring tower-sharing or a tower.
0
Number of formal infrastructure-sharing agreements signed between new entrants.