For a while, it appeared as if Canada's incumbent wireless providers would do little about new competitors launching aggressive cellphone products in key urban markets. Months passed, and there was no clear dent in the big players' subscriber numbers, nor any direct response from the companies.
Then, boom: Last week, Rogers Communications Inc., the country's largest wireless provider, confirmed that it is launching a discount brand, Chatr Wireless Inc., aimed right at the new entrants' key demographic: low-end and budget-conscious cellphone users.
Although customers with ordinary cellphones are less lucrative to large providers than smart-phone users, they form the vast majority of the current market. Rogers' move to cash in on these consumers, while at the same time preventing a mass migration to new competitors, makes business sense. A truer measure, however, may be how the big incumbents will respond to the cable companies launching wireless services. There is also the risk that overly bold responses could provoke competitors to more aggressive action.
The first taste of that came Friday, as Mobilicity chairman John Bitove called reporters to his office and threatened to haul Rogers before the Competition Bureau or launch legal action. He sees the Chatr brand - specifically, talk of its too-close-for-comfort pricing plans - as an "abuse of power" that contravenes a section of the Competition Act dealing with temporary or targeted "fighting" brands. He said Rogers was trying to "destroy" his company.
John Boynton, Rogers' executive vice-president and chief of marketing, said Mr. Bitove's reaction was a surprise. "What all those [new providers]said, was that all this competition would be good for the consumer," Mr. Boynton noted. The Mobilicity response "seems to be all about this company and not about customers."
Even if the bureau chose to investigate Mr. Bitove's complaint, it could take several years to make its way before a tribunal. Industry watchers note that lower prices from incumbent companies is exactly what the government wanted when it licensed new competitors in 2008.
The only thing preventing companies such as BCE Inc. and Telus Corp. from launching inexpensive, unlimited plans for wireless service has been their large home-phone subscriber bases. If they were to price wireless too cheaply, consumers might choose to "cut the cord" on land lines and go completely wireless.
Of the Big Three, Rogers has the least to lose. "They care less about cannibalizing their land-line product," said Greg MacDonald, a telecom analyst with National Bank Financial Inc. "That's why they're more bold."
While much of the focus has been on new wireless competitors, another key test will be how the big incumbents react to the cable companies, Shaw Communications Inc. and Quebecor Inc.'s Vidéotron Ltée, which are launching wireless services in 2011 and this summer, respectively.
Brahm Eiley, a principal at Convergence Consulting Group Ltd., said new entrants may not have been radical enough with their pricing. He predicts cable companies will eventually offer unlimited voice and data plans at prices that match or undercut any offer in the market. The real question, he said, "is what Vidéotron and Shaw do … Our view is that they're going to upset the apple cart."
Already owns one "flanker" brand, Fido. It has announced that it will also launch a cheaper one, Chatr, with unlimited talk-and-text plans to compete with new competitors. It expects other big incumbents to follow suit.
Has targeted newcomers to Canada with a mix of cheap and quality handsets, aggressive prices, unlimited data plans, and international long-distance packages.
With two existing flanker brands, Solo Mobile and Virgin Mobile Canada, Bell is well-placed to join the crowd of inexpensive voice providers, even as its Winter Olympics-related advertising pulled in plenty of smart-phone customers.
Launched first of the new entrants after a regulatory battle that pitted it against incumbents. Unlimited plans abound, but there is some concern it's being out-priced by the bold entrants that followed.
Its flashy Koodo Mobile brand of talk-and-text phones complements its high-end Telus smart phones. With a shiny new network, it's been picking up a fair share of smart-phone customers.
Went, unabashedly, for the budget-conscious in Toronto and Montreal who want to cut their land-line phones and go completely wireless. CEO Alek Krstajic vows to match anyone who tries to start a price war.
SHAW AND VIDÉOTRON
Launching in 2011 and this summer, respectively. Will pitch cellphones and smart phones to their existing cable and Internet subscribers, likely matching or undercutting market prices.