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.
