Robert Dépatie, the president and chief executive officer of Vidéotron Ltée, has long bragged that his quest to gain wireless market share in Quebec will be made easier by parent Quebecor vast stable of French-language media.
Quebeckers love home-grown Québécois content and, as Mr. Dépatie and Quebecor chief executive officer Pierre Karl Péladeau know well, they will pay to have access to it on cable TV or personal computers.
With the launch of Vidéotron's new wireless network on Thursday, Mr. Dépatie will begin testing whether this theory also applies to mobile devices. The company will allow smart phone users who are also cable customers to have access to a huge cache of French, local and exclusive content on their mobile devices, even on cheaper plans.
"We believe in data," Mr. Dépatie said in an interview. "We will be the ones who [introduce]multimedia and data at a reasonable price."
The strategy is one of the things that will set Vidéotron's wireless strategy apart in a marketplace that has seen intense disruption since the launch of a new wave of mainly discount competitors. The other key element of the Vidéotron plan involves discounts for customers who also buy other services from the company.
The entrance of Vidéotron, a giant in the Quebec cable TV, Internet and home phone markets, is not so much strategic as a necessity, since wireless is the main growth leg for telecom and cable companies as their core businesses mature or decline.
Mr. Dépatie said established providers have been adjusting in anticipation of his move. Rogers Communications Inc.'s introduction of a new discount brand, Chatr Wireless Inc., and BCE Inc.'s repositioning of its secondary brand Solo Mobile as an unlimited service, are both attempts to scare his company, he said. But there is likely more response to come, he added.
"I'm expecting reaction," Mr. Dépatie said. "We feel that they're going to have to fight with a secondary brand. I don't feel secondary brands are a threat."
Analysts are bullish on Vidéotron's wireless foray, though some expected the company would come out with much lower prices and avoid incumbent-like rate plans, which many consumers find confusing. Regardless, it is likely to help rewrite the way telecom companies, many of which now have similar network speeds, offer additional services to differentiate their offerings. Quebecor is lending Vidéotron exclusive access to some TVA Group Inc. and QMI Agency news content.
While some, such as Public Mobile, have tended to differentiate their product with cheap prices, Vidéotron is doing so with content - though it has also undercut on price within a "bundle" of additional telecom services.
While Chatr offers a $35 unlimited talk-and-text plan but does not permit Web browsing and other data usage, Vidéotron's $32.95 plan, which also has unlimited calling, includes 50 megabytes a month of Internet use. All of Vidéotron's phones are capable of accessing the Web, though the company is unable to offer Apple Inc.'s wildly popular iPhone.
"I think the content, coupled with the decent device selection and the low voice pricing à la Chatr and Solo, is a pretty good combination," said Dvai Ghose, a telecom analyst with Canaccord Genuity.
The network has been turned on in Montreal and Quebec City, but will roll out to the rest of Quebec gradually, with some areas getting service in spring of 2011.
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AT A GLANCE
What: Quebecor's telecom division, Vidéotron, launched its wireless network on Thursday.
Who wins: Pierre Karl Péladeau, Quebecor's CEO
Who loses: Bell, which has the largest wireless market share in Quebec, and Rogers, which cannot effectively "bundle" cellphones with other products in Quebec.
Back story: The company lobbied hard and convinced the federal government to set aside wireless licences for new entrants in a 2008 auction, which the Conservatives did. Now the plan is to sell wireless devices by bundling them with other offerings, such as TV and Internet, relying on Quebecor's vast array of media properties to sweeten the deal.
Why it's important: Of all the new wireless players to launch so far - including Wind Mobile, Mobilicity and Public Mobile - Vidéotron is the first established cable company to do so. It has financial heft and an established customer base.
What's next: Incumbents could start price cutting or add more services to existing offerings. Rogers is moving its new discount Chatr brand to Quebec on Sept. 16. Bell will likely do the same with its new unlimited talk and text Solo Mobile service. Then, Halifax-based EastLink and Calgary-based Shaw will become the next cablecos to launch wireless networks in their respective areas.