Skip to main content

John Bitove, chairman of DAVE Wireless.Peter Power/The Globe and Mail

Canada's newest cellphone company is about to show its hand after months of keeping its pricing and launch date a closely guarded secret.

Wireless startup Mobilicity will reveal plans this week to begin operating by early June, a source close to the company said, and a cornerstone of the company's offensive will be an aggressively priced unlimited talk, text, long-distance and data package for $65.

Mobilicity's strategy is to use its unlimited long-distance package to lure home-phone subscribers in big cities to ditch their landline with BCE Inc.'s Bell Canada, Telus Corp. and Rogers Communications Inc. Large providers do not usually price aggressively on wireless or offer unlimited packages, since their subscriber bases are so large that even slight adjustments can result in millions of lost revenue.

Mobilicity also figures it can offer data plans cheaper than the big companies can without cutting into its bottom line.

It is a two-pronged attempt to make a splash in the market for Mobilicity, the cellphone startup backed by satellite radio and fast-food executive John Bitove.

However, the small company is wading into a heated battle. Already, wireless startup Wind Mobile has attempted to steal customers from the incumbents by undercutting them on price and then offering a $150 credit to anyone who converts from Rogers, Bell and Telus.

Meanwhile, the incumbents are guarding their turf against the new startups. Rogers, for example, recently introduced a plan targeted at people who roam into the U.S., giving them cheaper data and long-distance than was available before.

Mobilicity has been the most guarded of the new wireless companies, compared with its rival startups, Wind and Public Mobile. Wind was the first company to enter the market in Janaury, and Public has opened stores in Toronto, though it doesn't expect its network to be switched on until June.

Reached at his office Monday, Mobilicity president Dave Dobbin would not comment on the launch date or pricing strategy.

"We've been very tight-lipped about our launch date for very specific reasons. It's a very competitive market out there," Mr. Dobbin said. "However, we are measuring time to launch in weeks and days, not months any more."

Offering unlimited data plans has its perils, though, since it can eat into the bottom line. Mobilicity is hoping to keep its cost structure low enough that it can offer the discount rates. Wind Mobile went into the market offering only unlimited packages, but has since moved to a range of plans at lower prices to attract broader customer groups.

The addition of another wireless player with unlimited data plans may begin to entice a small, heavy data-using crowd away from the incumbents and towards the Mobilicity or Wind. It may also put pressure on the incumbent companies to offer unlimited data plans, which are common in other markets.

The Mobilicity offering will likely appeal to a segment of the incumbent wireless providers' customer base, said Iain Grant of telecom consultancy the SeaBoard Group.

"For the corporate road warrior, or the entertainment road warrior, or a guy who travels a lot or has lots of friends in American universities, this is a great plan," Mr. Grant said of the $65 unlimited plan.

But there remains concern that, like Wind Mobile has seen, there may be fewer people willing to leave their current providers than previously assumed.

"The best customers are tied up by the incumbents," one industry analyst said.

Although many people claim to dislike contracts because of long durations and termination fees, they remain popular since are used to subsidize the cost of expensive phones.

One crucial component will be how much Mobilicity will charge for their devices.

"As Wind has found, getting people to leave in the middle of a contract is difficult. There is roughly a $200 (termination fee) impediment, as well as the cost of a new phone," Mr. Grant said.

Wind has introduced some aggressive new promotions recently that have hinted that subscriber growth is lower than expected.

Public Mobile, another new entrant, is aiming straight at the working class and ethnic communities in Toronto and Montreal with a flat-rate, $40 per month unlimited plan.