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(Photograph by Lindsay Page for Report on Business Magazine)
(Photograph by Lindsay Page for Report on Business Magazine)

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Why the wireless war is good for you Add to ...

Over in Quebec, Vidéotron is girding for battle as well. "Marketing costs and handset subsidization will be necessary in order to meet our service penetration objectives," Jean-François Pruneau, vice-president of finance at Quebecor Inc. recently told analysts. Translation: We'll be burning through a lot of cash in the first few quarters after launching, to quickly gain market share. Expect near-term profits to take a hit in the name of future wireless glory.

For Rogers, Bell and Telus, the strategy now is to hold on to existing customers while trying to grow the base. Stopping a customer from leaving (known as a save) and luring back former subscribers with incentives have become more important than ever. "The best customer to get is the one you already have," says Natale at Telus. "And all of us have been focused on what we are doing to keep our customers."

After his address to the Economic Club of Canada in October, 2008, Ted Rogers, founder of Rogers Communications Inc. blows a kiss to the audience.
The ups and downs of Rogers Communications Check out our timeline

Consumers who want to play the market need only call their wireless provider and see if there are discounts to be had. It's a lot like shopping for a new car: The price on the windshield isn't necessarily the amount you'll eventually pay.

It's tough to predict how this era in Canada's mobile industry will play out. The last time we saw scrappy upstart mobile providers in Canada, they were snapped up in a wave of consolidation after buckling to competitive pressures. Most notable was Telus's $6.6-billion takeover of Clearnet Communications in 2000, followed by the $1.4-billion buyout of Microcell Communications and its Fido brand by Rogers in 2004. The Clearnet deal turned Telus into a national player, while the Fido acquisition bolstered Rogers in its fight against Bell.

Who will survive this time around? Convergence Consulting Group estimates the new entrants will probably lay claim to 22 per cent of the Canadian wireless market by 2014. But the prevailing belief in the industry is that, 10 years from now-or as few as five-at least one of the new players will have disappeared, having sold off its assets or been taken over. "I continue to believe that there's room for only one new entrant," says Lacavera.

Public Mobile, for instance, bought a less-expensive grade of spectrum known as the G-block. Unlike Mobilicity and Wind, it is not restricted from flipping its licences to an incumbent in the next five years-which means the no-frills carrier could become a takeout target if it builds a big enough list of customers.

If this turns into a war of attrition, Shaw and Vidéotron have the staying power to endure a lengthy fight-and should consolidation hit, they're logical buyers.

Lacavera figures that if the smaller players are to flourish, they need to present a united front. Otherwise, the fresh crop of mobile start-ups might wither. "I think it's important that the new entrants figure out how to work together," he says. "Everyone who is a new entrant should be looking at ways to partner, because the incumbents are sitting there just looking for ways to wipe us all out."

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