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Bell Canada (Tibor Kolley)
Bell Canada (Tibor Kolley)

Canada's telecom market is fragmenting Add to ...

It's official: The Canadian telecom business has become regionalized.


Or not, depending on where you live.

Bell, on Thursday, announced it was introducing an unlimited local and long-distance calling plan to their premium Bell Mobility brand. But only in Quebec. And only if you bundle it with other Internet, TV and home phone products.

Bell, essentially, is now a national provider with a very regional strategy, one that depends on what its competitors do in different markets.

Its strategy is, not by accident, pretty similar to Videotron's new wireless strategy. Bell's Montreal-based rival launched service - only in Quebec - two weeks ago to the day, giving customers a discounted and better product if they take more than one service with the provider. So Bell reacted.

On Friday, Bell went one further, introducing its newly unlimited Solo Mobile service in the Montreal metro area. Earlier in September, Rogers introduced its own new discount brand, Chatr, into the Montreal market. Most assumed the two big telcos were holding back until they could tell what Videotron's strategy was; once Videotron had launched, they both felt safe to go ahead.

But this all begs another question: Where exactly are the big providers launching new services and adding additional plans? Answer: Urban areas where they are facing new competition from new wireless companies like Wind Mobile, Public Mobile and Mobilicity. Where the big telcos are not facing competition, they are not reacting - either by lowering prices or introducing more fulsome plans. Why? They don't have to, and it doesn't make business sense to. The footprint and pricing of Solo's unlimited plan and Rogers' Chatr brand are pretty much identical to Wind, as I have written before.

To boil it down, this means that big wireless companies are offering two sets of prices: One for urban customers on new discount brands or new plans, and another essentially more expensive offering for rural customers (who have less choice anyway). New competitors, it barely needs to be said, are only offering services in relatively rural areas because their networks are much younger.

To add to that, those in Quebec are now offered more choice and more discounts than Canadians in any other provinces. (And Quebec legislators have stepped in to make a law on early termination fees and the lengths of contracts, whereas other provinces have not. Law makers have limited the amount a company can charge in early termination fees, which the telcos responded to by offering less of a discount on phones).

Further, customers in the Toronto area were already offered way more choice than other areas (even within Ontario) because the economics of the start-up wireless business (in terms of gaining subscribers and becoming profitable) necessitates they start in Toronto. Unfortunately for those in the rest of Canada, many of them have stayed here: Mobilicity, for example, still hasn't expanded into other cities. And Wind is still expanding (they're not in Atlantic Canada yet). That means people on the Prairies and in the Maritimes have less wireless choice - for now.

When cable companies Shaw (in Calgary) and EastLink (in Halifax) launch wireless networks in their own regions next year, they are likely to take different routes based on both the dynamics of their markets and the make-up of their companies (Shaw owns media content through CanWest; EastLink doesn't really have any content). That means those markets will become different, too. Right now, of course, competition there is essentially the same as it ever was.

People have been expecting this regional shakedown for some time. And, frankly, I could have written this stuff about the Toronto market back as far as December 2009, when Wind launched here. But now it's really real. The country's telecom market is fragmenting. And, depending on where you are, that's either a good thing - or, of course, a slightly unfair thing.

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