Quebecor Media Inc. plans to make mobile phones the heart of its communications business, spending more than $800-million to launch a wireless network in Quebec within the next 18 months.
Quebecor and subsidiary Vidéotron Télécom Ltée said they will channel material from their existing print, broadcast, Internet and music empires onto the mobile platform, and also make "a massive investment" to develop content for smart phones.
"Technology is one thing, and we are going to use the best, but at the end of the day the content will make the difference," Robert Dépatie, president and chief executive officer of Vidéotron said yesterday in an interview.
The company is developing new methods of advertising to accompany content on smart phones, he said. "We believe that the advertising model on the phone will be better than the one on the Internet."
While some analysts question how profitable mobile content will be, they say Quebecor does have the potential to grab significant market share from the incumbent wireless operators in the province, thanks to the company's ability to bundle other services and to offer attractive pricing.
By 2015, Quebecor will have about 30 per cent of the wireless market in Quebec, said Chris Potter, a principal at Convergence Consulting Group Ltd.
Mr. Dépatie vowed to offer cellphone packages that were simple, clear and without hidden fees.
"They really are touching on the sore spots of consumers," Mr. Potter said. He estimates that by bundling its cellphone offering with its residential phone, Internet and cable TV services, Quebecor will be able to undersell incumbents by as much as 40 per cent.
Vidéotron already offers wireless subscriptions. But the service piggybacks on the network of rival Rogers Wireless.
The contract with Rogers did not allow Vidéotron to add its own innovations, Pierre Karl Péladeau, president and CEO of Quebecor Media, said at a news conference. However, it has allowed the company to learn the basics of running a wireless service, he added.
Vidéotron intends to prematurely end its contract with Rogers next year and pay a penalty fee, Mr. Dépatie said. A spokeswoman at Rogers was not available to comment.
Quebecor and Vidéotron said they will spend $255-million to build their wireless network using an advanced technology called high-speed packet access (HSPA). They said Nokia Siemens Networks will be the key supplier.
At the moment, Rogers is the only Canadian carrier using HSPA, which gives it access to such premium devices as Apple Inc.'s iPhone. Bell Canada and Telus Corp. said this month they will partner to add HSPA to their networks.
Quebecor has already invested $554.5-million in its wireless venture. The company bought 17 spectrum licences from the federal government this summer that cover Quebec and parts of Eastern Ontario.
It has talked to several potential partners about sharing access to airwaves in different parts of the country. "There is no partnership planned at this time," Mr. Dépatie said. "Our focus is on Quebec."
Toronto-based Globalive Communications Corp. wants to launch a national wireless business by next year and is hoping to gain access to Quebec airwaves.
"I maintain my view that there is a great opportunity for Globalive to work with Vidéotron," Globalive CEO Anthony Lacavera said yesterday.
QUEBECOR INC. (QBR.B)
Close: $20.50, down 81¢
