President of wireless startup is gone after 18 months of operations. An industry analyst says the debt from buying spectrum plus having to build its own network may have played a part

Dave Dobbin leaves Mobilicity

Wireless startup Mobilicity has become the second new cellular company to replace the man at the top, making the industry wonder how much trouble the fledgling companies are having competing against incumbent carriers after less than two years in operation.

On Friday it was revealed that Mobilicity president Dave Dobbin is leaving “to purse other interests,” the company said in a news release. He has been replaced by chief operating officer Stewart Lyons.

The release also said that chairman John Bitove, whose private equity firm Obilysk Inc. is the majority shareholder, will assume the role of executive chairman.

The other major shareholder is New York-based Quadrangle Capital Partners.

Mobilicity, which says it has 250,000 subscribers, operates in Toronto, Ottawa, Vancouver, Calgary and Edmonton.

Five months ago Wind Mobile, replaced CEO Ken Campbell with company chair Anthony Lacavera taking over the post in addition to his board position. At the end of September had 385,000 subscribers.

No one expected that incumbent wireless carriers Bell Mobility (owned by BCE Inc.), Rogers Communications Inc. Telus Communications would make it easy for the newcomers. And they haven’t, by lowering their prices, and, in the case of Bell and Rogers, introducing low-price brands (Solo for Bell, Chatr for Rogers).

Initially. both Mobilicity and Wind went after people who hadn’t bought cellphones by introducing no-contract unlimited voice plans. But increasingly they have been shifting strategy to offer data plans as well.

The new entrants are also saddled with hundreds of millions of dollars they spent buying AWS spectrum in the 2008 auction. Mobilicity spent $243 million, while Wind’s parent, Globalive Wireless Management, spent $442 million.

Unfortunately, says Ron Gruia, Toronto-based global telecom analyst at Frost and Sullivan, Wind, Mobilicity and fellow startup Public Mobile have spent hundreds of millions more on building separate networks instead of co-operating.

“It was always a surprise to me that the net entrants didn’t share towers and a network,” he said Monday, and they may be paying the price. “To do three new networks, I think a lot of money went to waste.”

Iain Grant, managing director of the SeaBoard Group, a Montreal-based telecommunications consultancy, said Mobilicity’s change at the top isn’t unusual in the evolution of companies. “It seems now that Mobilicity has achieved its launch intentions, it was time for a consolidator to take charge,” Grant said in an email.

Lyons, he said, “is a proven leader, understands the company, the marketplace, the competitors, and, most notably, the customers, well.”

Meanwhile, all carriers are anxiously waiting for the Harper government to announce rules for the next spectrum auction and whether it will loosen foreign investment rules for telecommunications companies. The latter will help the finances of the new entrants to some degree and their ability to participate in what is expected to be a hot round of bidding over 700 MHz spectrum. Bidding is expected to fierce because of the advantageous spectral properties of frequencies in that range.

A decision on those rules is long overdue, leaving speculation that the purchases this year by BCE of the CTV Network and Shaw Communications of the CanWest Global TV network has complicated the government’s hand. Those deals now means major telecom network owners also own major TV networks, which could interfere with a government desire to allow more foreign investment on the telecom side but not broadcasting.
 
The government has said it won’t set the auction rules until it has decided whether it will change the foreign investment environment.
 

 

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