Neither will say how many subscribers they have after 12 months of operations. But both maintain they are strong and will continue expanding their networks

Public Mobile, Mobilicity mark 1st anniversaries

This month marks the first anniversary for two of the newest wireless carriers in the country, Mobilicity and Public Mobile.

Mobilicity, backed by Toronto entrepreneur John Bitove, goes into its second year of operation with $215 million in new financing from private investors and having just started service in its fifth city, Calgary.

Public Mobile, controlled by private investors, operates in Toronto and Montreal and recently expanded its offerings to include wireless data after concentrating on voice service.

Neither will say how many subscribers they have after 12 months of operations. But both maintain they are strong and will continue expanding their networks.

Their launches were memorable for different reasons. “We had done some pre-selling, so we had a substantial base of customers before we formally launched the network,” recalls Bruce Kirby, vice-president of Public Mobile, which celebrates its anniversary on Thursday. “It was a bit of a rush to get their all their phones properly activated.”

Mobilicity CEO Dave Dobbin remembers a mini financial crisis. “So many customers came in [to the carrier’s first store] we overloaded the limit on the credit card machine. We actually had to [temporarily] stop selling part way through the day because we had to call Visa to up the limit on the machine.”

Amit Kaminer, an analyst with the SeaBoard Group telecommunications consultancy, says the pair — as well as fellow newcomers Wind Mobile and the wireless service of Quebec cableco Videotron Ltee – have given subscribers wider options than they had a year ago.

“We had high prices for voice and data,” he said. Since the launch of Wind Mobile in December, 2009, followed by Mobilicity and Public Mobile, not only have prices dropped and unlimited voice plans appeared but system access fees have disappeared.

BCE Inc.’s Bell Mobility, Rogers Communications Inc. and Telus Corp. still hold the lion’s share of wireless subscribers. According to the Canadian Wireless Telecommunications Association (CWTA), at the end of 2010 together they held more than 23 million wireless subscribers across the country. That’s over 90 per cent of the market.

But Kaminer notes that 80 per cent of their customers are locked into contracts. Part of the strategy of the new entrants is to pry them away when the contracts expire.

The new entrants are also after those who have never paid for a cellphone, the so-called entry level buyer.

Bell, Rogers and Telus have replied with their Solo, Chatr and Koodo brands respectively.

For Kirby, a sign of how much the new entrants are getting under the incumbents’ skin was Rogers’ marketing response. “The fact that Rogers came out with the Chatr brand and ran what were effectively negative ads for four months until the Competition Bureau shut them down was a little surprising,” he said.

Dobbin says that “when we started we were the underdogs” who some thought would be crushed by the incumbents or by Wind and the buying power of Orascom Telecom, its large foreign investor. A year later and it is Mobilicity that has found more private investors, he points out. And, he adds, Mobilicity, which spent $243 million on AWS spectrum, has a high-speed network the equal of the incumbents in the cities where they compete.

Public Mobile, meanwhile, is still going after spending just over $52 million on what most thought was oddball PCS spectrum.

More disappointing was the inability – not unexpected — of the incumbents to work with new entrants on reasonable prices for sharing towers and roaming, as demanded by Industry Canada. Kirby described the incumbents’ efforts on tower-sharing as “stonewalling”, while roaming pricing was “take it or leave it.”

The popularity of the new entrants is testament to the Harper government’s strategy of setting aside spectrum for new entrants in the 2008 AWS/PCS spectrum auction to ensure more competition in the industry.

Their ability to survive, however, will be heavily dependent on the rules for the next auction, expected to be held in 2012. While their networks are new and not clogged with traffic, industry analysts believe that without access to the valuable 700 MHz frequencies about to auctioned their futures are limited. The odds of a mergers or acquisition – already high in the face of competition from giants like Bell, Rogers and Telus will increase.

Industry Canada has yet to release the rules for the upcoming auction, The newcomers are urging the government to again set aside spectrum for bidders with only a small market share. The incumbents want an unrestricted auction.

No one underestimates the importance of the 700 Mhz auction because its spectral efficiencies mean new entrants will be able to better compete with incumbents in offering data services.

Meanwhile, more competition is coming from two other new entrants: Halifax-based Bragg Communications Inc.’s Eastlink cable division may launch its wireless services this year, while Calgary-based Shaw Communications Inc. says its twice-delayed cellular service should go live next year.

Related Download
IDC Analyst Connection - Unified Threat Management: Benefits of an Integrated Approach to Network Security Sponsor: Fortinet
IDC Analyst Connection – Unified Threat Management: Benefits of an Integrated Approach to Network Security
This IDC Analyst Connection looks at the the benefits of using a UTM platform integrated with network connectivity and how it will save the enterprise money, reduce the number of vendors' products needed to be purchased, improve the communications between devices, offer the opportunity for organizations to deploy more sophisticated capabilities, and vastly improve security.
Register Now
Share on LinkedIn Share with Google+ Comment on this article
More Articles