U.S. could be looking north for wireless

It is no secret that the wireless industry in Canada gained serious momentum through 2001, but what may come as a surprise to Canadian carriers is the effect our wireless industry might be having on our neighbours to the south.

A recent Yankee Group in Canada report suggests that American carriers are taking a long hard look at the Canadian wireless market and are starting to see it as a potential testing ground for new wireless technology.

According to Jeremy Depow, research analyst with the Kanata, Ont.-based research firm and author of the report entitled Wireless Year in Review: 2001Sets the Stage for the Next Generation, U.S. carriers are increasingly viewing Canada as a “prime test bed for wireless generations to come.”

Depow cited Canada’s geography, service pricing, regulatory framework and demographics as contributors to this cross-border voyeurism. He also noted that the recent network-sharing agreement between the four major Canadian carriers (Bell, Telus, Rogers AT&T and Microcell) to offer short messaging services has proved that the Canadian experience is worth investigating.

Depow even went as far as to suggest that Canada’s wireless subscriber penetration is expected “to grow at a relatively constant rate, eventually overtaking the United States…” based on the percentage of Canadian subscribers in urban areas compared to those in the U.S. The Yankee Group also predicts that “Canada’s wireless industry will increasingly become a model for the United States in determining which offerings will flourish and which will not.”

Depow said that there has too often been a comparison between North America and Europe, which he said does not apply, as the telecommunications services offered in the two regions are quite different. He said that in order to learn important lessons, carriers have to look at similar landscapes.

“For example, in terms of the text messaging (agreement), Canada is ahead of the U.S. in getting interoperability going,” he said. “Part of the reason for [a U.S. lag] is billing difficulties, and, also, U.S. carriers are regional. But if they can look at Canada and see that it is working in similar social trends, they can certainly learn those lessons and apply it to their markets.”

Depow said that a lot of Canadian companies have been quite frank in saying that they would not have been as successful had they started outside of Canada. 724 Solutions fits this bill. The mobile Internet solutions provider has offices in Houston but is headquartered in Toronto.

“We have been very fortunate,” said Alistair Rennie, senior vice-president, corporate development for 724. “We’ve been pretty open about the fact that we think Canada has been a great place to start the business. I think the Canadian companies have done a really good job building out their networks.

“We have always attributed the fact that we have had some great partners in Canada and that Canada has had some great people in the mobile operator space that have been willing to put the right kinds of programs around early technology to let other companies flourish. It is a market that is open to people working together.”

However, Rennie said he does not think the U.S. views Canada as a test bed. He said that although there is nothing wrong in a statement that suggests U.S. carriers look to Canada to see what is happening, he does not necessarily think they are looking to us to lead by example.

Rogers AT&T Wireless Vice-president of New Product Development David Neale was blunt about his views of the Yankee Group report.

“I wasn’t overly impressed with the study,” Neale said. “We have not seen any evidence of [the U.S.] looking at Canada as a test bed.”

Telus Mobility’s Robert Blumenthal, vice-president of products and services in Mississauga, Ont., could not wholeheartedly agree with Depow’s findings, noting that Telus Mobility had not seen evidence of American carriers looking to test out products and services in the Canadian marketplace.

“I think there might be some instances where (the U.S.) may look at Canada, as with the interoperability agreement with SMS,” Blumenthal said. “I think Canada has some great opportunity, but I wouldn’t necessarily say that the U.S. is looking here for a testing area.”

As far as the Cellular Telecommunications & Internet Association (CTIA) in Washington is concerned, there is a definite possibility that U.S. carriers are looking to Canadian experience, but the organization does not have hard evidence of this happening. Travis Larson, a spokesperson for the CTIA, did say that the organization is working with carriers and operators on messaging interoperability.

“Where are we in terms of messaging? Not where Canada is yet,” Larson said, but added that he was unsure of the Canadian influence of the initiative.

A spokesperson for Atlanta-based Cingular Wireless told Network World Canada that in terms of keeping an eye on this country, it is not, and that the company has not and is not doing anything in particular with or in Canada.

Still, Depow said he stands by the predictions despite the disagreement.

“Canadian carriers are now the first to enter into an interoperability agreement,” he said. “That will speed up the evolution of text messaging. I think you will see more American carriers, like AT&T Wireless for example, looking at Canada, comparing the experiences that work here, and taking that into account.”

AT&T Wireless declined to comment for this story.