Wireless startup Public Mobile will start offering service in May with its new CDMA-based network, a 3G standard which cellular companies in North America see as increasingly outdated.
However, the company said Thursday it’s ready to upgrade to the advanced so-called fourth generation LTE broadband standard when needed.
“One of the advantages of building a modern network today is most of the radios are soft-ware defined,” said Brian O’Shaughnessy, vice-president for network and technology, said in an interview, “so it’s largely a software change to make it LTE.
“I’ll have to put some computer boxes at the switch to enable the functionality, I’ll probably have to put one card in a base station to enable it, but everything I’m installing now is capable of supporting LTE as it stands. It’s a minor upgrade.”
The startup expects to have its carrier licence shortly from the Canadian Radio-television and Telecommunications Commission (CRTC) and will begin service in mid-May.
It will start with a $40 a month unlimited prepaid talk and text plan (not including taxes) and full-priced handsets ranging from $70 to $180. To lure customers, those who sign up before commercial service begins will get free long-distance within the country as long as they remain subscribers.
The target market is “working class” Canadians who have been avoiding cellular, part of the estimated 30 per cent of the country that hasn't signed up for wireless.
The company spent $52 million on little-wanted PCS “G-block” frequencies in the 2008 spectrum auction covering populous southern Ontario and southern Quebec. That spectrum was ignored by most bidders who thought no handset maker had devices that could run on those particular frequencies.
By comparison other bidders spent hundreds of millions more buying more advanced AWS spectrum, which better handles bandwidth-hogging rich media.
For Public Mobile, the relatively inexpensive PCS spectrum suits its aim to offer a modestly-priced service by keeping down its capital expense.
Meanwhile other North Amercian PCS carriers are looking ahead to LTE, an all IP-based and highly-efficient broadband technology. BCE Inc. and Telus Corp., who partnered for years on a PCS-based network using CDMA technology, just spent around $1 billion to build a new 3.5G HSPA network, which will eventually be upgraded to LTE. In the U.S., Verizon Wireless MetroPCS Wireless Inc. hope to launch LTE service by the end of the year.
To make sure it won’t be stuck in the past Public Mobile's network, built around base station equipment from China’s ZTE Corp., can easily be upgraded to the advanced LTE standard when needed.
ZTE will charge for the upgrade components, O’Shaughnessy said. But, he added, “I’d much rather be in a position where I’m buying a software upgrade and I’m pushing it from a central location to every base station, than having to get a whole bunch of people every night for three months to unbolt, [install hardware], re-bolt and test.”
Having an LTE-capable network more than just helps the startup be ready for the future. It also makes Public Mobile more attractive to as an acquisition by competitors who might be leery of purchasing a company with older technology.
Still, Iain Grant, managing director of the telecommunications consultancy the SeaBoard Group, said the amount of spectrum Public Mobile has now won’t be enough to satisfy the demands LTE will put on PCS spectrum. At Thursday’s press conference, Public Mobile CEO Alek Krstajc said he will likely participate in the next spectrum auction, in the 700 Mhz band, which might be held in 2012. That band is ideal for LTE. But Krastajc also maintained that the CDMA-based system Public Mobile now has is very efficient.
On the other hand, O’Shaughnessy acknowledged that it will be a few years before Public Mobile shifts to LTE. That will depend on customer demand for advanced capabilities such as Web surfing and sending videos. Right now, however, those customers aren’t being targeted by the company. In fact at the moment its network has no data-sending capabilities.
Public Mobile is trying to make it easy for people to sign up. There will be no credit checks or contracts. Voicemail and call display is $5 a month extra.
Initially, its handsets are the ZTE C78, the Samsung R312 and the Kyocera Tomo and G2GO. More will be added by the end of the year, but “for now,” Krastajc said, no smartphones.
To start, only Toronto and Montreal will be covered. Roaming outside the coverage area is anticipated, but won’t initially be available. Over time surrounding areas will be added to the network and eventually coverage will extend up Hwy. 401 between the two cities.
By aiming at the roughly 30 per cent of eligible Canadians who aren’t wireless subscribers, Public Mobile is trying to stay away from directly confronting the leading wireless market providers, Bell, Telus and Rogers Communications Inc., who Krastajc says have the power to vigorously defend their turf.
However, the trio have “bargain” brands of their own: Virgin and Solo (Bell), Koodo (Telus) and Fido (Rogers).
As of Thursday 25 company-owned or franchised stores are open and selling phones in Toronto and Montreal, a number that will triple by the end of the year. Phones will also be sold in unnamed retail outlets working-class people frequent.
Krstajic wouldn’t say how many subscribers he expects to have after the first year, saying he’s patient for growth. But, he added, he’s “impatient for profitability.”
In saying that he’s going after an underserved market, Krstajic criticized fellow startup Wind Mobile, which launched in December in Toronto, Calgary and, recently, Edmonton. Already Wind had to part with two senior staff, with chairman Anthony Lacavera acknowledging his network has had some “hiccups.”
To avoid similar network problems Krstajic said Public Mobile won’t launch until May, although he said it’s ready now.
Wind, he added, is trying too hard to go up against Bell, Rogers and Telus. “They look and smell like and incumbent … and that’s going to hurt them.” He also believes Wind doesn’t have a solid distribution system.
It didn’t take Wind long to respond. In a written statement the company noted that Wind’s present network Toronto-area network is four times bigger than Public Mobile’s would be at launch, which only covers the city proper. Step outside the city boundaries and Public Mobile phones won’t work, the statement said.
However, Public Mobile plans to expand its network in the Toronto area significantly by the end of the year.
The statement also said Wind’s $35 a month plan includes unlimited calling throughout Ontario and Alberta if the caller is within a Wind zone (Toronto area, Calgary and Edmonton.) For Public Mobile, calling outside Toronto or Montreal is long-distance until roaming is set up.