Wireless carriers in the West will get a three-month reprieve from facing cableco Shaw Communications Inc. after the company said it will delay the launch of its new wireless network until 2012.
The announcement, made Thursday when the Calgary-based company was holding is annual shareholders meeting, comes after the head of the new wireless division, Lawrence Cooke, suddenly left the company and as it deals with the $2 billion acquisition of the CanWest Global Communications Inc. TV network.
“We remain committed to wireless and are excited about the opportunity wireless represents for our company going forward,” CEO Brad Shaw said in a statement. “With the rapid evolution of wireless technology and changing market conditions, we believe it is best to take a disciplined approach to our wireless rollout to ensure we deliver an exceptional customer experience.”
Wireless service will start early next year, three months later than the company had anticipated, and only in one market at first. This year the company expects to spend between $150 million and $200 million on the new network.
At a conference call with financial analysts, executives deflected questions about the reason for the delay. "As we go along we're learing and we're understanding how the market works and the wireless customer," Shaw said. Historically, he added, the company has always introduced new products one market at a time.
Asked by one analyst if the delay is due to equipment or something beyond the company's control, Shaw replied that it was the company's decision.
However, executives also made it clear the network won't leapfrog competitors and go the next generation of wireless data technology called LTE. Instead, it will keep up with most other carriers and have use HSPA+ for the data network. "We're not waiting for LTE," said Michael D'Avella, senior vice-president of planning. When the time comes, he added, the new network will be able to convert to LTE. One of the considerations for a move, he added, will be the availability of handsets and USB modems. In the U.S., where LTE networks are starting to come on-line, carriers are using their 700 Mhz spectrum. That spectrum has yet to be auctioned off in Canada.
In 2008, Shaw spent just over $189 million buying AWS spectrum covering most of Western Canada, where it can leverage its cable network to bundle wired and wireless packages.
Its biggest competitor will be Telus Corp., which is rolling out a fibre optic network so it can compete with Shaw in offering so-called quad-play packages of phone, TV, Internet and wireless services.
When the Shaw network is completed, the major cities of Vancouver, Calgary and Edmonton will have six facilities-based wireless carriers: Incumbents Telus, Rogers Communications Inc., BCE Inc.’s Bell Mobility, as well as startups Wind Mobile and Mobilicity. If Novus Wireless joins, that will make it seven, making the three cities the most competitive in the nation.
(Technically speaking, in Calgary there would be eight carriers counting Airtel Wireless Ltd., which focuses on the business market.)
Toronto and Ottawa already have six carriers (the three incumbents plus Wind, Mobilicity and Public Mobile), while Montreal has five (the three incumbents, Public Mobile and cable operator Videotron.)
The delay means nothing to Telus, Bell and Rogers, who are well-funded for what will be a long-term fight for subscribers. However, Wind and Mobilicity will need every advantage they can get.
On the other hand, in their young lives the startups are aiming at different markets. At least initially they are concentrating on price-conscious subscribers, many of whom don’t yet own a cellphone. Shaw, on the other hand, will want to leverage is cable subscribers.
Shaw also said Thursday that in its first quarter, which ended Nov. 30, consolidated revenue was $473 million, up 19 per cent over the same period a year ago. The results partly include revenue from the CanWest acquisition.
Net income for the quarter was $20 million, compared to $114 million for the same period a year ago. Part of the drop was due to a charge of $139 million after the federal broadcast regulator discounted a benefit obligation from the CanWest purchase, as well as a restructuring charge.