In a move that does not seem to have caught anyone by surprise, Bell Canada and Telus Corp. announced last week they are working together on a High Speed Packet Access (HSPA) network, scheduled for completion in 2010.
“It’s been widely rumoured in the last few weeks and for a year financial analysts have been saying it’s coming any day,” said Lawrence Surtees, vice-president and principal analyst for communications research at IDC Canada. “I’ve been writing about it for two and half years that this is going to be a logical progression.”
Rather than ditch their respective CDMA and EVDO networks, the companies indicated they will continue to offer existing wireless services for now.
Telus said it will support its EVDO and Mike networks “for the foreseeable future” while Bell said it “continues to expand and enhance” its national CDMA network.
“Certainly for the foreseeable future we will be offering EVDO,” said Stephen Howe, senior vice-president, wireless network and chief technology officer at Bell Mobility.
To overlay its CDMA network with HSPA, Bell said it will “leverage” an existing network-sharing agreement with Telus, originally inked in 2001.
“We roam out west on Telus and for all intents and purposes you can’t tell if you’re on the Telus network because everything is routed back to our servers,” Howe said. “You can think of it as an extension to our current agreement.”
Telus did not get into specifics of cost, only saying that its “initial capital expenditures” for the HSPA buildout “are included” in its 2008 capital expenditures “guidance” of about $1.9 billion and total spending related to the HSPA network is “approximately $750 million.”
Howe would not say how much Bell will spend but Surtees estimates each carrier will spend $350 million each year in 2008 and 2009 on the HSPA network.
“Keep in mind (Bell has) an annual (capital expenditure) program of about $4 billion including mobility,” he said.
Surtees added the biggest advantage for both carriers is the ability to offer additional handsets.
“It gets them to be able to contemplate devices like the iPhone if (Apple CEO) Steve Jobs is willing to provide it to them,” Surtees said.
Howe said although Bell Mobility currently offers some dual mode handsets that use both EVDO and HSPA, the national HSPA network would let them offer more handsets.
The companies plan to use equipment from both Nokia Siemens Network and Huawei.
“This is a huge contract win for Nokia Siemens in Canada” Surtees said. “Siemens has been trying to make a big carrier win in Canada for decades. Now they finally got a large national and wireless network.”
He added in the past, competition in Canada was usually a “two way race” between Ericsson of Sweden and Brampton, Ont.-based Nortel Networks Corp.
Surtees said this would help Bell and Telus compete with companies that bought spectrum in Industry Canada’s auctions earlier this year.
“The timing is interesting given that the spectrum action will introduce at least one or two major newcomers in most territories within about a year or so,” he said. “This allows Bell and Telus to be on par with what we would expect a newcomer to go with HSPA speed right out of the gate.”
He added it puts both companies in a position to offer Long-Term Evolution (LTE) technology as a fourth-generation wireless standard.
“It seems to set WiMAX and LTE as two different versions of 4G, with perhaps different markets and different market needs,” Surtees said. “It’s looking like LTE will be favoured by incumbent or existing wireless carriers in larger developed markets. WiMAX is being embraced by new entrants in underdeveloped or undeveloped wireless markets.”