Wait before signing that cellphone deal, consultant advises Canadians

Despite tempting deals from the discount wireless brands of Bell Canada, Rogers Communications and Telus, a telecom consultant says consumers should hold off buying for a year until all of the new cellular entrants are on the air.

Of the new companies that won spectrum in last year’s AWS auction only Public Mobile has firmly committed to starting service late this in the third quarter, Iain Grant, managing director and author of a new report from the SeaBoard Group called The Shape of the Market to Come, said in an interview Monday.

The other main spectrum holders, Globalive Wireless and Videotron, have more elastic timelines while DAVE Wireless has yet to say when it will launch.

It isn’t know whether Bragg Communications, which won licences covering much of Atlantic Canada, will launch this year. It has so far been silent on plans for its spectrum. However, today its Eastlink Cable division resells wireless through a leasing deal with Rogers. Calgary’s Shaw Communications has already said it is sitting out 2009.

“Much of our theory (on launch dates) before the [financial] meltdown was that there will be some systems by the fall – maybe, if all things went well, by the summer,” Grant said. “But since then the world has changed a couple of times” and it’s taking longer for some of the new spectrum holders to raise money for building networks. In addition, it’s taking longer than expected to negotiate antenna site sharing deals with the incumbents, Grant said.

So his advice is that consumers should wait until the new entrants have actually launched, which may be 12 months from now, for the best pricing. There’s lots of ads now from the incumbents, but in his report Grant dismisses them as “Old wine, new bottles.”

So far, Globalive and Public Mobile have suggested they’re going after the underserved market of consumers who haven’t yet bought a cellphone, which is about 40 per cent of the potential market. Both have said they’ll release $40 a month unlimited voice plans. Videotron hasn’t talked about pricing, but is going after a higher market that wants to take advantage of the multimedia content it can offer as part of a cable and publishing conglomerate.

If Globalive and Public Mobile were to launch today they’d face roughly similar-priced plans from the value divisions called Solo (Bell), Fido (Rogers) and Koodo (Telus). However, their plans have monthly limits ranging from 300 to 400 minutes.

“The existence of pure wireless companies within a market keeps everyone’s pencils sharpened,” says the SeaBoard report. “A pure-play provider positions its single service-set based upon its limited product portfolio and looks to exploit opportunities without regard to the sort of cross-service impact that characterize more integrated competitors.”

Bell and Telus could counter with their own unlimited plans, but that would accelerate the exodus of their landline customers to wireless, SeaBoard argues.

To Grant, the newcomers have substantial advantages – no legacy landline network to pay for, no existing customers to annoy by changing rate plans and the ability to chose what cities to launch in. Even the recession plays into their hands by putting pressure on equipment providers to price right for sales, SeaBoard argues. On the other hand, the Bell, Rogers and Telus have their own advantages, Grant acknowledges, such as the ability to reward customers for staying with their mobile services.

DAVE Wireless may soon reveal its hand. The company, backed by Toronto entrepreneur John Bitove, recently put out a request for proposals for network hardware. Grant says once it knows how much the network will cost to build, it will have a better idea of its market and pricing plans.

It’s only March, but 2009 “promises to be an exciting year” for news, says SeaBoard. But, it advises, for now keep your wallet in your pocket.

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Jim Love, Chief Content Officer, IT World Canada

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Howard Solomon
Howard Solomon
Currently a freelance writer, I'm the former editor of ITWorldCanada.com and Computing Canada. An IT journalist since 1997, I've written for several of ITWC's sister publications including ITBusiness.ca and Computer Dealer News. Before that I was a staff reporter at the Calgary Herald and the Brampton (Ont.) Daily Times. I can be reached at hsolomon [@] soloreporter.com

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