Wireless war finds peace on two fronts

A wave of cooperation recently swept across the Canadian wireless industry, with the country’s top carriers agreeing to share some of their networks and to enable easier flow of short messaging services across their collective airwaves. Whether these announcements are part of a developing “bury-the-hatchet” trend, or whether they are two coincidental concords is yet to be determined, however.

On Oct. 17, Bell Mobility, Telus Mobility and Aliant Telecom Wireless announced that they would be sharing each others’ code division multiple access (CDMA) networks. The agreement allows each player to move into the others’ territory without having to build out new CDMA infrastructure. Western telecom power Telus can now flood into Ontario and Quebec, areas it has long coveted, and Bell can similarly roll out services in Western Canada.

With its superior speeds, the CDMA protocol is especially important to the companies’ increasingly intense desire to get third-generation (3G) wireless services out to their customers. The agreement will also allow the carriers to extend their reach into notoriously underserved rural regions.

Mark Quigley, telecom analyst with Kanata, Ont.-based The Yankee Group in Canada, said the agreement will make “a tremendous amount of difference” for the carriers.

“It will mean that they won’t have to spend as much money rolling network out in each others’ territory, so they can concentrate more on the product and service development end, which is going to be important,” he said.

On Nov. 6 at the Communications 2001 trade show in Toronto, Rogers AT&T Wireless, Bell Mobility, Telus Mobility and Microcell Connexions Inc. announced that customers using any of the four carriers’ short messaging services (SMS) would now be able to send those messages seamlessly across all four networks. The services were previously proprietary, meaning that a Telus subscriber, for instance, could only send short messages to another Telus subscriber. They were out of luck if they wanted to send one to a Bell customer.

George Cope, president and CEO of Telus Mobility, said the SMS agreement will open up communication amongst business partners who might not be on the same network.

“Now, because it’s inter-carrier, if you have other partnerships where that company’s not necessarily on Telus, now you can go across the enterprise,” he said.

Quigley, however, said the announcement is more about getting consumers used to looking at their phone in a new way than in enabling smoother enterprise communication.

“We haven’t seen a whole lot of penetration in terms of enterprises to use [SMS] to keep in touch with customers, etc.,” he said.

What could be more important to businesses in the long run is the cooperative air amongst the carriers that both announcements have helped to define. It’s a trend that we could see continue in the months ahead, according to Ian Angus, telecom consultant for Angus Telemanagement in Ajax, Ont.

“If you look worldwide, we are seeing a lot of talk, at least, about sharing the cost of building infrastructure that there’s a lot of wireless infrastructure that could be in common and especially when they use the same technology, as is the case between Bell and Telus (with the CDMA agreement) – they’re both CDMA and that makes it much, much easier to share resources.”

Angus also pointed out that Canada’s wireless carriers have a history of being able to cooperate, most notably in their sharing of transmitting towers in many parts of the country. Also, the economic realities that each carrier faces points towards cooperation making a lot of sense, Angus added.

“They’re confronted with significant marketplace issues, and those press them (to) reduce capital costs, because going out and raising millions of dollars to build out into rural and remote areas is difficult in today’s economic environment.”

If this atmosphere of agreement continues, just how far might it go? Can customers expect to see any form of consolidation in the wireless industry?

“In some respects we’ve seen consolidation already because Telus/Clearnet and BCE/Bell Canada own 54 per cent of Aliant in Eastern Canada. They also have an agreement with MTS in Manitoba,” said Quigley.

And while he said any potential mergers are certainly not to be expected in the near future, Quigley did say that some synergies are plain to see – such as those between Rogers and Microcell, two companies that do not share the same competitive dynamics.

“While they compete on the wireless front, they don’t compete in other areas of the telecom world, so perhaps there would be some synergies there,” he said. “Rogers has its cable assets, and its high-speed Internet. Microcell has made some inroads on the high-speed side with Inukshuk, but there hasn’t been a whole lot there yet, so I would think from that, it makes those kinds of alignments perhaps a little easier to rationalize.”

For now, however, it’s competition, not cooperation, that rules the day, according to Telus’s Cope.

“We make our living on the idea of how we’re going to beat each other up, not how we’re going to work together.”

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