Predictions 2013 Part 1: Make-or-break for wireless

Every December most reporters across Canada engage in a vicious and gut-wrenching ritual: Looking backwards at the last 12 months so they can predict events of the next 12.

My track record on this has been particularly undistinguished so I dare you to read on:

1. 2013 will be a make-or-break year for the Harper government’s wireless strategy

Five years ago the telecom industry was quivering with excitement over the government’s rules for the 2008 spectrum auction, which made sure there would be new companies to give Bell Mobility, Telus Corp. and Rogers Communications competition.

But with another spectrum auction scheduled for next year, the quivering might be for the future of competition.

First to launch – after a tortured gestation – was Wind Mobile in December, 2009, followed by Public Mobile, Mobilicity and Videotron in 2010. But according to the latest estimates, the big three still have over 90 per cent of wireless subscribers.

One analyst thought that by the end of 2015 new entrants would have 24 per cent of the market. That prediction has been scaled back.

Videotron, thanks to having a Quebec-wide cable business for support, is in good shape. But the other three startups are growing slower than they’d hoped. For example, Wind Mobile, with about 510,000 subscribers, isn’t near the 1.5 million it was hoping for after three years of operations. Mobilicity and Public Mobile haven’t released recent subscriber numbers.

Meanwhile, of the two other cablecos who bought spectrum, Bragg Group’s Eastlink is only just about to open its cellular store doors, while Shaw Communications is taking a pass.

In the spring of 2013 there will be another spectrum auction. It will tax the financial resources of Wind, Mobilicity and Public Mobile unless there’s a merger or Ottawa’s new 10 per cent foreign investment rule pulls in tens of millions of dollars from new shareholders.

Were industry observers overly optimistic about how eagerly Canadians wanted new carriers? Did they wrongly calculate in 2009 that with about 30 per cent of the population who still didn’t have a cellphone there was lots of cash on the table – forgetting that in large cities that number would be smaller? Did they forget that Bell, Rogers and Telus were giants who had lots of resources to fight with?

Yes, yes and yes.

Time is running out.

The upcoming spectrum auction will be over prized 700 MHz bands which are particularly favourable for the latest LTE wireless technology. It won’t be cheap. Players will need to be well funded, despite (or perhaps because of) the rules Industry Canada has set down.

Some new entrants are hoping that tweaks to the roaming and tower sharing rules, forcing the big three to be more generous, will be enough to encourage foreign investors

But I believe that before the auction a major shakeup among the smaller carriers has to occur, either through consolidation or a foreign investor.

NEXT: Research In Motion’s future still cloudy

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Jim Love, Chief Content Officer, IT World Canada
Howard Solomon
Howard Solomon
Currently a freelance writer, I'm the former editor of and Computing Canada. An IT journalist since 1997, I've written for several of ITWC's sister publications including 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 [@]

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