Could there be real competition again within Canada’s wireless industry – a.k.a the land of disciplined pricing and an obsession with ARPU? It looks pretty good now that Quebecor Inc. has signaled its intentions to get into the wireless business by bidding on spectrum so it can build a 3G network in Quebec. Not content to simply unveil Quebecor’s wireless plans, CEO Pierre Karl Péladeau Canada lags the U.S. and much of Europe in wireless adoption largely due to a lack of competition. “There is a flagrant lack of competition in this sector”.
Of course, this comment drew a rebuke from Rogers CEO Ted Rogers, who said “Canada has some of the lowest rates in the world and we are one of the top countries in the world for wireless usage. Statistics and arguments to the contrary are being manipulated by those who want the government to give them favours when they build a wireless network – favours that Rogers never received.” Hmm, those sounds like fighting words. By the way, anyone expecting Shaw to get into the wireless business will be disappointed. Last week, the Calgary-based cableco said the return on investment prospects didn’t look attractive enough.
4 Comments
Lowest wireless rates in the world??? this coming from a company that has the highest data rates for wireless by a factor almost incalculable !!!
http://www.thomaspurves.com/2007/04/09/canada-worse-than-3rd-world-countries-when-it-comes-to-mobile-data-access/
I’m not going to lie Mark. After reading your post I shed a tear of joy!
This is great news!
How can Ted claim “some of the lowest rates in the world” with a straight face? That’s a complete load of crap. Perhaps you can dig up some countries with higher rates, but the real comparison should be to the United States, and study after study has shown the U.S. has MUCH lower rates than in Canada. The wireless carriers here have been milking their oligopoly. They’ve been lazy, not very creative, and have poor customer service. This is a sign of lack of competition. If you travel a lot and are subject to roaming charges, it’s cheaper to get a satellite phone service from GlobalStar than to stick with a Canadian wireless service. Shame on the Canadian government, and the CRTC, for letting this go on. Don’t even get me started on the service access fee — a license to print money.
Ted Rogers was also quoted in the Financial Post as saying “Statistics and arguments…..are being manipulated by those who want the government to give them favours when they build a wireless network — favours that Rogers never received.” If memory serves me correctly, didn’t the non-ILEC facilities-based cell companies get an 12 or 18-month head start at the beginning before Bell and Telus could start up their operations? I believe the purpose of this favour was to ensure the Rogers’ of the world would be able to compete against the old, more entrenched guys (Bell).
The question for the fedral government now is should new entrant get a similar favour or not? If the government decides there should be additional players in the wireless market because it believes, like Karl Peladeau, that “Canada’s wireless market is in the hands of an oligopoly of three companies –Bell, Telus and Rogers and that there is a flagrant lack of competition in this sector and the reality of the market is that none of these companies is forced to offer better products or better prices”, then it has to decide whther or not a new player has any chance of surviving without a subsidy or favour like Rogers got at the beginning of cellular.
If it decides a subsidy of some sort is needed, they can’t give the new entrant a head start but they could, among other things, give the new entrant a break on the price of the spectrum they will need.
If they did this they could also say that if new entrants take the price break they must actually use the spectrum within a certain time frame or lose it (i.e. they must hand it back with no compensation). Another condition for the price break could be that if they do use the spectrum and build a network they can’t flip it within a certain time frame.
It all depends on the government’s level of concern about the wireless market and how much of a priority having a new entrant is to them.