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Good News In The Wireless Kingdom

Seaboard Consulting finds something to cheer about, namely as a result of last year's spectrum auction.


May 1, 2009  


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I am sure there is no need to remind everybody that it is a very different world out there in the Land O’ Business these days. And the wireless industry is not immune. Here are a couple of recent examples:

In April, Shaw Communications Inc. CEO Jim Shaw held a conference call with analysts. He predicted a rosy future for Shaw’s digital cable operation, as Joe and Jane Canada hole up in the home entertainment bunker to weather the recession. Sure makes sense: after all, watching a movie on TV at home, with your own popcorn, is going to save you a bundle over a night at the multiplex. What is more, you can adjust the volume to your own preferred level and will not have to put up with those rambunctious teenagers. (If you are living with those teenagers, you might find that they too stay at home to watch movies. If so, I am afraid you are on your own.)

At the same time, Shaw noted that the company is in no rush to roll out wireless, despite paying Ottawa $190 million to acquire 20 MHz of spectrum in last year’s auction. Shaw told analysts, “It is going to be weak. There are a lot of problems with wireless. There is a lot of price competition.”

Even as Shaw reiterated his company’s decision to sit out this dance, Telus reported slower than expected growth in its wireless business the first quarter.Netadditions of 48,000 in the first three months of 2009 paled in comparison to 88,000 additions during the same period a year ago.

What is more, Telus experienced a 5.6% drop in the amount of money each user generated for the operator. This figure, known as average revenue per user, or ARPU was down due in large part to a drop in ARPU among users of the company’s business-oriented Mike service.

Telus highlighted three reasons for the weaker numbers, all the result of the weaker economy: fewer people are working, those that are have been told to be more vigilant about spending (including wireless spending), and individuals are being more cautious with their money which means they are less likely to buy new phones or services.

So, is there any good news out there in the Wireless Kingdom? SeaBoard Group says YES!

There sure is, according to the consulting firm. In its report Canadian Wireless Stakes: The Shape of a Market to Come, released in March, the telecommunications consultancy noted that a number of companies that acquired spectrum in last year’s auction are planning to launch new wireless services later this year.

These include Quebecor Inc. in la belle province, DAVE Wireless, Public Mobile and Globalive.

Of these, Public Mobile anticipates offering a $40 per month service, featuring unlimited voice and text messaging, when it lights up its network in Ontario and Quebec. The SeaBoard report notes this should happen just in time for the 2009 Christmas-buying season.

Meanwhile, Globalive plans to launch two brands including a discount wireless service under the “Yak” brand by the end of the year. SeaBoard reports the Yak service should come in at around $40 per month as well.

Interestingly, this was the price point at which Microcell launched the Fido brand in the mid-1990s. If memory serves, Clearnet’s digital cellular service, unveiled about the same time, was similarly priced.

The difference is that Microcell and Clearnet, now part of Rogers and Telus respectively, did not offer unlimited talk time at those prices. But their offers were definitely revolutionary, and as Canadian wireless users we can thank these two companies for a number of innovations that we now take for granted, such as per-second billing and flat-rate pricing that applies any time of the day, any day of the week.

So, the impending launch of a number of new carriers raises a couple of interesting questions for current and potential wireless users.

Will these new entrants offer services and plans that are similarly revolutionary? And will the incumbent carriers, which have adjusted their offers — usually only if one signs a multi-year service contract — in anticipation of increased competition, continue to sweeten the pot to attempt to lock in more users as launch dates grow imminent? Why not take SeaBoard’s advice: avoid those contracts, and wait and see?

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The impending launch of a number of new carriers raises a couple of interesting questions for current and potential wireless users.