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The value-added alternative

Rogers stands to gain from wireless CLEC, but for some reason it seems reluctant to take advantage of this unique offering.


January 1, 2006  


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It has been another good year for the wireless sector, and that is not just coming from what the wireless industry says. I base this claim on the Nov. 8th issue of The Daily, Statistics Canada’s regular digest of information.

In that particular edition, the nation’s number crunchers published telecommunications statistics compiled during the second quarter of 2005. (To paraphrase a famous saying, the number crunching wheels of the federal government crunch slowly, but exceedingly fine.)

Stats Canada notes that the wireless industry achieved record revenues in 2005 Q2. The wireless haul was up more than 16% versus a year earlier, to $2.7 billion. Wireless accounted for more than 30% of all telecom sector revenues in the quarter — double what it was five years earlier.

The StatsCan report also notes that the success of the wireless market is coming at the expense of wireline.

While the number of traditional phone lines dropped just 1.4% year over year, there are still 19.2 million of those residential and business connections across the country. But StatsCan observes that “the erosion of this market is a broad trend observed since the end of 2001. It is generally attributed to innovation and technological substitution as well as to competition.”

Where things get interesting is that the federal agency notes that while the decrease in traditional phone lines was initially noticed in the business sector, the drop in residential lines is now outpacing corporate cutoffs.

Calling it a “fundamental change,” StatsCan concludes that “it seems clear that new habits are taking root among residential users. Consumers are increasingly inclined to change their ways of communicating and their suppliers. The entry of some cable companies into the telephone market will undoubtedly reinforce this trend.”

After years of false starts, could this mean that the federal government gets its wish and sees meaningful competition in the residential phone sector? I am not convinced.

Some people are so mad at their phone company that they will switch to an alternative service provider out of spite. Few will do it for features: Feature sets are great for business settings, where four-digit dialing, intercom, conference calling and the like boost productivity.

But who bases a home phone decision on productivity? No, the primary reason most people will consider switching their home phone to another provider is that a competitor offers a better price, or significantly more value for a similar cost.

And, indeed, price-based competition seems to be the model on offer. As an example, look at the Rogers Home Phone service on that company’s web site.

The company’s description of the benefits of its home phone service can be summed up as, “just the same as your existing home phone service.” Even the price is comparable to what Bell charges, so where is the incentive to switch?

It is especially curious since Rogers could offer a value-added alternative. Of course, I’m referring to the wireless Competitive Local Exchange Carrier (CLEC) capability that Rogers acquired when it absorbed Microcell Telecommunications Inc. more than a year ago.

To date, Rogers is the only company with this capability, and that is unlikely to change since Bell and Telus probably are not keen to enable users to abandon their wired local phone networks in favour of wireless.

Yet Rogers has not expanded the wireless CLEC offering (known as CityFido) beyond the three cities — Vancouver, Toronto and Montreal — where it was launched under Microcell’s ownership.

All the hard work was done for Rogers: Microcell negotiated the interconnections with other carriers, overcame regulatory hurdles, and deployed the technology to enable number portability between its wireless service and wired local phone services.

Meantime, the wireless industry is working towards a 2007 implementation of wireless-to-wireless number portability.

That gives Rogers less than two years in which to leverage CityFido to add a unique set of customers to its wireless network — ones that its competitors will be hardest pressed to lure away.

Yet Rogers seems reluctant to take advantage of its unique offering, and that begs the question: Why?

Trevor Marshall is a Toronto-based reporter, writer and observer of the Canadian wireless industry. He can be reached (on his mobile) at 416-878-7730 or trevor@words-tm.com.