Who's Shaking Up Wireless in Canada?

It has been a long, drawn out, and relatively bumpy road. But new wireless carriers have taken the necessary steps to get their services up and running. One carrier, WIND Mobile, has already launched, while the other two major new players, Mobilicity (formerly known as DAVE Wireless) and Public Mobile, are quietly waiting in the wings for the perfect time to strike. (Note: that time will be this Spring for both.)

If I make the situation sound like a battle, that's because in many ways, it is. The companies aren't out to get one another, so to speak. But they're certainly out to snag as big a piece of the growing Canadian wireless customer market as they can, and to make darned sure that there's fair competition, services, and marketing from all parties involved.

The battle isn't just among the "New Three". The "Big Three" existing carriers, Bell, Rogers, and Telus, are also duking it out with one another as they ramp up services to prepare for new competition, something they haven't had to contend with in a long time.

"Consumers will have more choice of mobile phones, and new entrants will definitely reshape the post-paid and prepaid wireless marketplace," says Cary Skidmore, Vice President of Marketing at Glentel Inc., which operates the T-Booth/la cabine T, WirelessWave, and Wireless etc. stores across Canada. "It could quite possibly drive wireless costs down over time, and will create a more competitive nature."

The entrance of these new carriers has certainly shed light on how consumers, and the industry, feel about the wireless landscape in Canada. We needed more competition. We needed to shake things up. And WIND, Mobilicity, and Public Mobile, certainly promise to do so.

"It will be interesting to see how the market develops," comments Kyle Wiseman, National Account Manager at Microcel Corporation, a Newmarket, ON-based distributor of wireless accessories. "I'm not sure how it will play out just yet."

"Each carrier has been very specific about their strategies," claims Joey Lasko, Director of Product Development at Hitfar Concepts Ltd., a cellular accessories distributor based in Vancouver, BC. "Each has a unique proposition. They have the potential to change things. But it will all depend on execution."

The History of Change

For as far back as most can remember, Bell, Rogers, and Telus have ruled the wireless land, gobbling up other players like Cantel (Rogers), Clearnet (Telus), and Fido (Rogers) along the way. Even in recent times, the tightly-controlled landscape has continued: Virgin Mobile entered the Canadian market in 2005, already 50% owned by Bell. In late 2009, Bell purchased the remaining 50%, making Virgin a wholly-owned Bell brand. Fido, as noted, is owned by Rogers, Solo by Bell, and Koodo by Telus. Clearly, the industry is long overdue for change.

From May to July 2008, the Canadian Government held the Advanced Wireless Spectrum (AWS) Auction to auction off the airwaves required for cellular services to operate. But that year, things were to be done differently. Industry Canada set aside a significant amount (40 MHz) of spectrum exclusively for new entrants to bid on. Realistically, this was the only way any new players could have a fighting chance at setting up shop.

"The introduction of new service providers will help make Canada's wireless market more dynamic, more competitive, and more innovative to meet the growing needs of Canadians," Jim Prentice, Ministry of Industry said at the time the decision was made.

By the end of the AWS auction process, more than $4.3 billion was spent by 15 companies for 282 licenses, including both major "national" players as well as regional companies.

The New Three

Three major new carriers emerged: WIND Mobile (Globalive Wireless), which is backed most significantly by Egyptian mogul Naguib Sawiris; Mobilicity (DAVE Wireless), backed by investors like well-known Canadian entrepreneur and force behind XM Canada John Bitove; and Public Mobile, headed by former Bell president Alek Krstajic.

As Lasko notes, all three carriers are coming to market with their own, specific strategies and target customer base. There is, of course, some overlap. And there's one common theme: offering simple, affordable services.

"Each new wireless company is well-positioned to make an impact," opines Skidmore. "For now, we're still in early days, but time will tell how and what in-roads they will make in the wireless marketplace."

"If the new carriers can actually simplify things and do things differently,"opines Lasko, "then we will see the landscape change. The ball is in their court to get the ball rolling."

Indeed, the ball is already rolling upwards for all three companies. Let's take a look at where they are today, and their journey to get here:

DAVE Wireless/Mobilicity: Simple in the City

In early February, DAVE Wireless confirmed that its go-to-market brand name would be Mobilicity. Pronounced "mobill-iss-ity", the name represents a combination of the words "mobile" and "simplicity", with the benefit of "city" added in for good measure.

"‘Do I have to add something on to get what I want?'" asks Sara Moore, Vice President of Marketing at Mobilicity, mimicking a typical consumer question about wireless plans. "'Is it incoming or outgoing? Have I gone over that bucket of messages and/or minutes?,' Who worries about those things when they use the Internet at home? Who worries about those things when they're on their home phone? We think that wireless can be that simple."

Set to launch this Spring, simplistic pricing is a dominant focus for the company, as evidenced by the choice of nomenclature. Moore points out that, with other carriers, some features come in buckets, some are omitted. "Some things if you want, you have to add it on," she explains. "You might start with a $15 plan, but then you add two or three things in for $5. There's an opportunity to come in, truly simplify [wireless service], and take out the complications."

DAVE Wireless' John Bitove (left) and Dave Dobbin address the media at the launch of the company's go-to-market brand name: Mobilicity.

One might infer from this that Mobilicity's plans will be all-encompassing: one price that truly includes everything with only very specific add-ons, much like, as Moore explains, broadband Internet works. Unfortunately, the company hasn't disclosed plan specifics just yet. DAVE did, however, roll out a teaser campaign prior to launch that urged customers not to renew current contracts because "competition is coming". One ad, which took over a downtown Toronto bus shelter, reads: "like contracts? Go to law school." Either way, we'll hold tight until further information is made available.

What we do know is that the company will offer no contracts, no credit checks, and unlimited calling and data. Dave Dobbin, President, also happily confirms that Mobilicity will not charge that frustrating System Access Fee, pointing out that it isn't required, nor should exist.

"Back when spectrum used to be free," he explains, "the carriers agreed to charge their customers a fee in order to pay back the Government. With the Auction, the System Access Fee was no longer needed, yet carriers continued to leave them on bills!"

Mobilicity will offer a selection of smartphones from brands like Research in Motion (RIM) and Nokia; as well USB Internet sticks, and possibly even netbooks as that category continues to grow.

As the "city" part of the name implies, Mobilicity service will roll out in major urban cities one by one, starting with Toronto this Spring, and moving into Vancouver, Edmonton, Calgary and Ottawa later this year. Mobilicity will have its own stores, as well as a dealer network and store-within-store concepts. "It'll be a whole assortment," says Dobbin. "We will be where people want to buy phones.

"We are looking for customers who want more value in their phones, whether it's with talk, text, or data," he adds. However, he's clear in noting that Mobilicity's target market is customers who both live and work in urban cities. "How often do you travel?" he asks. "If not that much, then you're our customer: that is, if you work, live, and play in our coverage areas. If you're a banker who's traveling a lot, then you're not our customer."

Overall, the company is looking to target that 30% of Canadians who currently don't own a mobile phone; as well as the 90% or so that still own a landline. Unlike some of the other carriers, both new and old, however, Mobilicity won't be focused so much on the youth customer.

From a competitive standpoint, Mobilicity sees the existing incumbents as its primary competition.

"The carriers coming in have zero per cent marketshare," says Dobbin, "so I don't understand why anyone thinks they're our competition. They've got zero, we've got zero. The competition is the incumbents in this country."

Competitor or not, by the time Mobilicity services are up and running, WIND will have already been in the market for at least four or five months. But Mobilicity feels that its simple services are what will really set the brand apart from the others, WIND included.

And the company is making serious moves, including a recent cash injection of $75 million from a group of Canadian institutional investors, led by GMP Securities L.P. and National Bank Finance Inc. That figure, secured in December, complements $125 million in debt financing that DAVE also recently acquired from ING Bank N.V.

"Mobilicity will kick the value equation up a notch this Spring," Dobbin enthuses.

"Launching a business is like having a baby," mused John Bitove, Chairman, when he addressed the media at the new brand name launch event in downtown Toronto. "Usually you leave the hospital with the baby, but we wanted to take our time, do some research, look at the competitive set, and come up with a name that we thought was great for this business."

We all know babies are expensive, but they reap many rewards. DAVE is certainly confident that its Mobilicity baby will do just the same. It all starts with the name, of course. And Mobilicity has a nice ring to it.

DAVE Wireless' John Bitove, Sara Moore, & Dave Dobbin celebrate the reveal of the Mobicility brand name, emphasizing the company's focus on city-wide and simplistic mobile services. "How often do you travel?" asks Dobbin. "If not that much, then you're our customer: that is, if you work, live, and play in our coverage areas. If you're a banker who's traveling a lot, then you're not our customer."

Public Mobile: Back to Basics

I've always viewed Public Mobile as just another Fido/Solo/Koodo/Virgin brand, focusing on the talk and text, basic use customer, and not so much looking to play with the "big boys", so to speak. Indeed, this is true to an extent as Public will not even be offering data services at launch. But Public, which plans to go-to-market with the brand name Public Mobile, doesn't see "discount" brands like Koodo and Fido as direct competition.

"Koodo, Fido, Virgin, they're not really inexpensive at all," says Bruce Kirby, Vice President, Strategy and Business Development, Public Mobile. "We're not spending money on Victoria's Secret models to market ourselves," he muses, alluding to a recent Virgin Mobile event to launch the company's HSPA high-speed network. In reference to Virgin, as well as the other noted brands, Kirby comments: "If you look at their pricing, it isn't much different [than the incumbents]. Maybe there's more of a focus on texting with the low-end introductory plans. But they're not an attractive deal overall."

For Public, service plan pricing will be uber-simple: pay $40, and get unlimited talk and text within the company's coverage area. (There will be long distance options as well, but there won't be any roaming capability at launch.) This Spring, services are set to be up and running in Toronto and Montreal, with plans to extend to core cities and broader urban areas over the coming months. "Our long-term goal is to cover the corridor from Quebec City to Windsor, and the two-thirds of consumers in these markets." (Public has a planned media event set for Thursday, March 17, so check back to this Website for more details then!)

What we do know thus far is that phones can be purchased outright: Kirby says the entry-level device will cost less than $100, and a "high-end" model will still be under $200. This will include four or five devices at launch, ranging from basic bar phones to QWERTY texting devices. No BlackBerries or fancy smartphones, though. "People have a distorted perception of the market," claims Kirby. "We encourage people to buy phones with functions they don't need. Our expectation is that our customer will be more voice-focused, followed by text. We don't want to push our customers to a $300 or $400 phone when they don't see value in it."

Currently, the only handset Public Mobile has disclosed via its Website is the ZTE C78, a bar-styled phone with a numeric keypad and pretty basic functions like Bluetooth (stereo) and a built-in camera.

As can be inferred, Public Mobile is going strictly after those who don't own a mobile phone. "We're not looking to steal customers," says Kirby. "We want to target that 30 per cent of people who are lagging behind the market because of uncertainty or price. We will focus on being a simple, low-cost provider with unlimited service where people don't have to worry about their bill at the end of the month."

Over time, however, Kirby admits that Public will add new features, functions, and handsets as consumers desire them. That means data functionality isn't out of the question for the future.

One major point of concern for Public Mobile is the fact that it operates on the G-block of spectrum, a CDMA band. This means that only handsets that support the band will function on the Public network.

"The core technology in handsets are designed to support this band," clarifies Kirby. "Sprint has licensed the band in the U.S. A minor adjustment is required in firmware to tell the hardware to look at this spectrum. But essentially, we can adapt any CDMA/PCS device to work." According to Public's Website, the company opted to go with this band because the network is "able to handle a greater capacity."

Kirby says there have been a couple of hurdles to overcome in order to get services up and running, including the city strike last summer in Toronto that caused delays. But the company is still committed to launching this Spring. In fact, in mid-February, Public confirmed that a number of its corporate stores were close to completion, and dealer locations were to come as well. Painted in the company's signature white and orange, the store, located at 225 Wellesley St. in Toronto, ON, features the company's logo on the back wall, plus a series of service counters.

"There are logistical challenges, but we need to be comfortable about the service," Kirby comments. "We want to avoid rushing into the market."

Last month, Public Mobile offered a sneak peek of one of its corporate stores in Toronto, finished in the company's signature orange and white. "We can't wait to greet you at the door," said the company in it's Website blog.

Article Tags:  mobile, wireless, company, public, market, mobilicity, carriers, phone, globalive, customer, service, customers, canadian, services, canada, rogers, store, plans, brand, toronto, three, launch, carrier, competition, videotron, telus, phones, stores, campb