AS THE ADVANCED wireless spectrum auction gets under way today, there are a couple of things that are clear.
First, Canadian consumers will see several new wireless operators (one or two national, some more regional) inside of 18 months after the auction’s end in three to five weeks, driving down retail prices and increasing competition for their business.
Second, thanks to the new rules favoring any newcomers to Canadian wireless that demand mandated roaming on the existing incumbents’ networks, Rogers Communications is going to take on most of that burden. It will tax the company’s system somewhat, but will also earn Rogers millions in new fees because the wireless world has largely gone GSM – and any new company will certainly adopt GSM as their platform.
When Rogers went GSM years ago, it clearly made a prescient choice.
And that GSM advantage is only becoming more pronounced as time passes. Since over 80% of the world’s wireless companies use GSM and not the CDMA technology chosen by Bell and Telus and Sprint, handset manufacturers like Nokia, RIM, and LG generally make GSM handsets first and then later on produce a CDMA version.
This stark GSM v. CDMA difference is most notable, of course, with Apple’s iPhone. It’s a GSM-only device and will launch with Rogers later this year, leaving Telus and Bell without the coolest new handset in the Canadian market.
In the States, GSM carrier AT&T has the iPhone exclusively and has reported those subscribers bring in double the ARPU compared to users of other handsets. It has sold well over two million iPhones and Apple says it will hit its stated goal of selling 10 million of the touch-screen beauties this year. One analyst says Apple will sell 14 million iPhones.
And it will just get hotter when the 3G iPhone debuts this summer with new applications and other do-dads like 32 GB of storage and video recording, according to the web rumor mill.
And because of their network technology, Telus and Bell couldn’t even get in the iPhone bidding.
It’s a running theme actually, where the world’s GSM network owners get the neatest new handsets first, while the CDMA providers have to wait, sometimes up to a year, for manufacturers to offer the same device for its technology.
And the difference is only going to get more pronounced. Next generation multimedia transmission technologies (like mobile video people will actually want to watch – and be able to see) are built off the GSM standard, not CDMA.
When those new 4G technologies begin hitting the street, the wireless companies bidding on new spectrum beginning tomorrow will be in launch mode, meaning they will come out of the gate with a serious technical and strategic advantage over two of the three Canadian incumbents. As GSM operators, they’ll be able to offer the latest and greatest in video and data communication on the coolest, newest handsets.
Yes, the incumbent operators have a massive lead in subscribers over the newbies but a technical disadvantage is no way to fend off nascent competition.
While Telus has been making noise about transitioning to GSM (it was mentioned in its last quarterly conference call) Bell has been silent on the matter as it currently has bigger fish to fry.
But seen in this light, it sure looks like the two big telcos will have to spend hundreds of millions upgrading their wireless networks, and move to GSM.
