TORONTO – New wireless entrants are most likely to fail if they “look and smell like an incumbent,” one of the new Advanced Wireless Services spectrum licensees warned his fellow competitors during the final panel session at the Canadian Telecom Summit on Wednesday afternoon.
Top executives from Globalive Communications, DAVE Wireless and Public Mobile came together for a discussion about the challenges they will face as their companies prepare to launch new wireless offerings by the end of 2009 or early in 2010. Although not as volatile as the incumbent-heavy “regulatory blockbuster” session held on Tuesday, the AWS session had some equally entertaining moments.
“Take a good look at the three of us,” Alek Krstajic, president and CEO of Public Mobile, said to the audience. “Two of the three of us will not be around for the next Telecom Summit….Okay, we all three may be here (next year), but two out of three will have different business cards. And I may be one of them, time will tell. I’ll let you guys decide who you make your bet on. But the reality is it’s a very, very tough market.”
Krstajic added that the new wireless players who probably won’t win out are the ones that look too much like the incumbents.
“Now, I’m not wearing a tie, I don’t look like a Bell or a Rogers guy, but these guys are wearing ties,” Krstajic joked, pointing to Globalive CEO Tony Lacavera and DAVE president Dave Dobbin, which was met by laughter all around.
The comment made a few eyes roll because Krstajic worked formerly for both Bell and Rogers – stints during which he added that learned “every trick in the book on how to keep new entrants out.”
“If you look and smell like an incumbent, you cause them (the incumbents) to become more competitive, and they may get really tough and put their foot on your throat,” he warned.
Krstajic said Public Mobile’s strategy when it launches its CDMA-based wireless network in Q4 2009 (a quarter later than originally planned) will be to go after a market that the incumbents don’t want – namely, the roughly one-third of Canadians who don’t already have a cell phone, who are typically working class and just want a flat-rate, unlimited wireless plan, he said.
To that end, he re-iterated the price plan for Public Mobile’s service at launch will be $40 per month for unlimited talk and text services. During last year’s AWS spectrum auction, Public Mobile spent $52 million for licences that cover the Windsor-to-Quebec-City corridor in Ontario and Quebec.
“Unlike my colleagues here, we’ve made a choice that we’re not going to go up-market, we’re not going to sell smartphones,” Krstajic said. “We’re being very laser-focused on who we’re going after, and we’re not going to deviate from that.”
Dave (Dobbin) from DAVE (Wireless) – “gotta change the name”, he mused – said his company’s service launch date of early 2010 is still on track, but he wasn’t prepared to announce price plans yet.
“We don’t know what the price plan is going to be. There’s a lot of water that has to go under the bridge between now and launch. Clearly, the competitive dynamic will change a lot,” Dobbin said. “And if you went and asked Bell what their price plan was going to be next spring, they wouldn’t be able to tell you either.”
In comparison to Public Mobile, DAVE Wireless spent $243 million on spectrum licences covering large urban centres in Ontario, Alberta and B.C. (Public Mobile bought the less-expensive G-band) The company is building a UMTS-based wireless network that will fully support HSPA+ (high-speed packet access evolution), meaning its customers will be able to use 3G smartphones and data devices, Dobbin explained.
For its part, Globalive Communications is building out a GSM network that will cover all of Canada, with the exception of Quebec, said company CEO Tony Lacavera. Globalive paid $442 million for its spectrum licences, and plans to spend between $300 million and $600 million on its wireless network infrastructure, Lacavera said during an interview after the panel session. Globalive is backed by Egyptian-based wireless company Orascom.
Globalive will launch its commercial wireless service initially in five cities – Calgary, Edmonton, Vancouver, Toronto and Ottawa – and has pushed its launch date slightly back to late 2009 or early 2010.
“We really want to make sure we don’t pigeonhole ourselves and reduce our long-term business opportunity by inadvertently launching before our network is ready,” Lacavera said during the panel discussion. “Canadians are going to give us one shot to prove ourselves. If we don’t deliver, we’re not going to be around long-term.”
Both Dobbin and Lacavera didn’t agree with Krstajic’s assessment that two of the three new entrants represented on-stage would be gone by next year’s Telecom Summit.
“All three of us sitting on stage here have zero market share today, so by definition I don’t believe we can really be competing with each other in the short- to medium-term, at least,” Lacavera said, adding he agreed with Krstajic that “it’s not going to be an easy go for any of us.”
Dobbin’s position was there is plenty of business opportunity for all three new entrants.
“If you look at the Canadian marketplace, with low penetration rates, I think there’s room in the marketplace for all three of our companies to survive, if not thrive,” Dobbin said.
He added, jokingly: “Of course, I believe we (DAVE Wireless) will take the lion’s share of the available market.”
At one point, Dobbin attempted to suggest there may be some “deployment issues” regarding Public Mobile’s purchase of spectrum in the G Block, basing his opinion on market analysis conducted by Lemay-Yates Associates Inc. of Montreal – a research report commissioned by DAVE Wireless itself. Dobbin then declined to go into detail about what those deployment issues might be, referring interested parties to the report itself.
Krstajic’s responded by saying “spectrum is spectrum” and suggested the Lemay-Yates analysis was based on an outdated idea that available handsets are not supported on G-Band, which has since been proven to be untrue, something Public Mobile demonstrated at its press launch in February. He said every CDMA handset that ships in North America with a Qualcomm chipset will speak to G Band. He then quipped that Dobbin might consider asking for his money back for having commissioned the report.
Lending support to Krstajic and Public Mobile, Lacavera said he believes the G-Band spectrum is going to work fine and there won’t be any issues with it. And perhaps in an effort to foster a friendly competitive spirit among the new entrants, Lacavera generally took on a can’t-we-all-just-get-along role during the session.
“The new entrants need to work together wherever it makes sense,” Lacavera said. “We’ve got to look for ways, because with the three of us going at each other, we’re all sitting ducks for the incumbents and they’re sitting on the high mountaintop with a sniper rifle ready to pick us off.”
He reminded everyone in the room of what happened 10 years ago when the local market was deregulated and new entrants tried to separately build competing networks to compete with Bell. “Bell killed them all,” Lacavera said.
Roaming agreements and tower sharing – mandated as part of the AWS spectrum auction – are ways for new entrants to work together, Lacavera said, although he wasn’t prepared tell Cartt.ca about any specific negotiations that may be taking place at this time.
During the panel session, Dobbin said DAVE Wireless had signed non-disclosure agreements that also prevented him from discussing roaming or tower sharing-related partnerships in the works. However, DAVE Wireless did recently announce a roaming agreement signed with T-Mobile in the U.S.
