Switching Carriers, Or Not

I hate to say it, but mobile wireless competition in Canada has not arrived. Even worse, it could take some time yet. Neither Wind Mobile nor the other new entrants to the market will have a significant impact until later in 2010 at the very least. It is also possible that competition could be set back by Wind offering service now when their network is only partially turned up, which could cause a backlash from their early adopters when they see what their bills are really like in the first months of service.

The threat of competition made quite the impression on the share prices for Rogers, Telus and BCE on the days subsequent to Minister Clement overturning the CRTC ruling on the foreign ownership of Globalive, which owns Wind. While it is said that the stock market is a future discounting mechanism looking forward about 6 months, these declines are premature. I am beginning to doubt that their 2010 calendar year earnings will be significantly impacted by Wind and the rest, and therefore the predictions by many analysts will be proved wrong. Unfortunately this also means that the big 3 will not be quick to drop their prices in response to Wind's opening salvo of simple, low-price contracts (and full-price smart phones).

At the risk of stating a tautology, a key feature of mobile phones is the ability to, well, be mobile. If you try to do that with Wind's service you will pay a high price. Their coverage areas are (sensibly enough) in the urban cores of our major cities, but it will take time for that coverage to be extended to the suburbs, and perhaps much longer before they cover rural areas and major transportation corridors. If you are truly mobile, expect to pay a substantial amount for roaming ($0.25/minute plus long distance).

From what I've seen, it appears likely that Wind, slow as they are in getting their network in place, is further along in their geographical roll out than the others. Facilities-based competition is what we need, but it's expensive and it takes time. It may in fact turn out that Rogers' business will increase as Wind enters the market since they will have windfall revenue from Wind's customers who will spend a lot of air time roaming on their network. This revenue could more than compensate Rogers for the customers they lose to Wind since they will also gain air time from the subscribers Wind takes from Bell and Telus. (Wind subscribers can't roam on Bell or Telus networks since Wind uses GSM technology which, of the big 3, only Rogers supports.)

This situation reminds me of the mid-1980s when for a few years AT&T's biggest customer was MCI; MCI entered the long-distance market in 1984 when the FCC first allowed competition, but their geographical coverage was poor while they built out their network, so they leased facilities from AT&T, the former monopoly and now MCI's competitor.

It looks like I won't be switching to Wind anytime soon.