TORONTO—Wireless companies are duking it out and Canadians are walking away with the prize money, but how low can prices go before these businesses stop making dollars and sense.
Upstarts have been entering the market since last December, introducing deals the Big Three (Telus, Bell, and Rogers) are being forced to match, driving plan prices down across the country and sparking the birth of entirely new brands. The falling prices are a welcome relief to Canadian consumers once forced to pay some of the highest cell phone rates in the world.
“It is a new era of wireless in Canada, we haven’t seen this level of competition ever,” said Amit Kaminer, a research analyst with telecommunications consulting firm The Seaboard Group.
“Everyone is testing the water. The new entrants are trying to see what market share they can grab for a specific number of dollars and the incumbents are looking to see how much they have to discount from their value propositions to maintain that market share.”
Roger’s stirred up a storm last week when it offered Chatr in select cities, a third wireless brand positioned below Rogers and Fido that offers unlimited talk and text across Canada for $45 a month.
Mobilicity CEO John Bitove has been telling reporters those are the same markets in which his new company is operating, and that Chatr is nothing more than a fighter brand designed to drive the new entrants out of the market.
He has said Mobilicity will file a complaint at Canada’s Competition Bureau under Competition Act laws that prohibit dominant players from introducing temporary brands designed to destroy competitors, although a spokesperson for the company could not confirm Wednesday whether the complaint had been filed. A spokesperson at the Competition Bureau also declined comment, citing legal restrictions.
Telus and Bell Mobility are widely expected to cut prices to their discount brands Koodo and Solo in the weeks before school to compete against Chatr and the new entrants.
Despite the fierce competition, executives at Public Mobile and Wind both sounded upbeat about their prospects in tougher market.
Public Mobile has built its entire business around serving a demographic the Big Three has historically ignored and they won’t be underpriced, said executives.
CEO Alek Krstajic said Chatr legitimizes the market segment that Public is going for. Now that Rogers has dropped prices so dramatically with Chatr, he said Rogers will have to explain why some of their customers get better deals than others.
“Public Mobile encourages all Rogers’ customers to call Rogers and ask for the Chatr pricing,” said Krstajic in an emailed statement.
Rogers may also have to deal with losing customers to its own businesses as subscribers unlock their Rogers phones to use on Chatr, he said.
Bruce Kirby, Public’s VP of strategy and business development, said Rogers can’t go head to head with public on a price point basis because Public has geared its entire company structure to shave costs and secure its value brand status.
“We can make money at price points nobody else can,” he said. “We’ve consistently said we won’t be undercut by somebody else in the market.”