An odd thing to announce at 8:45pm, but Quebecor just sent out a press release saying they’ve come to a 20-year deal with Rogers to create a shared LTE wireless network in Quebec and Ottawa.
I don’t know much more than what’s in the release: The two companies will pool their resources to create a shared network, but maintain their operational independence. This deal follows a similar one between Telus and Bell to share their LTE network.
There are some side-effects to this. For one, Quebecor hints at expanding its handset lineup. Since the only one people care about is the iPhone, I’ve asked if this is the plan. I’ll let you know what they say.
The deal also includes an option for Rogers to purchase Videotron’s unused AWS spectrum in greater Toronto for $180 million. This is important in the context of other new wireless players like Mobilicity and Wind Mobile deciding putting themselves up for sale. Mobilicity has already agreed to a sale to Telus and Wind may also sell to one of the three major incumbents. A partnership between Videotron and Rogers adds to the impression that Canada simply isn’t large enough for more competition in wireless.
Or it might not.
“A partnership between Videotron and Rogers adds to the impression that Canada simply isn’t large enough for more competition in wireless.”
I don’t think you could be any more wrong here. What this really gives is that Canada is actually too big for competition, and the population density is too low to support it.
Outside of the major urban centers, Canada suffers with huge areas that are just empty, blank. The costs related to providing service in those areas makes it beyond logical to offer service. Back in the earlier days of regular cell service, there wasn’t even continuous service between Montreal and Ottawa on the 417 or to Toronto on the 401… because the usage density didn’t really support it.
LTE is just the next step. It requires that every tower’s transmitter system is replaced and other equipment updated, plus extra provisionment for the data connection from the tower to the rest of the world. It’s costly, and something that you cannot just roll out on a couple of towers, you have to have enough coverage to support charging for the service.
What Rogers and Quebecor are doing is moving to make it possible to do this in an economical fashion, and in a timely fashion. They could both do it alone, but it would take a longer time, and they would both start out duplicating each other’s coverage anyway.
The market of people is big enough for competition. The area that have to be covered is not.
I meant big as in market and population, not geographic size. It has been argued that Canada’s geographic size is a reason that wireless data rates are so high, and why there’s less competition. I don’t know how true that is.
It’s a basic fact of life. The profitability of a given tower is expressed in percentage usage, no different from operating an airplane or a bus. You have a certain amount of service available at a given cost, and the more you use up, generally the more profitable it is.
As towers generally have a limited coverage area, the density of the population and the density of the people travelling through it are key factors in determining when and where towers get built. When the cellular networks were first being built (back in the time before any G was considered) the coverage was limited to the biggest cities. Cantel (before Rogers) was very proud of it’s Quebec City to Windsor coverage. You can look at this page:
http://community.fortunecity.ws/business/whittle/1173/cell_coverage.htm#cantel
to see what the coverage would have been at that point.
So if you need to roll out a 4G service, and you are only going to get a certain amount of usage in an area, it might be a losing business (or not very profitable) to do so. In a shared situation, if pretty much lowers the usage requirement for each company by half to justify the service.