Tag Archives: wireless

August 12, 2014 | Opinion, Technology

Cooperation, not acquisition, might be better option for Quebecor

Put simply: Under the right conditions we are ready, willing and able to become
Canada’s fourth wireless competitor.

With that statement two months ago, new Quebecor CEO Pierre Dion launched a campaign to create fertile ground for his company to expand its wireless operation nationally, and become the fourth national wireless player that the Conservative government has been so desperate to see arrive.

Quebecor’s main issue is roaming — the fees it has to pay other carriers when its subscribers use their networks. Until it can build a national network that rivals those of the Big Three in coverage (something that would take several billion dollars to do), it would have to offer its subscribers access to someone else’s network, and at fees that would still allow it to undercut those networks’ operators on prices.

The CRTC is holding a public hearing in September on wholesale wireless services that should address this issue. The commission will try to determine if the market is sufficiently competitive and if not, what it can do to fix that. Quebecor would like low, regulated wireless wholesale rates, particularly for data. Bell, Telus and Rogers, needless to say, aren’t in favour.

And just two weeks ago the commission slapped Rogers on the wrist for exclusive roaming deals that it determined were anti-competitive.

Quebecor’s hand

At the moment, Quebecor’s network covers populated areas of Quebec and the National Capital Region. It also has a deal with Rogers that allows Videotron customers to use Rogers’s network where necessary. A year ago, the companies signed a 20-year agreement to build a shared wireless LTE network in Videotron’s existing territory.

The thought of Videotron becoming a national player took off in February after it purchased licenses in Quebec, Ontario, Alberta and British Columbia for $233 million. Because the big three were limited in the amount of spectrum they could buy, and new players like Wind and Mobilicity didn’t have the financial means to spend that kind of money, Videotron got a deal it simply couldn’t pass up. The licences could be worth a lot more than that, even with the limitation that they can’t be sold to Bell, Rogers or Telus.

The rest of Canada is split up between other regional players: MTS in Manitoba, SaskTel in Saskatchewan, and Eastlink in Atlantic Canada and Northern Ontario. They also got good deals on spectrum because those frequencies were reserved for smaller players.

So even if Videotron wanted to become a national player, it would need to team up either with one of the big three or all of these smaller providers. Plus building out networks in Ontario, B.C. and Alberta.

It has been suggested very openly that Videotron would be interested in buying either Wind Mobile or Mobilicity (or both) to instantly get a foothold in Ontario, B.C. and Alberta. This is important because next March will see another spectrum auction from Industry Canada, and its rules reserve licences for operators other than the Big Three that are already operating in those territories. Unless Videotron sets up its network in the next six months, it’s bidding potential is limited. But acquire Wind and/or Mobilicity, neither of which have the capacity to participate in the auction, and Videotron can make another government-assisted investment.

Except Videotron doesn’t have enough cash for such an acquisition. So it would need some source of money to step up to help it. And the clock is ticking.

Politics

But spectrum licenses and cash aren’t the only impediments to Videotron’s wireless expansion. Even if it develops a decent network, Videotron has no other infrastructure in the rest of Canada. It can’t bundle wireless with cable TV and Internet like it does in Quebec. It can’t leverage its brand, or set up Videotron corners in Archambault shops in the rest of Canada.

And then there’s the politics. Pierre Karl Péladeau is still the controlling shareholder of Quebecor and Videotron. And he’s not willing to put his stake in a blind trust until he becomes a minister (and even then it would come with an order not to sell the company). So the federal government’s best hope for a company that would give a shot in the arm to competition in wireless is one owned by a devoted separatist. It’s not exactly the kind of company the government would want to bend backwards to help. And that’s saying nothing about consumers who might see switching to Videotron as tantamount to funding Quebec separation.

Cooperation

But maybe there’s another way. What if, instead of buying Wind and Mobilicity outright, it partnered with one or both, giving them enough cash to participate in the March auction and allowing their subscribers to use each other’s networks seamlessly? For that matter, why not do the same with MTS, SaskTel and Eastlink? Imagine a national wireless player made up of regional players, all with the same problem of national roaming. It would take less cash than one company gobbling up the others, and avoids the problem of having to deal with Quebecor’s not-so-great brand outside of Quebec.

There are other possibilities, too. Shaw, which is active in B.C. and Alberta and has a lot of money but doesn’t have a wireless network, could become involved, and partner with Wind or Mobilicity or Videotron to offer a wireless service they could bundle.

Perhaps it’s just pie-in-the-sky dreaming, and I’m sure people will point out a bunch of practical problems with these ideas that would make them unrealistic. But if Ottawa really wants a fourth wireless player (even though experience in other countries suggest the market might not be able to support more than three), this sounds to me like a way to get there.

Of course, it would require Quebecor playing nice with others and swallowing a lot of humble pie.

March 31, 2014 | Technology, TV

Videotron finally joins the iPhone club

One of many ads in Saturday papers announcing Videotron’s introduction of the iPhone.

Three and a half years after launching its mobile network, Videotron has finally solved its biggest issue: Until now, you couldn’t get a plan with an iPhone.

At first, the problem was technological. The frequency spectrum Videotron acquired in the 2008 auction was in the 1700 MHz band (called the Advanced Wireless Services band), and the iPhone wasn’t compatible with that band. It wasn’t just an issue for Videotron — it also prevented the iPhone from being compatible with the T-Mobile network south of the border.

That changed last year, when Apple introduced a model of the iPhone 5 that was compatible with AWS and the T-Mobile and Videotron networks. By last fall, people could get their hands on an iPhone 5 and by adding a Videotron SIM card make it compatible with the carrier’s network.

After that, the issue stopped being a technological one and started being a legal one. Videotron didn’t have a deal to sell the iPhone, so the best it could do was encourage people to buy it at Apple stores and install a Videotron SIM card themselves.

A couple of weeks ago, in a brief and understated email (whose contents were strictly regulated by the terms of the deal between Videotron and Apple), the company announced it would start selling iPhones on March 28. On March 29, full-page ads came out in all the papers announcing the iPhone 5s was now available at Videotron retail outlets.

Not only does this mean that Videotron can join the big guys, but also that it can stop pretending that non-Apple products are just as good as Apple ones. Without the iPhone, Videotron pushed Android apps and devices, including the Google Nexus One, which was the hot new thing when the network launched. Parent company Quebecor did its best to wipe the iPhone out of its universe, even going so far as to push producers of fictional shows on TVA to replace characters’ iPhones with Android devices (Quebecor downplayed this as something similar to product placement).

All the while, it remained impatient, hoping that Apple would soon deem Videotron worthy of inclusion.

Illico TV app now available

On ~~Monday~~ Tuesday, Videotron will announce that the Illico TV app is available for iPhone users. The application allows subscribers to Videotron’s television service to access live TV channels and free video-on-demand shows on their iPhones. And for the most part, they can do this regardless of who their carrier is.

Using the app, which was added to the Apple app store on Friday, requires authenticating with Videotron to prove that you’re a Videotron cable TV customer, which gives you access to channels you subscribe to, including a bunch of live channel feeds.

One exception to the rule is RDS, which is the most expensive channel to get the rights to. You can access RDS’s live feed, including Canadiens games, only if you’re also a Videotron mobile customer as well. This is the result of the rights agreement between Videotron and RDS (owned by Bell Media). RDS sells its mobile rights through the mobile carriers.

Videotron’s iPhone app doesn’t allow purchases, so you can’t buy video-on-demand movies. The reason for this is simple math: Apple’s required percentage take of in-app purchases is so high (30%), that Videotron can’t make any money selling content this way.

The Illico Club Unlimited subscription video-on-demand service is also not available yet on the iPhone app.

New prices

Something that’s already making headlines is the prices that Videotron is using to sell them. Videotron is offering unlimited calling and 4GB data for $75 a month, while the Big Three are offering $110 a month for the same plans. Additionally, it’s offering the iPhone at an almost $500 discount for a 24-month plan. That means more than $20 a month of your iPhone plan with Videotron will be going just to pay off the discount you got for your device.

It’s almost as if Videotron has been waiting for this day for years.

June 4, 2013 | In the news, My articles, Technology

CRTC’s Wireless Code vs. Quebec’s Bill 60

On Monday morning, the Canadian Radio-television and Telecommunications Commission issued its final Wireless Code, a set of rules all wireless service providers in Canada have to abide by. I was curious how this code compares to the rules the Quebec government put into place in 2009 that similarly protect consumers in cellphone (and other) service contracts.

The result is this story in The Gazette, which appears in Wednesday’s paper. It lists point by point the provisions of both. In general, they’re very similar in terms of how cancellation fees are calculated, how major elements of contracts can’t be changed unilaterally, and how renewals are done. Bill 60 also includes a prohibition on late-payment fees or additional fees for pay-as-you-go services. But most of the advantage for the consumer is in the CRTC’s code, which specifically deals with wireless service. It includes a de facto two-year maximum on contracts, a 15-day trial period, a right to unlock phones, notification of data roaming and caps on data overage and data roaming fees.

You can read the CRTC’s decision here setting the Wireless Code into place and explaining its reasoning. Quebec’s Bill 60 became law in 2009, and the text of it is here (PDF).

The Wireless Code comes into effect with contracts signed on or after Dec. 2, though providers can start applying the new rules to new contracts as soon as they’re drawn up. Since it’s not really in their interest for people to wait, I would expect the code’s provisions to be in new contracts by the major wireless companies before then.

If your main concern is contract length, by the way, you can go ahead and sign now. As of two years from now, all contracts must comply with the code, which means in two years you won’t have a cancellation fee, even if your contract right now says you will.

How will this be paid for?

The big question now is how these changes (particularly contract length) will be reflected in the marketplace. Having phones subsidized over two years instead of three will mean one of three things:

Higher prices for new handsets. I’m guessing this is the most likely option. Instead of getting, say, a $360 subsidy on a phone, which works out to $10 a month for 36 months, the subsidy might only be $240, which means the phone will be $120 more expensive. Expect fewer $0 smartphones.
Higher monthly rates. If subsidies are done over two years instead of three, then they have to be 50% higher on a monthly basis. So that $10 a month subsidy now has to be $15 a month if the total subsidy is the same. But in my experience there hasn’t been much flexibility in monthly pricing based on device subsidy, and monthly fees have much more competitive pressure than initial handset cost. Prices might inch up slowly, but only if all the major providers agree their profit margin at the lower price is unsustainable.
Lower profits. Yeah, go ahead and laugh. But wireless providers make decisions all the time that result in lower profits, hoping that they might result in higher profits down the road. Acquiring new customers has a large price to it (beyond just the phone subsidy), but if you can lock them in for three years or longer, you’ll make much of that money back. Reducing the contract to two years will mean less time to recoup this acquisition cost. We may see an effect on the bottom line here.

Because, in two years from now, all contracts will have to have zero-fee cancellation after two years, expect new handset costs to go up quickly. Which means even though it sounds like it might be a good idea to wait until December, now might actually be the best time to get a new phone.

May 29, 2013 | In the news

Quebecor, Rogers announce wireless network sharing deal

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.

December 1, 2007 | Business, In the news, My articles, Technology

What is a wireless spectrum auction?

It’s perhaps notable that two blog posts I’m linking to about the announcement by Industry Canada that part of the wireless spectrum auction will be set aside for new entrants to the market start with the word “finally”.

Though Michael Geist did a good job explaining the issue back in June (certainly better than Industry Canada’s very technical policy framework document), I take a crack at it in today’s Gazette.

In short, it means some wireless frequencies (which cellphones use to communicate with cell towers, and for which wireless providers need licenses from Industry Canada to operate) will be reserved for new companies in the market, like Shaw or Yak or Videotron (which currently re-sells Rogers service under its own brand). This wasn’t the idea of the current oligopoly (Bell, Rogers, Telus) because they say it gives an unfair advantage to newcomers (even though many of their licenses came through similar breaks given to their predecessors).

So now, the only thing standing in the way of at least one new entrant into the business (either regionally or nationally) is the opening bids, which for a high-bandwidth national frequency could reach past $200 million.

Videotron plans to use $500 million to setup a Quebec-wide network (including the cost of the cell site equipment and administrative costs of running an entire wireless network), which might expand to other provinces if successful.

Also included in the decision this week is a requirement for existing cell providers to share tower space with new entrants (which will significantly lower their startup costs) and a requirement to allow roaming (so, for example, new Videotron customers will be able to use their phones outside Quebec with reasonable fees being billed for use of the other company’s network).