New Wireless Brands…Can 3 More Survive?

Three new wireless brands are about to launch their service in the Ontario market in the next few months. Public Mobile (BMV Holdings) was the first to introduce their brand to the market followed recently by Wind Mobile (Globalive). The dark horse at this point is DAVE Wireless that hasn’t launched their consumer brand yet. There are currently 7 brands in the market today before the new competitors….3 more makes 10!

Branding aside, with wireless market penetration at close to 70% can three new competitors survive fighting for the low end of the market at sub $40 ARPU? There is still a big price gap between prepaid ARPU at $17 and the proposed offers by Wind and Public Mobile at roughly $40. History would suggest that a competitor with a low cost operating model (read Public Mobile) can go a lot lower than $40. If that’s the case, it won’t take long for voice pricing to hit rock bottom.

It would appear that wireless voice pricing is headed in the same direction as national long distance pricing where U.S and Canada rates are in and around $0.05/minute. Where does that leave the carriers? I suspect that data pricing will remain high to offset the price erosion that we’ll see in voice much to the chagrin of most data users. Most people are expecting to see data rates come down as a result of increased competition but that’s not likely to happen especially when Public Mobile won’t be offering data service…voice and txt only.

One thing is sure, we’ll see a lot more wireless services offered in a lot more channels than we’ve seen before. Chasing the low value subscriber will mean offering service where they shop….which is not in high end shopping malls. Look for these new competitors to show up at Wal-Mart, Dollar Store and discount grocery outlets.

In anticipation of the new competitors FIDO has been ramping up their promotional activity around $15 rate plans and all-you-can-eat at $40. This is certain to take a bit of wind (pardon the pun) out of the sails of the new competitors and set the stage for aggressive pricing activity.

Stay tuned….rates will get cheaper but so will the service.

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