Telecom Trends

Three press stories related to the wireless industry (2 about the Canadian scene and one about the U.S. scene) relate to this entry.

Two of the three were in the hard copy edition of the National/Financial Post. One of them was titled "Fewer holiday giveaways a plus for Bell Mobility and Rogers". The essence of this story was that by not resorting to cut throat tactics like aggressive discounting and the in-store gift giveaways of things like DVD players, credits and discounts that characterized the 2005 holiday period Bell Mobility and Rogers may have created a situation where, on the one hand, there were fewer activations over the holiday period but, on the other hand, a significant boost to fourth-quarter earnings before interest, taxes, depreciation and amortization by focusing on advertising and marketing.

When I read this I thought to myself 'boy, it must be nice to be in a (supposedly) competitive industry and not have to give things to potential customers to attract them to your service and isn't it interesting that at least 2 out of the 3 major carrieres chose to follow this tactic'.

Then I read the second NP/FP story that was titled "Flat-fee unlimited cellular service Metro PCS to list shares within three months". It's about a pending IPO from Metro PCS Communications Inc. in the U.S. that plans to offer flat fees for unlimited minutes without the long-term commitment required by most of its competitors. When I read this I re-stated my comment noted above and added an exclamation mark as well as some additional words along the lines of 'it sure would be nice to have the kind of situation in Canada where wireless companies really had to fight for customers and weren't so comfortable that all they had to do was to sit back and just worry about how to improve on an already swollen (for a supposedly brutally competitive industry) bottom line'.

And then I read a story in the Globe and Mail's electronic copy with the headline "Rogers rings up more wireless customers" that reported on Rogers' release this morning of their fourth quarter results. It seems that Rogers is doing quite well these days as are its shareholders I suspect. However, when you read the comments that have been posted about this story, it seems that the customers are NOT faring quite so well and they are pissed off about the fact that there's not enough competition in the Canadian wireless industry.

Here's a sampling:
- "I, as a Rogers customer waiting for cell phone number portability laws to finally make their way to Canada, I am hoping this company - devoid of customer service - curls up and dies."
- "The wireless industry in Canada overly gouges the Canadian public and this activity appears to be approved by the public 'watchdog,' the CRTC. I returned to Canada from the US a couple of years ago and after inquiring about mobile phones in Canada, I decided to keep my Verizon service until I came to Barbados for an extended holiday. I had two phones, was able to call roam-free with a combined 3000 minutes a month to and from Mexico, the US and canada. My monthly cost was $95 plus tax. No company in Canada comes close! and they are supervised by an agency that is supposed to protect the Canadian public. Shame!"
- "Overall, Rogers' treatment of customers and level of service is indicative of a larger problem with the Canadian consumer market, and that is a lack of real competition due to its relatively small size (at least when compared to the US)."
- "The corporate culture of a lot of the big three's wireless executives is quite interesting in
that there is alot of "old-blood" at these companies that are more interested in maintaining their fifedoms instead of taking care of exisiting clients' real needs and problems (this includes end clients as well as the carriers dealer channel). I say this as a Roger's wireless client, as well as a former employee of both Bell and Rogers. Number portability may force a shift in paradigms...we'll see."
- "Rogers modus operandi has always been to provide the lowest level of service that a customer will stand to keep operating costs down."
-"I read somewhere that the C.R.T.C. does not have jurisdiction and de facto does not regulate the wireless sector in Canada. Because of the trend towards dereglementation, as it stands, it is suppose to be the industry that regulates itself. I think it is time the C.R.T.C. takes a closer look at the industry, and request input from its customers. The horror stories that would certainly pop up would have some people reflect."
- "This oligopoly is brilliant at picking our pockets. I quietly am waiting for the day when we get so fed up with these jokers that we let in unregulated foreign competition. Then we can all laugh as Roger's, Telus, and Bell whither and die. Usually I am an economic nationalist, but these guys have pushed me toooo far, they obviously have illegal agreements so they don't compete with each other too much. Wireless is just too cozy, there isn't enough big players, we need more."

Hopefully, Mr. Bernier's pending review of the wireless industry will take a look at the sorry state of competition in Canada's wireless industry and undo the mistakes of the CRTC and the Competition Bureau. Alternatively, the government could allow foreign ownership and we could benefit from the innovative thinking of companies like Verizon, Cingular, AT&T and NCS who know what it takes to compete in a competitive market.