Wednesday, April 18, 2007
Looking forward to Videotron wireless
I was happy to read about the likelihood that Videotron plans to evolve from reseller to facilities-based provider of wireless services.
Regular readers will recall that I tend to believe in letting market forces work, especially when there is so much choice available. We have 3 real, facilities based carriers and a host of resellers who are keeping the marketplace pretty competitive for consumers.
People often neglect to mention the MVNOs and resellers - companies like Amp'd, PC, Virgin and others. I know that Virgin has some real differentiators for customers - my daughter has been using their service this past year. No system access fees, real live customer service reps, aggressive price plans - easy, no-charge number changes (for when she is back in Toronto for the summer).
I think additional competitors would be great, but I get concerned with calls for government subsidies and intervention into the marketplace. A set-aside of the spectrum to be reserved for new entrants is a subsidy. I don't like the implications for distorting market econmics if one industry participant pays less than market value for its infrastructure - it ends up with an artificially subsidized cost structure. The need to guard against speculators that might use the subsidy to inventory spectrum waiting for foreign investment restrictions to be lifted.
I don't believe lower wireless pricing leads to increased market penetration. If it did, then the US should be leading the world.
There are a lot more complicated forces at work. I'll be speaking about some of these issues on Monday at the CWTA AWS Forum in Ottawa.
I wonder if the proper correlation, if any, may be that a decline in the rate of change in market penetration leads to more aggressive pricing. In other words, as the market becomes saturated, service providers drop prices to try to grab each others' customers.
Any economists want to do a study?
Technorati Tags:
Videotron, Pierre Karl Peladeau, CWTA, AWS, spectrum auction
Regular readers will recall that I tend to believe in letting market forces work, especially when there is so much choice available. We have 3 real, facilities based carriers and a host of resellers who are keeping the marketplace pretty competitive for consumers.
People often neglect to mention the MVNOs and resellers - companies like Amp'd, PC, Virgin and others. I know that Virgin has some real differentiators for customers - my daughter has been using their service this past year. No system access fees, real live customer service reps, aggressive price plans - easy, no-charge number changes (for when she is back in Toronto for the summer).
I think additional competitors would be great, but I get concerned with calls for government subsidies and intervention into the marketplace. A set-aside of the spectrum to be reserved for new entrants is a subsidy. I don't like the implications for distorting market econmics if one industry participant pays less than market value for its infrastructure - it ends up with an artificially subsidized cost structure. The need to guard against speculators that might use the subsidy to inventory spectrum waiting for foreign investment restrictions to be lifted.
I don't believe lower wireless pricing leads to increased market penetration. If it did, then the US should be leading the world.
There are a lot more complicated forces at work. I'll be speaking about some of these issues on Monday at the CWTA AWS Forum in Ottawa.
I wonder if the proper correlation, if any, may be that a decline in the rate of change in market penetration leads to more aggressive pricing. In other words, as the market becomes saturated, service providers drop prices to try to grab each others' customers.
Any economists want to do a study?
Technorati Tags:
Videotron, Pierre Karl Peladeau, CWTA, AWS, spectrum auction
Posted by Mark Goldberg @ 4/18/2007 01:23:00 PM 
Comments:
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As I recall Bell, Telus and Rogers (Cantel) all got their spectrum for free. Companies that didn't survive 'market forces' (Fido, Clearnet) all paid for spectrum.
True market forces at work, no?
True market forces at work, no?
Posted by 
: 2:38 PM, April 18, 2007
: 2:38 PM, April 18, 2007
Like you, Ted Rogers doesn't like the idea of a set aside for new entrants. He's quoted in the Financial Post today as saying "Statistics and arguments.....are being manipulated by those who want the government to give them favours when they build a wireless network -- favours that Rogers never received." If I remember correctly, didn't the non-ILEC facilities-based cell companies get an 12 or 18-month head start at the beginning before Bell and Telus could start up their operations. I believe the purpose of this favour was to ensure the Rogers' of the world would be able to compete against the old, more entrenched guys (Bell).
If the government decides there should be additional players in the wireless market because it believes, like Karl Peladeau, that "Canada's wireless market is in the hands of an oligopoly of three companies --Bell, Telus and Rogers and that there is a flagrant lack of competition in this sector and the reality of the market is that none of these companies is forced to offer better products or better prices", then it has to decide whther or not a new player has any chance of surviving without a subsidy or favour like Rogers got at the beginning of cellular.
If it decides a subsidy of some sort is needed, they can't give the new entrant a head start but they could, among other things, give the new entrant a break on the price of the spectrum they will need.
If they did this they could also say that if new entrants take the price break they must actually use the spectrum within a certain time frame or lose it (i.e. they must hand it back with no compensation). Another condition for the price break could be that if they do use the spectrum and build a network they can't flip it within a certain time frame. These conditions would cover your concerns about speculation.
It all depends on the government's level of concern about the wireless market and how much of a priority having a new entrant is to them.
If the government decides there should be additional players in the wireless market because it believes, like Karl Peladeau, that "Canada's wireless market is in the hands of an oligopoly of three companies --Bell, Telus and Rogers and that there is a flagrant lack of competition in this sector and the reality of the market is that none of these companies is forced to offer better products or better prices", then it has to decide whther or not a new player has any chance of surviving without a subsidy or favour like Rogers got at the beginning of cellular.
If it decides a subsidy of some sort is needed, they can't give the new entrant a head start but they could, among other things, give the new entrant a break on the price of the spectrum they will need.
If they did this they could also say that if new entrants take the price break they must actually use the spectrum within a certain time frame or lose it (i.e. they must hand it back with no compensation). Another condition for the price break could be that if they do use the spectrum and build a network they can't flip it within a certain time frame. These conditions would cover your concerns about speculation.
It all depends on the government's level of concern about the wireless market and how much of a priority having a new entrant is to them.
Posted by : 9:42 PM, April 18, 2007
: 9:42 PM, April 18, 2007
A new entrant on this market would be a nice thing. But beside a 4th entrant, maybe the CRTC should mandate first the Bell, Telus, Virgin Mobile and other CDMA operators to let customers port their CDMA handset. So that to really complement the MNP of March 14th.I find this situation where to benefit from the services of one operator you have to buy "one of his phones" and you can't use he same phone on another CDMA network. The case with Virgin Mobile which operate on the physical infrastructure of Bell doesn't allow one to buy say a CDMA smartphone from Bell and activate it with Virgin Mobile is abusing for me. I am used to the european market and maybe porting CDMA phones from one operator to another is by far an efficient way to bring competition and innovation in this market. R-UIM technology have been around for years but operators still hold back the customer's freedom to choose the best offer. I don't see where a customer will benefit from a 4th operator.
Virgin Mobile: How can they still charge calls by the minute not by the second and say their offer is better even if I like them not charging network access fees, VM and calling number display. I used to have this as basic standard with any phone.
PS: Sorry for my bad English...
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Virgin Mobile: How can they still charge calls by the minute not by the second and say their offer is better even if I like them not charging network access fees, VM and calling number display. I used to have this as basic standard with any phone.
PS: Sorry for my bad English...
Posted by : 5:31 PM, April 19, 2007
: 5:31 PM, April 19, 2007 
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