Globalive adds Calgary to cellular service area

greg meckbach and howard solomon

15 years ago

Globalive Wireless Management Corp. has added Calgary as a “home zone” to its mobile service area.

Toronto-based Globalive, which uses the Wind Mobile brand in Canada, does not require users to sign contracts and currently offers four handsets, including Research in Motion Inc.’s BlackBerry Bold 9700.

It announced the opening of four retail stores in Calgary, plus three Blockbuster Video outlets will sell the handsets.

Globalive started service Wednesday in Toronto when it activated the network and opened 18 stores.

Its least expensive voice plan — dubbed Chat — costs $15 a month, includes 100 minutes of calls in the home zone and 50 outgoing text messages. That does not include voicemail. Users making or receiving calls when outside the home zone pay 25 cents a minute. Its data plans do not have a download limit but the firm will throttle users who transfer more than 5 Gibabytes of content in a given month.

For users of the $15 and $35-a-month voice plans, the home province is considered the local calling area.

“The price will be attractive for a lot of people, but when you’re coming into the market to establish yourself just based on low price and simple plans, it’s hard to see how they’re going to make money,” said industry analyst Jon Arnold, principal of J. Arnold & Associates of Toronto.

Most of Globalive’s voting shares are held by chairman Anthony Lacavera, but Telus Corp. complained last summer Globalive was really controlled by Orascom Holding SAE of Egypt, which loaned Globalive the money it spent on wireless spectrum and holds enough voting shares to give it 65 per cent of Globalive’s total equity.

The Canadian Radio-television and Telecommunications Commission (CRTC) echoed the foreign ownership concerns concerns of Telus – and Bell Canada Enterprises Inc. and Rogers Communications Inc. – when it denied Globalive permission to operate as a carrier.

Though the CRTC is a regulator operating at arms length from politicians, the federal Cabinet overturned the CRTC ruling earlier this month on the grounds that Globalive does in fact comply with the foreign ownership limits of the Telecommunications Act.

When it sold frequencies by auction in 2008, the federal government reserved some of that spectrum to new entrants.

“The government’s getting what it wants,” Arnold said. “I’ts like they’re trying to mandate competition and they got it.”

About 95 per cent of wireless subscribers take their service from Bell, Rogers and Telus. Western telcos MTS Allstream and SaskTel each have two per cent, while the rest is divided up by a number of small providers who resell spectrum from the others under their own brands.

As of the middle of this year, Rogers had about 8 million subscribers (roughly 37 per cent of the market), Bell had about 6.5 million (for 30 per cent of the market) and Telus had about 6.2 million customers (for about 29 per cent).

How much the new entrants will take from the incumbents’ market share is a roll of the dice at this point. Convergence Consulting Group of Toronto has calculated that by the end of 2015 the newcomers could steal as much as 24 per cent of wireless subscribers. Thanks to fierce competition, some 96 per cent of Canadians will have a wireless device by then, compared to 64 per cent now, the company predicts.

However, Iain Grant, managing director of the SeaBoard Group, a Montreal-based telecommunications consultancy is skeptical. The majority of existing wireless subscribers are on contract, he reasons, with roughly one-third coming up for renewal each year. Grant made his comments to Network World Canada before Globalive launched.

Grant said subscribers will be targeted by their providers, who have the advantage of customer data – including spending and usage habits – to craft offers that will be hard to refuse. So by 2014 Grant believes new entrants will only pick up 10 per cent of this group.

As for those who haven’t bought a cellphone yet, another target market several new entrants have vowed to conquer, Grant believes only a small per cent will be won.

By his count, the new entrants will have about 15 per cent of the wireless market in five years.

The other new entrants include DAVE Wireless Inc. and Public Mobile, which plan to launch next year.

On Friday the CRTC published a letter addressed to Public Mobile stating it will review its foreign ownership and control.

“The Commission considers that based on a preliminary review of the documentation filed to date, the ownership structure of Public Mobile appears to comply with the legal control requirements of the Act,” the CRTC stated. “The foreign equity is provided by a number of investors and the foreign debt is primarily vendor financing. Finally, Public Mobile’s corporate governance provisions largely follow the guidelines laid out in the BCE and Globalive decisions.”