Public Mobile debuts May 26 in Toronto

Howard Solomon

15 years ago

Canada will have eight wireless carriers next week when Public Mobile turns on its new network.

Staffers at the startup’s stores have been telling customers that service will begin May 26 in Toronto and June 25 Montreal, with the network eventually extending along the highway corridor from Windsor, Ont. to Quebec City and up to Ottawa.

(An earlier version of this story said service in both cities would launch May 26.)

The launch had been expected to be earlier in the month but Mobilicity beat it to market by opening its doors May 15.

With its Public Mobile’s debut the country will be getting its third new cellphone company in five months. The first was December’s controversial launch of Globalive Wireless Management Corp.’s Wind Mobile, which needed a federal cabinet order to get off the ground.

But Public Mobile has had the advantage of a head start of sorts: Since mid-March it has been selling handsets and signing up customers before the network is turned by promising free Canadian long-distance calling to early subscribers. After launch that will be a $5 a month extra.

That may be needed for those who want to make calls outside of the local area. At the moment the company doesn’t have a roaming agreement.

So far the startup has announced only one no-contract plan, a $40 package that includes 3-way calling involving any carrier.

Public Mobile was asked for comment, but a spokesman said CEO Alek Krstajic won’t do interviews until next week’s the launch.

The company is one of a group of new entrants that bought licences in the 2008 AWS/PCS auction after Ottawa set aside spectrum for newcomers to boost wireless competition.

Three incumbents – BCE Inc.’s Bell Canada, Rogers Communications Inc. and Telus Corp. – had 95 per cent of the wireless market at the end of 2009 and the federal government is determined that should shrink.

An estimated 70 per cent of the eligible market has subscribed to wireless, leaving 30 per cent – perhaps 7 million people – to be signed up. The newcomers will initially target those people.

Public Mobile spent only $52 million on spectrum to cover two of the country’s biggest cities, leading some industry analysts to say it got the deal of the century when other new entrants spent hundreds of millions more. Globalive spent $442 million, Mobilicity’s parent spent $243 million, Quebecor Inc., parent of cableco Videotron Ltee spent $555 million, Calgary-based cableco Shaw Communications Inc. spent $189.5 million and Halifax-based Bragg Group, parent of the Eastlink cable company, spent $40 million.

It did it by gambling on standard PCS spectrum in frequencies that few thought handsets were available for. Most of the other new entrants went for pricier AWS spectrum, which is better at handling bandwidth-intensive tasks like downloading music and videos.

But people with those needs aren’t Public Mobile’s market. It is going after so-called “working-class” Canadians who want basic voice and text service. The incumbents, however, have flanker brands aimed at some of that market, Bell with Solo and Virgin, Rogers with Fido and Telus with Koodo. Public Mobile is betting that these publicly-traded companies will be unwilling to engage in a price war that might cut into their profits. It’s unclear, however, how willing the incumbents are to losing market share, or if the market is big enough in the short term for them to lose share but still keep their profits.

Analysts argue the real test for incumbents will come when Videotron, Bragg and Shaw start selling wireless in bundled packages with TV, home phone and Internet. Videotron has been reselling wireless with spectrum leased from Rogers, but now it has its own spectrum and can control its future and pricing. The Quebec cable company is expected to launch service soon, while Shaw says it won’t start selling wireless until late next year. Bragg hasn’t given any sign when Eastlink will begin construction of its wireless network.

Convergence Consulting of Toronto has estimated that the new entrants will capture 22 per cent of the wireless market by 2015.