The country’s new wireless carriers are spending millions on marketing but it’s still a tough slog getting customers, according to the latest figures from the federal telecommunications regulator.
In its annual Communications Monitoring report, issued Tuesday, the Canadian Radio-television and Telecommunications Commission (CRTC) calculated that at the end of last year the new entrants had just four per cent of the wireless market.
The newcomers are Wind Mobile, Mobilicity, Videotron and Public Mobile.
That left the incumbent carriers – Bell Mobility, Rogers Communications and Telus Corp. – still holding well over 90 per cent of the market.
On the other hand, 2011 was the first full calendar year of operations for Mobilicity, Public Mobile and Videotron.
At the end of 2011, Wind had been in business just over two years, Mobilicity and Public Mobile 19 months, and Videotron 16 months. (Videotron had been selling cellular service before September, 2010,
New entrants were encouraged by Industry Canada to get into the market in the 2008 spectrum auction to counter the dominance of the big three incumbent carriers. In fact the government tailored the rules of the auction to ensure new entrants could buy spectrum.
However, Bell, Rogers and Telus have fought back with aggressive pricing on their own and with the launch of so-called flanker brands (like Rogers’ Chatr and Telus’ Koodo) Bell’s lower-priced brands are Solo and Virgin.
The government’s plans were also knocked askew when Shaw Communications, which spent $189 million on spectrum in the 2008 auction, decided against building a cellular network in Western Canada and instead chose to focus on Wi-Fi.
Meanwhile Bragg Communications, which owns the Eastlink cable network, is still building its cellular network and has yet to launch.
Arguably the new entrants came to market with high expectations put on them. In 2008, Toronto-based Convergence Consulting predicted that by the end of 2015 startups would capture 24 per cent of the market. (For more on that report click here.)
In April of this year Convergence predicted that new entrants will have 6.5 per cent of the market by the end of 2012.
(Still, in that April report Convergence Consulting suggested that new entrants are not without weapons. While incumbents have come close to matching the prices of the startups for voice service, new entrants can undercut the big three and their discount brands by more than 40 per cent on combined voice/data pricing and by more than 80 per cent on data alone. Those figures don’t include promotional pricing.)
The CRTC report comes after the Harper government changed the foreign telecom investment rules in hopes of giving new entrants financial help in fighting the incumbents, particularly with another spectrum auction coming this year.
The rules allow foreign companies to buy all of a Canadian wireless carrier that has less than 10 per cent of the market.
However, the CRTC numbers may give foreign carries pause as they look at how steep the road is.
