Videotron Ltd. announced on Thursday its 3G+ mobile service across Quebec and in Ottawa on four handsets not previously available in Canada, including Google Nexus One HTC, and a BlackBerry plan for small businesses.
The subsidiary of Quebecor Media will offer consumer and corporate plans for wireless, cable television, phone and wired internet service that, according to Quebecor Media president and CEO Pierre Karl Péladeau, will allow the company to compete with service providers that have had the advantage of a 20-year start.
Videotron was one of the new entrants in Canada’s Advanced Wireless Spectrum (AWS) auction in 2008, having paid $555 million for its cellular licences.
Apple’s iPhone 4 is not among the list of handsets available but that could change in coming months.
Service will initially be available to the greater Montreal area and Quebec City with some municipalities in between. Additional municipalities in Quebec will get service by the end of 2010, eventually covering the bulk of the province. Outside of Quebec and Ottawa, customers will roam with Rogers in Canada and T-Mobile in the U.S.
Robert Dépatie, Videotron president & CEO, placed a lot of emphasis on not just the competitive pricing but also that there will be no contract commitments and the option to bow out through an unconditional 30-day money back guarantee.
As to whether Videotron is starting a price war among telecommunications providers with its new wireless service, Dépatie said the price war was started a long time ago before Videotron got in the mix. “For us, it’s value for your money,” he said.
Videotron’s entry in the mobile service market could not have happened earlier, said Dépatie, because the company needed time to get in shape after being acquired by Quebecor Media about a decade ago. “It was so important for us to get our act together, fix the business,” said Dépatie.
It’s wise for Péladeau to not gaze too far into his crystal ball because retaining and expanding its existing triple-play customers (home phone, internet, cable) can get complex, said Lawrence Surtees, research vice-president for communications at Toronto-based IDC Canada Ltd. “What that does to the top line revenue and profitability can be dramatic,” said Surtees.
Videotron recognizes that price is not the only deciding factor for customers, said Surtees. The company’s play here is to also offer customers a service bundle that now includes wireless, handsets not previously available in Canada, and video, said Surtees.
“Wireless for (Videotron) is about the bundle,” said Surtees. “It’s about making the triple play a more lucrative quadruple play.”
Surtees said wireless is the “future of the whole franchise” and it can be fully expected that rivals Bell and Telus will soon respond with their own competitive offerings.
The observed drop in landline usage among the younger generation is a trend that Videotron is taking into account and one reason it has entered the wireless market, said Péladeau. “Yes, it’s a trend that is going to continue. It’s part of our planning,” he said.
Péladeau also said the company has a lot of faith in the Android operating system given recent statistics of a smart phone penetration rate of 55 per cent.
Follow Kathleen Lau on Twitter: @KathleenLau
