Before I start going in on this post, I’d like to present you with some raw facts about Canada’s wireless situation. Canada is a country with a population of 33 million people and of those 33 million, roughly 2/3 of them are mobile phone subscribers. These 22 million subscribers have 3 national wireless carriers to choose from. Bell, Rogers and Telus all operate on HSPA+ networks that cover over 90% of the population (in addition to their “discount” brands Virgin Mobile, Fido and Koodo, respectively). In the past year, 3 new entrants have arrived but to call them national carriers would be misleading. Wind Mobile, Mobilicity and Public Mobile all purchased spectrum that was auctioned off by the government in Spring 2008 and launched their services in major Canadian cities starting with Wind last fall, Public Mobile this past spring and Mobilicity just a couple of months ago. However, these carriers are nothing more than trumped up regional providers and once you look past the plans designed for a college student’s budget and the bombardment of “grass is greener” marketing, you’ll see that these carriers are bad for wireless consumers in Canada and bad for each other. It’s always the same steps over and over in the dance that is Canada’s mobile industry, unfortunately while we think that the carriers are leading us somewhere, we look up and realize that we haven’t really gone anywhere. A wireless waltz indeed. (Shoutout to Darren Humphries for inspiring this series’ title). Let’s go on a trip shall we?
Canada boasts one of the most robust wireless networks in the world with support for CDMA, EDGE, HSPA+ on 850/1900MHz frequencies as well as AWS. There is not one major city in the country that is without 3G coverage, in fact, 93% of the country’s population is covered by at least one of the national carriers’ 3G network. Hell, we have FIVE different carriers that offer the iPhone 4. However, you can’t ever seem to have your cake and eat it too as our national carriers often miss out on the best devices (or pick them up late), the devices that they do offer are only available at a reasonable price if you’re willing to sign a 3 year contract, their rate plans offer less but still cost more than those in other countries and until recently, all post-paid customers in the country were forced to pay a monthly $6.95 “System Access Fee” on top of their agreed upon plan. As more and more customers complained about the SAF, the more creative the carriers got. Some began training their customer service staff to simply tell customers inquiring about it that it is a government imposed fee to shut them up, some companies offered to waive the SAF as a way to attract new customers or retain the ones they already had that were considering jumping ship. After years of this, the carriers decided to do away with the fee altogether, one by one starting with the discount brands (“No SAF” became their new marketing campaign) then the Big 3 followed suit…kinda. They simply replaced the SAF with the “regulatory recovery fee” which varies from $2.46 to $3.46 depending on where in the country you live so instead of just saying that they were going to reduce the fee by $3-4, they dressed it up with a fancy name and its business as usual. The new carriers haven’t brought any improvement either. Since they don’t offer carrier subsidies on devices, their products are limited to low end devices and the Blackberry Bold 9700 (which they have both priced too high to be popular), their networks are unreliable and their coverage footprints are pathetic. Now let’s assess the damage and see exactly how we got where we currently are, let’s start with Fido.
Originally funded by T-Mobile, Fido was the first carrier to launch a GSM-based network in Canada and the first carrier in North America to offer GPRS on its network. Pretty lofty accomplishments for a carrier that has been reduced to nothing more than “Rogers Lite” now. When you look back at Fido and their track record, it’s not hard to see why they failed. They offered no high end devices, they offered an unlimited data plan at a time that wireless data was a) too slow b) not worth the $50 they were charging because of a lack of mobile content and devices with a half decent browser (it only became useful to those who held onto the plan through their acquisition by Rogers and still enjoy the only truly unrestricted, unlimited data plan in Canada), their coverage was spotty, their unlimited calling plan was confusing to the average customer (a problem that both Wind and Mobilicity face but have dealt with much better than Fido did) and their biggest selling point was “per second billing”. Their failure was inevitable but not unavoidable. I’m not sure where all of Microcell’s money went but it would have been better spent in upgrading their network. Fido’s network only supported GSM 1900 and only had very little coverage outside of major urban areas of the country which meant that they simply weren’t an option for anyone outside of a major city and placed restrictions on their own growth and advertising reach. CityFido was a great concept but that doesn’t mean that it wasn’t without its flaws. The Local Calling Areas were difficult to explain and even more difficult to understand (“So I can make unlimited calls from anywhere within the area that you’ve outlined on this map but I might still be charged long distance even if I’m calling someone within the same area? Huh?”), it came at a time when Fido was strapped for cash and had their backs against the wall fighting off hostile takeover attempts from their competitors. They also failed to position the plan properly and market it towards the right demographic. Originally launching in Vancouver in October 2003, CityFido offered unlimited local calling for $40 per month provided that you remained within your local calling area (which was typically the metropolitan area surrounding whichever city you lived in, in this case the Greater Vancouver Area). However, the service was targeted mainly at those with landline telephone service and were looking to keep their existing phone number while ditching their home phone. What Fido didn’t understand at the time was that the majority of people didn’t need to be pushed to abandon their landline in favor of their wireless phone, it simply made sense. CityFido should have been marketed to anyone with a mobile phone in the 3 cities that the service was offered in (Toronto and Montreal were added in 2004) and would be interested in unlimited calls. So in other words, it should have been targeting EVERYONE. Ironically, by the time Fido launched CityFido in Toronto and Montreal, everyone started targeting it. Not only was Fido taking on their competitors’ wireless business but they were also encroaching on their home phone business as well which has been very lucrative to Telus in Western Canada and Bell in the east. By this time, Fido was just about out of money and a buyout was inevitable, the question was which company eventually acquire them. Due to the dictatorial rules that the CRTC places on this kind of thing, we knew that the company would have to be Canadian owned and most likely one of the other wireless carriers: Bell never showed much interest to begin with, Telus was aggressive right from the start while Rogers sat back to see what the final cost would be. In the end, Rogers outbid Telus’ offer of $29 per share ($1.1 billion) with it’s own $1.4 billion bid ($35 per share) and acquired Fido’s parent company, Microcell Solutions, in November 2004. They quickly went to work tearing down all the things that made Fido great. CityFido was the first and probably the biggest thing to go as Rogers announced that the plans as we knew them would be discontinued on March 1st, 2005 and only those who activated it prior to that date on a 2 year agreement would be allowed to keep it after that date. Several other plans saw their demise shortly after this, including the unlimited data plan that I mentioned above. So much for competition right? CityFido is still offered today except now instead of unlimited local calling, customers are given a choice between 2000 and 4000 minutes for $40 and $60 per month, respectively. The only plus side is that unlimited text is now included but that doesn’t really balance it out does it?
In Part II of this series, I’m going to take a closer look at Canada’s new carriers and why it’s almost a sure thing that most of them, if not all of them, will fail miserably.
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has written 13 articles for The Mobile Fanatics.
Your favorite blogger's favorite blogger coming at you live from Toronto, Canada. One of the original BMEs and a cell phone fanatic. Find Kyron on Twitter @EverythingBlaxx. Email him at kyron.john@themobilefanatics.com.
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