Europe has seen cutthroat competition for subscribers
By this time next year, Canadian wireless phone customers may find that their familiar service has taken on a distinctly European flair.
In the little more than 24 hours after the federal government said it was throwing open the doors to new wireless competition, the upstart contenders began stepping forward. Little-known Yak Communications and media giant Quebecor Inc. were two of the first to throw their hats into the ring for the May auction, at which the federal government will lease new wireless spectrum — the airwaves over which wireless companies run their business. And it's likely that just about every telecom and cable company in Canada will spend the coming months looking long and hard at the potential for a new competitor to succeed. "That everyone is lining up shows how uncompetitive the market was," says Amit Kaminer, an analyst with the SeaBoard Group.
The changes in store for the wireless industry will do more than simply add some regional players to compete with Rogers Communications, BCE and Telus. Successful new entrants will bring entirely new strategies and business models that move away from complex contracts and fees that customers have long complained of, says Eamon Hoey, head of the consulting firm Hoey Associates.
Yak, for instance, has said that it plans to be "the first no contracts, no gimmicks wireless provider in Canada." And although industry insiders are somewhat skeptical about Yak itself, the company's plan is a sign of what's in store. New competitors will likely take Canada down the path being followed by European and U.S. companies, which have been moving away from closed networks and locked phones that chain customers to one carrier, says Kaminer. Anyone who tries to compete toe-to-toe with the big players, while offering nothing new, will be "dead in the water," says Huey. Changes won't happen overnight. But customers have been demanding change, and now they're going to get it.