Wireless rivals. Telecom giants plan to overlay cell systems with 3G technology
Bell Canada and Telus Communications, two rivals in the wireless business, are teaming up to make their networks faster and more profitable for foreign visitors.
The telecom giants will overlay their cellular networks with a technology called high speed packet access (HSPA), the 3G technology used by Rogers Communications.
This will allow the firms to offer popular handsets that only work with the GSM mobile standard. Bell and Telus use the incompatible CDMA technology, which is losing favour around the world. The new overlay, which allows for faster data transfers and rich multimedia applications, will be active just before the 2010 Olympic Games in Vancouver.
Both companies will be able to charge roaming fees for data transfers by foreigners, but not for voice calls. This made one analyst wonder why they will invest in the overlay at all.
"The number of data roamers is small compared to voice roaming," said Iain Grant of the Seaboard Group. "It raises the question of why they don't add voice to profit from the Olympics."
Grant also wondered why Telus would partner with Bell, whose $52-billion buyout may be in jeopardy in the current credit crisis. "They are supposed to be competitors, and when your competitor is weakened, it's a time to exploit your strength," he said.
Wade Oosterman, president of of Bell Mobility and Channels, said this partnership is part of the evolution of a tower-sharing deal the two companies signed in 2001.
"We're significantly improving our existing network and adding the overlay," he said. "So you can use the biggest network in Canada no matter which platform you prefer."
Dvai Ghose, an analyst at Genuity Capital Markets, expects the overlay to cost $800 million to $1 billion, split between both carriers.
The HSPA overlay is also a transition into the 4G Long Term Evolution standard, expected in 2012, which will offer record download speeds and eliminate the division between GSM and CDMA.