When the Wind blows West:

Will Wind Mobile take down Canada’s telecom titans?

From titans maintaining an oligopoly to unproven newcomers, the Canadian wireless provider industry in wrought with distrust and
uncertainty. But there’s more to Wind than meets the eye. Plus: How to pick the best plan for your new phone.

 

By Knowlton Thomas
THE OLIGOPOLY

veryone and their dog has
He of the “Big Three” in

Canada’s telecommunications
industry: Rogers Communications,
Telus Mobility, and Bell Mobility.

Much like our country’s “Big
Five” banks—Bank of Montréal,
Royal Bank of Canada, Canadian
Imperial Bank of Commerce, Toronto
Dominion Bank, and the Bank of
Nova Scotia—the Big Three is a
market oligopoly.

Let’s stop here and understand
exactly what an oligopoly is. An
oligopoly is a state of limited
competition within an industry, where
a select few businesses run a massive
market. It ultimately functions
parallel to a monopoly (the Insurance
Corporation of British Columbia is
a good example of one), except that
oligopolies are capable of creating the
illusion that a market has sufficient
competition for consumer-fair pricing
models.

The next question is how is this
illusion created? In the case of the
Big Five banks, it’s sheer numbers.
Five banks offering nearly identical
services must be in competition,
right? Well, yes, but they also have

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an unwritten agreement never to
undermine each other too intensely.
But why wouldn’t they? Simple:
first, they’re well-positioned to be
consistently profitable because they
can all keep their fees high instead
of all keeping their fees low, which
would be a “price war.” Second, their
services are essential to virtually
all of the population, so they know
people will use their services. (Credit
Unions offer nearly all the same
services as banks for considerably
lower costs, but many consumers fail
to realize this point. But I digress)
It’s slightly different—but a lot
worse —in the Canadian telecom
industry. The Big Three function
on the same principle as the banks,
where they universally keep their
prices high (and identical) instead of
competing for the lowest prices to
lure in new consumers. But they go
a step further in eluding the masses:
each of these corporations actually
has subsidiaries that few people
realize are owned by the Big Three.
For example, you’ve probably
heard of Fido. You may have even
observed that it’s a cheaper, but
less capable, version of Rogers.
That’s because it’s fully owned by
Rogers, and was created to target a
demographic unsatisfied with Rogers.

 

WIND

And just within the past month, Chatr
Wireless officially launched. A new
company? Hardly. Rogers created and
owns that brand, too.

Continuing on, Bell owns Solo
Mobile, and Telus owns Koodo
Mobile. Again, these subsidiaries
appear to be separate companies,
but really just target different
demographics. For several years, the
Big Three have been sitting awful
pretty. Until a 2008 government-
managed auction shook the very
pillars on which they are founded.

THE NEWCOMERS

Quoth Reuters, May 27, 2008:
“Canada’s government launched
an auction of wireless spectrum on
Tuesday that it hopes will bolster
competition and lower prices by
allowing new players to break into
the cellular phone market.”

Up to five new companies were
staged to enter a highly regulated and
chokingly constricted wireless service
industry. The Big Three, for the first
time ever, were about to have some
real competition.

Of course, companies can’t
sprout out of the ground like a magic
beanstalk. It’s taken four years
for them to launch, and only three
survived the gruelling process: Public
Mobile, Moblicity, and Wind Mobile.

 

These companies are brand new to
Canada, completely separate from the
Big Three, and determined to offer
greater value in their services.

But the Big Three haven’t made
it easy for these altruistic newbies.
Rogers began developing Chatr
nearly one year ago, and launched it
specifically to nip Wind Mobile in the
bud. And I mean specifically. Chatr
matched Wind’s services and prices,
and—despite Rogers having a much
more expansive network —cut its
service boundaries precisely where
Wind’s are cut. And I mean precisely.
Like, same street precisely.

With Wind and Chatr almost
identical companies, who’s going to
win? Rogers has the natural edge:
it’s a huge, established company
with myriad more Canadian
resources. Despite Public Mobile
filing a complaint with Canada’s
Competition Bureau against Rogers,
the longstanding communications
company looks poised to forge ahead
and clip the wings of these telecom
start-ups before they ever get off the
ground.

But there’s more to Wind than
meets the eye.

A BIGGER VISION

Quote Wind Mobile’s website:
“Wind [has] a history of over ten