The Canadian Wireless Industry appears to be saturated, much different than the experience just a few years ago when there were just three major incumbents â€“ Rogers, Telus and Bell. The perception was that Canadian cell phone users were being ripped off with their cell phone plans that were in themselves pricy but also included hidden charges like a $6 System Access Fee.
While the days of the System Access Fee are gone and the unlimited talk and text plans that Americans and Europeans have had for awhile are making their way to Canada, the Canadian wireless industry is not really all that different. One of the primary reasons that the carriers appear to have such lucrative, and therefore, unfair plans for clients is that the phones the clients receive like Androids, Blackberrys and iPhones are so heavily subsidized that it takes about a year for these companies to recover their costs on them. Apple charges the three carriers $670 for each iPhone and they turn around and sell them to each client who signs up to a 3-year plan for $100 or $200. Considering that a client gets another subsidized phone approximately 24-30 months into their contract, really the companies only have about 12-18 months out of every 36 month contract to make good money off each of their clients.
That being said, the mobility industry in Canada is not nearly as competitive as it appears. The current brands in Canada in addition to the big three are Solo, Virgin, Koodo, Fido, Chatr, Mobilicity, Wind, Public Mobile and SaskTel. Shaw Wireless is set to launch in the West and Videotron is set to launch in Quebec in 2011. At first glance it would appear there are currently 9 separate brands with an additional 2 on the way , as well as all the resellers who use Rogers, Telus and Bell's network like Petro Canada, Cityfone, PC Mobile and SearsConnect.
In reality, Solo and Virgin are both owned by Bell. Virgin originated as a joint venture but since then has been fully absorbed by Bell's corporate structure. Koodo is a Telus creation and never existed as a separate entity at all. Fido and Chatr are both Rogers brands and while Fido was acquired as part of the Microcell acquisition, Chatr is purely a Rogers brand and also exists completely under Rogers corporate umbrella. SaskTel is limited to Saskatchewan, Shaw to Alberta and BC and Videotron to Quebec so they will never be true national rivals. What's left is Mobilicity, Wind and Public Mobile. While they exist as foreign entities currently as the Canadian government opened up the industry to competition by selling wireless spectrum to them, it is not expected that they will survive as separate entities for very long.
In the spirit of competition, the Canadian government stipulated that the spectrum sold to these companies cannot be resold to the three incumbents for a period of 5 years. The business plan of many of these companies is to undercut the competition and lose money in the short term to gain subscribers, and then when the spectrum is available to be sold, sell them to the highest bidder out of the three for a large profit.
In 2015 look for the industry to be right back where it started â€“ Rogers, Telus and Bell, with the only difference being each company will own 3 or 4 different brands to keep the masses happy, thinking there is ample competition. There will never be true competition in Canada. The sparse population over a large land mass is a barrier of entry â€“ it is impossible to cover all of the land with a decent network without tremendous capital investment. Given that the wireless penetration rate is nearly 70% in Canada already and the ones who don't have cell phones yet are people who would not be high revenue generators, it is just not worth it for a true new competitor to enter the market for an extended period of time.