Back-to-school season is the new Christmas for Canada's cellphone providers, but although this September will see plenty of giving and receiving, no one expects the affair to be festive.
The wireless industry is preparing for its most disruptive back-to-school period ever as companies prepare to defend their existing bases of cellphone customers and win new ones during the industry's most crucial sales season. The mayhem has already started and, especially at the low-priced end of the market, it is only going to intensify.
"It's 'go' time now," said Ken Campbell, Wind Mobile's chief executive officer. "We'll see where the dust settles."
The third quarter, especially the intense period between August and late September, has grown in importance for wireless companies over the past few years and is now more significant than Christmas in terms of picking up new customers.
This year the competition will be tougher than ever as newly launched cellphone providers Mobilicity, Public Mobile and Wind Mobile fight for customers. The new entrants are expected to ramp up offers, especially in the country's biggest cities, in a bid to win business.
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One wireless industry executive said the next couple of months will be a "bloodbath" and predicts deeply discounted offers no company will be able to maintain over the long term.
Some executives, such as those at Wind Mobile, are postponing summer vacations to deal with what they expect to be the most intense competition in the sector's 25-year history. The upstart provider just launched an offer featuring half-price service for one year on mobile data plans, a deal that Mr. Campbell said is positioned to target students who use smart phones as modems. As the competition intensifies, Wind will also look at bundling offers together and further discounting.
The incumbent providers - Rogers , BCE Bell Mobility and Telus - will have the trendy new iPhone 4 by August to help spur sales.
The incumbents, as well as the new players, are closely guarding the details on many new products and prices to prevent being outflanked by competitors, but every provider has something planned.
"You'll see news from us on pricing, you'll see news from us on hot devices," said Phil Hartling, senior vice-president for Rogers' consumer segment.
Rogers has already announced a new discount brand, Chatr Wireless Inc., to battle the new wireless players - a move analysts say is likely to prompt Bell and Telus to reprice or reposition their own discount brands, Solo Mobile and Koodo Mobile.
Telus is about a week-and-a-half away from announcing its back-to-school pricing plans and promotions.
Wireless companies view students leaving home for university as ideal customers. Not only are students tech-savvy consumers, capable of influencing their parents, but many need to start off with a full suite of mobile Internet and cellphone plans, said Kaan Yigit, founder of the Solutions Research Group consultancy.
"Back-to-school is the season that addresses relatively young consumers who are leaving home for the first time and are therefore more likely to be taking the product as their only source of communication," added Greg MacDonald, an analyst with National Bank Financial Inc.
"This further suggests that these are higher-than-average-revenue customers, and that's why the third quarter matters so much now."
Hot sales season
Back-to-school season in Canada has gradually grown more important than Christmas for Rogers, Bell and Telus, as measured by total gross additions of wireless subscribers during the third and fourth quarters.
Q3: 1.26 million subscribers
Q4: 1.38 million
Q3: 1.37 million
Q4: 1.45 million
Q3: 1.46 million
Q4: 1.45 million
Q3: 1.47 million
Q4: 1.43 million
Q3: 1.48 million
Q4: 1.46 million
Source: Company reports; National Bank
Companies & investments Mentioned In This Article (3)
BCE-T 47.64 0.549 % 871,040 TELUS Corp.
T-T 39.13 0.128 % 642,811 Rogers Communications
RCI.B-T 43.665 0.564 % 312,816