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In what can only be described as a game of high-stakes legal douchebaggery, Bell and Telus have forced Globalive to review their foreign ownership before a public CRTC hearing. Telus in particular has been throwing every legal means they can at Globalive to try and hold up the upstart’s launch date. Needless to say, Globaliver are eating their livers over this latest development. And probably you should be too. There’s little in this antiquated idea of nationalistic telecom protectionism that helps Canadians in this context. In fact, one could probably point to the long coddling of Canada’s domestic telco industry for our current oligopolic-ish sort of situation.

From Today’s NationalPost:

Globalive Wireless has been racing to bring its offering to market as quickly as possible. By next summer, without the delays occasioned by the CRTC review, Globalive Wireless would have launched its services in many Canadian markets, employed an estimated 2,000 people and spent over $1 billion building its network.

The incumbents responded to the threat of new competition in predictable ways: they cut prices and suggested they would provide better customer service. Fair enough although one wonders whether that would have happened without the threat of more competition. Somewhat more cynically, they sought to game the regulatory system in a way that could delay and seriously complicate the introduction of wireless competition.

LINK: Wireless Wars: Barriers to new providers -Ken Campbell CEO Globalive Wireless
Funny that Rogers doth not protest. It’s almost like they know that as the one carrier selling out iphones, blackberries, and rocket sticks faster than they can back up the trucks, that they are the least of whose lunch will be eaten by the upstarts.

Here’s what we know. Globalive (our only new nationwide entrant) has partnered with Alcatel in the west and Nokia in the east to build them a cellar network. The bad news is they are, reportedly, still in phase of locating acquiring tower real estate. To make life a little more difficult, Globalive is also catching some flack for using a lot of US labour (really Alcatel’s labour) rather than hiring the local talent apparently ready/able to do the work. Take that for what you will.

This is, of course, funny because our government -over much lamentation of the incumbents- mandated something called “tower sharing” in the recent spectrum auction. Meaning that the existing carriers were supposed to share space on their towers with the new kids whenever “reasonable”, “safe” and “practical”. Unfortunately None of the new entrant CEOs we’ve spoken with have particularly optimistic about tower sharing arrangements.

You would thing that after burning through the better part of two billion in a slugfest of an auction last summer, that the hard part would be over for Canada’s new Wireless Entrants. Word is though, that the rollout of wireless coverage across a country this size isn’t so easy either. Leaving aside the obvious challenges of the vast geographies, lets not mention the global economic collapse (not a fun time to be going back to the well for more capital) the new entrants current challenge is finding tower space. Or urban spaces for new towers.

Elsewhere in the world this wouldn’t be as difficult a problem. In the US, europe and many civilized countries, a majority of towers and cell sites are owned by 3rd party companies, vertical wireless hotelling/hosting businesses.

Theoretically, it’s really nobodies interest to have a lot extra tower sites. Municipalities and locals don’t like it, towers and antennas are usually ugly. Finding real estate, building the tower, routing power and data backhaul is expensive so it makes for considerable scale advantages to share.

In Canada though, we don’t have an independent, competitive tower industry. The towers are , by and larger, all owned by the big three. They do share or trade tower space amongst themselves. By share, our sources tell us, you mean “grudgingly” and “like children”.

Contacts a certain big red carrier have been suggesting they will be doing all they can to fill up their towers with equipment, any equipment, just to not leave space for the new entrants. Don’t be surprised if you see the Rogers’ family own toaster-oven staplegunned to a cell tower near you, and so forth.

Altogether, signs don’t point to “likely” that we’ll see meaningful new wireless coverage in Canada this year.

You’ll notice that Bell has primarily hung on to market share in recent years only thanks it’s acquisition of Aliant. Telus is has been aggressive at growing share, while Rogers iPhone bump is less than you might expect. Not less than you might expect however if we plotted revenue share of market instead of subscribers (postpaid+prepaid) which is what this diagram illustrates. Rogers ARPU (average revenue per user) is substantially higher. Rogers advantage of being the only carrier with the latest GSM handsets has helped them maintain the industry highest prices and the highest market share.

These totals include virtual operators (e.g. Virgin counts as Bell) and all of the big guy’s familiar wanker flanker brands.

In all cases every carrier has been adding significant subscriber numbers in every quarter over the last 4 years. But there’s a ways to go yet. Canada is still sadly behind the world in penetration. Previously: Mobile penetration ekes up to 70% in Canada, still sucks

source: CWTA (the horse’s mouth)

So stop me if you’ve heard this one: A dog, a lizard and a yak walk into a bar….

As the CEO of Globalive, the winner of the largest geographical amount of the wireless spectrum auction, Anthony Lacavera started off by encouraging the audience at this month’s Mobile Monday meeting to ask him the controversial questions. He is the first CEO of a wireless company to speak to a MoMoTO crowd, and it appeared that he didn’t want to hide behind the messaging in a glossy marketing package.

Many may not know Globalive, but will likely be aware of their home phone and long distance services that operate under the name of Yak. Yak will soon be offering wireless service to it’s 1 million customers, as well as trying to get some of the unsatisfied customers from the other companies to come over to their side of the fence.

So what is Yak going to do with their $442 million share of the wireless spectrum? Yak will be launching their service in late 2009 to five Canadian cities: Toronto, Vancouver, Calgary, Edmonton, and Ottawa. They are going to be targeting their existing customer base, providing them with the same customer service they have become accustomed to in their home and long distance services. They’ll scoop up some dissatisfied customers from the existing cell phone companies, and they’ll try really, really, really hard to make them happy. They’re also going to be targeting the almost 40% of Canadians that don’t already have cell phones, which is perhaps a market that Rogers, Bell, and Telus have long forgotten about.

When the auctions were first announced, many people were hoping that new wireless service providers would break the big players, shaking them to the ground. With Yak coming into the picture, it doesn’t seem that we’ll be saying good-bye to Rogers, Bell or Telus anytime soon.

Yak intends to start off by competing with the smaller wireless companies of Fido, Solo and Koodoo. Even though we won’t see them square off with the Big 3 right away, Tony says that the consumers are already seeing the effects of having a new competitor in the market. New plans have already been announced that remove the system access fees, and allow customers to carry over their minutes to the next month. Tony also said that Yak will be exploring options that have worked in other countries to help stimulate a more competitive wireless market in Canada, a country whose wireless service ranks as the most expensive worldwide.

Tony spoke about the challenges that face them, most of which will come from getting Bell, Rogers and Telus to co-operate with them. Yak would like to be able to share some space on the physical towers that are currently owned by the other companies, but has been given a slew of excuses as to why that won’t work. One example he gave was that he was told the towers couldn’t support the weight of new equipment. He also mentioned some concern about getting roaming to work across the country when Yak’s customers are outside their service areas. Eventually he said, the co-operation from the other companies may only come in the form of government regulated rules since there is no incentive for them to play nice.

It’ll be a GSM network [ed- is that HSPA or just "GSM"?] . They have the AWS part of the spectrum, which means that only phones with AWS capability will work on their network. They are anticipating for 1.5 million users within the first 3 years. (Notice that I didn’t call them subscribers, since Yak won’t have any contracts.)

One thing that struck me about Tony was that he seemed to truly recognize that the customers are the real strength behind any wireless company. He related to us stories about how he continues to call Yak’s customers as a customer service rep, just to make sure he stays in touch with his customers. When he started talking to people about wireless service, and he realized just how much people wanted to express their opinion, he had the idea of creating a website where people can talk about wireless service in an unmoderated forum. That was when the Wireless Soapbox (http://www.wirelesssoapbox.ca) was created, and it’s pretty apparent that he genuinely would like to hear what Canadians have to say about their wireless service.

While there was no shortage of questions for Tony, in the end, the tough and controversial questions didn’t come; on member commented that there weren’t any tough questions to ask. I suppose we’ll have to wait and see what happens with their service when they launch Yak Mobile in late 2009 – you’ll be seeing their phones appear in retail stores nationwide.

My remaining question: how can I get out of my 3 year contract with Rogers so I can switch to Yak if I decide I’d like to do that?

- Big thanks to James Eberhardt of Echo Mobile for this report from momotoronto

Well this is fun, Globalive has launched a “wireless soapbox” site like a dell ideastorm or suggestion box for how to build a better wireless carrier in Canada. You can submit ideas or gripes and vote up better suggestions with a digg-like interface. You get the idea.

Clever of Globalive to be the first out there positioning themselves as the white knight, against the familiar evils and frustrations of the current providers. (While it lasts) this whole new competition idea looks like it’s going to be fun. You know what to do, head over to wireless soap box here.

Hat tip to electrokinetica for the link.

Google made a nifty announcement yesterday that they were launching mobile image ads. Googles says image ads have a few advantages, they are specially sized for mobile, they link only to mobile-readable sites, they are stronger for brand-building and earn higher click-thrus. These ads are available in “Australia, China, France, Germany, India, Ireland, Italy, Japan, Netherlands, Russia, Spain, the UK, and the US” – no Canada. Not worth the investment apparently.

A source at Google Canada let us know that mobile text ads are available in Canada however offered no ETA for the availability for images.

A lot of people ask us this question, how will I monetize my content in the mobile world? And the answer is that advertising ultimately has to play big role in the mobile value chain. The trick is mobile content and and mobile advertising are a chicken and egg problem. They’ll both need to grow together.

A few industry speakers at ICE08 in Toronto referenced the statistic that mobile ads were fetching CPMs (cost per mille or thousand impressions) upwards of $80 (compared to a few cents to a few dollars for online ads). However no one seemed to remember exactly who’s deal that was (if you do let us know).

They say that advertisers are hungry for mobile inventory. Which make makes some sense if you ask me, the $80 may say more about a scarcity of M’s than a preponderance of C’s.

There’s no doubt that Canada’s history of high data rates and an epidemic of mid to low-end phones with weak browsers have slowed the market in Canada.

It’s not that big a deal to be shut out by one particular mobile ad platform. However, just once, WirelessNorth.ca would like to see Canada counted as a first world country in the new mobile economy.

And dear CRTC if you are out there listening, these market realities are just another little tidbit of evidence why an under-competitive telecom industry in Canada holds back Canadian content creators and holds back Canadian culture from having a voice in the future of media.

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Just a few days before the event was scheduled, I was asked by a couple friends if I could fill in a slot at DemoCamp17 in Toronto on the subject of “The state of Wireless in Canada Sucks”. You can thank Dave Crow for the title, who made it up and the theme by preannouncing it on his blog. I could probably have also prepared another 5 minutes about what’s awesome in wireless in Canada (On WirelessNorth.ca we try to cover both where we can find them). However, this is not that latter presentation. Somewhere some body has a video of this presentation, which I hope I can YouTube up at some point. In the meantime, above is the slide share version.

The crowd, who were probably over generous, had this to say about it (Do you think the subject may have touched a nerve?):

More than 400 people packed the Toronto Board of Trade conference hall Monday night for DemoCamp, a loosely organized gathering of Web entrepreneurs, venture capitalists and technology enthusiasts. … But the real crowd pleaser of the night had to go to WirelessNorth webmaster Tom Purves’ fast-paced Ignite presentation on why the Canadian wireless industry “sucks.” – David George-Cosh, National Post “DemoCamp warms up Toronto Tech Crowd“

I caught you at DemoCamp yesterday. I was quite proud to realize that it was a local Torontoian who had published that graph on wireless rates around the world I saw everywhere last summer. I find Canada’s postion a bit ironic given that we were a leader in wireless communication back in the 1950s when were built the cross country microwave network. -JP

fantastic presentation at democamp the other day! nice standing ovations! – Albert Lai

Wirelessnorth.ca preso rocked. Next steps? -Jeremy Wright, B5Media

DemoCampToronto17 was a great success. @tpurves rocked the house with “Why the State of Wireless in Canada Sucks”. All presenters awesome. -Jay Goldman

Ignite presentation “The State of Wireless in Canada Sucks” from Tom Purves could be the best ignite presentation in the history of Democamp Toronto so far. Well done, Tom! – Libin Panwir

In the news today, Torontoist calls foul on Roger’s new “unlimited” data plan. Go read. excellent rant. Why is it important?

Among the plan’s many “unlimited” caveats, is this gem:

3rd party applications are applications like Yahoo! Go or Google Maps. These are non-Rogers applications which can be downloaded to the device and incur data charges at a rate of 5¢/KB – Rogers “Unlimited” browsing plan

In Roger’s case, this isn’t an offer, this is declaring preemptive war on off-deck content. 5cents a kilobyte is $50 a megabyte 3 years, or a prohibitive cost and fear denial-of-audience attack against any non-rogers owned or licensed off-deck applications.

Now all mobile application developers, whether you are Google, an art student or designer experimenting with new modes of interaction, or a kid in the garage with the Next Great Software Idea, you all now have to do a corporate deal with Rogers to have any hope of distribution and mobile usage on the Rogers network.

Where are Bell and Telus in all this? If I were them , there’s tremendous opportunity here to call out the emperors nakedness on data and play the white knight of the industry. There’s a whole internet and mobile ecosystem out there exploding with new (3rd party) mobile services and applications – which your competitor is shutting out. Sounds like a competitive advantage to me.

The biggest wireless story of 2008 is going to be Canada’s upcoming spectrum auction. Technically, Canada is auctioning three chunks of spectrum, but only one of which, the “1700″, is particularly interesting for most uses. So much so, they’ve even given it a brand name: Advanced Wireless Spectrum (AWS).

The shocker of course, is that the government has done something dramatic by setting aside 3 of the 6 blocks (40% of actual spectrum) to new entrants. Furthermore, they’ve mandated the existing carriers to share towers and even share roaming spectrum to give these would-be entrants a fighting chance at achieving scale.

This government largess, does hide another issue however. Before we sling too much mud at certain tacit oligopolies in Canada, remember also this is the same government that is about 3 years behind the U.S. in unlocking wireless spectrum. What is on the block now is NOT even the same (or quite as juicy) as the 700MHz spectrum currently up for grabs in the U.S.. Canada won’t be clearing this auction until as late as 2012.

As for the spectrum itself, it is divided up into six blocks, 3 big and 3 small called (a,b,c,d,e,f). B, C and D are the set asides and the other three are open to incumbents. Coincidentally, there are exactly three big incumbents in Canada. Nonetheless, it doesn’t mean one block will go to each. Each block is further divided into territories (some blocks big geographic chunks of 14 blocks and others 50blocks of smaller regions) just to make it more confusing.

Oh and each block is broken into two pieces (2x5MHz or 2x10Mhz). The first block is for uplink transitions and the second for downlink. This is so base stations can efficiently listen and talk to a fleet of devices at the same time.

So it’s entirely possible that a telco like Telus might scoop up more or even all of the spectrum bands out west (where they need it most) and vice versa, Rogers might be bidding higher in eastern Canada. The not-so industry secret is that Canada’s “national’ carriers are rather, rather regional.

How “advanced” is the spectrum?

From an incumbent or new entrant, the spectrum itself is pretty good.

• It supports the latest 3/4G standards of HSPA and LTE. Carriers could start rolling out 7MBs or even 14mbs HSPA equipment right away (in theory, this is faster than my home wired broadband
• These are the same auction blocks as auctioned off a few years ago in the U.S. so there is GSM/HSPA equipment and handsets/devices on the shelf supporting these frequency bands. Vendors are standing by to take your call.
• There’s no one using it right now. So, unlike problems in the US, rollout can begin quickly without the messy business of dealing with interfering legacy users of the spectrum
• You would be a nut to rollout CDMA on this network in this day and age. Or you would be Bell.

What does it cost? Opening bid price for 10MHz blocks is about 54M nationally, and 140Million for a 20MHz chunk. Practically speaking, 20MHz is at least what you need to be serious operator, but you could also get by on 10MHz with a little clever juggling, roaming and/or future spectrum purchases to greater handle subscriber growth down the road.

when is this all going down?

Auction Timelines:
Deadline for Applications: March 10, 2008
Government Publication of the list of Applicants: March 14, 2008
Government Publication of the list of Qualified Bidders: March 31, 2008
Auction begins: May 27, 2008

My Predictions
Among the incumbents, my money is on Telus vs Rogers. Telus could use the spectrum as a deft way of switching to GSM while keeping their existing network operational. Rogers could just plain use the extra spectrum.

Among the entrants, Quebecor has been most vocal, but they have been in a world of financial trouble lately. Manitoba Tel should be a player, and I bet Shaw will put a toe in to the auction. Watch though, for a spate of entrants you’ve never heard of, at least in the early stages. A market opportunity like this does *not* come along often, and the Canadian market is ripe for disruption.

The biggest challenge? undoubtedly financing. Even with the government concessions, it’s frightfully expensive to start a wireless operator, especially nation wide. So you could see entrants focusing on local/regional licenses and/or creative strategies for achieving scale nationwide.

For the official line, the Industry Canada Spectrum Auction page is here

Calling it the “Betamax” of wireless standards, there was a piece in the Toronto Star this weekend covering growing speculation that Telus (if not Bell as well) may switch their network to GSM.

“The CDMA format is still common in North America but is increasingly falling out of favour as the rest the world moves toward GSM. A switch would allow Telus subscribers to roam on more overseas networks and choose from a much larger (and cheaper) selection of cellphones built for global markets, where some 80 per cent of cellphone users now operate on a GSM format.”

Despite the enormous cost of the switchover there’s a few reasons to believe it’s ultimately inevitable that one or both of Telus and Bell will go GSM. GSM is by far the dominant world standard, giving GSM operators access earlier to a larger pool of hadsets and equipment (the iPhone, for example, is currently GSM-only) and, for a more immediate business case, is roaming.

Any new entrant in the current spectrum auction would go GSM, opening up a competitive market for GSM handsets (and SIM cards) in Canada for the first time since Rogers bought out Microcell several years ago.

At present almost any international vistor to Canada will be carrying a GSM device, and they run hundreds of millions in roaming minutes a year. Currently ALL of that revenue goes to Rogers.

You can bet the backroom deal offering with the equipment vendors is going on something fierce at Telus these days. We’d peg Ericsson as the likely big winner if Telus makes the switch.

Link, Toronto Star Telus considers dumping its `Betamax’ of wireless networks

Thanks to Mack D. Male for the tip.