CityFido boosts competition

By Sven Eriksen
June 01, 2004
Canada is finally seeing the growth in cell phone services and technology that many will often see in commercials on American television. Unlimited local calling, constantly hearing 'can you still hear me' and similar rates are things you don't normally see advertised in Canada. It looks like things are about to change.

Microcell Fido (TSX: MTI.B MTI.RT) has recently launched a service called City Fido, which isn't unlike the many services on American television commercials promoting Unlimited Local Calling in various areas. The service offers unlimited local calling in some Canadian cities such as Toronto and Vancouver. Fido is still expanding the service, but promises to be the perfect solution for city dwellers. Fido's plan is based on their GSM network operating at 1900mhz.

The city Fido plan effectively moves into the residential telephone market, giving consumers the choice to throw out existing residential service such as those offered by Bell Canada in the East and Telus in the West. Consumers no longer require a physical line to their landline, it's now all about mobility.

“The launch of City Fido in Vancouver in October 2003 marked one of the most important developments in Canadian wireless communications, as well as in our company’s history,” said André Tremblay, Microcell Telecommunications' President and CEO. He goes on to say “We created a new category of services that helped tens of thousands of customers change the way they communicate, while putting in place a new platform that we can build on to offer more services and applications in the future. To bring this phenomenon to Toronto, the largest metropolitan area in our country, is the next logical step for City Fido and Microcell’s business strategy, and we expect consumers will embrace the service as they have in Vancouver.”

Wireless landlines are possibly a wave of the future. From an unfortunate point of view, though, you can't have a high speed Internet connection on a mobile phone like you would with ADSL services. High speed Internet is still an industry dominated by the communication giants; Bell Canada, with it's Sympatico service and Rogers Communications, pulling in customers to it's multi-tiered Internet service platform.

Another popular feature Fido introduced late last year was the free Fido-to-Fido calling. It was a plan which gave customers the ability to call other Fido subscribers without having to worry about airtime over-usage.

Though many of these Fido plans mimicking American giants have been seen by critics as a last attempt at grabbing customers attracted to others services like Telus Mobility citing that Microcell has been in financial difficulty for the past few years. Microcell has been fighting off a bid, by rival Telus, for the past few weeks.

More competition is something Canadian consumers so desperately need, making their choices as broad as Europeans and Americans. Canada's market is highly regulated by the Canadian
Radio-television and Telecommunications Commission, or the CRTC. This is a hurdle many International corporations have stumbled on. A barrier between large players southward like T-Mobile, AT&T Wireless and Verizon Wireless.

Following the moves by Microcell Fido, we have yet to see any drastic responses from it's rivals. Rogers, Bell and Telus have all been silent in watching the launch of Fido's City Fido service. Though two big players are eyeing the hostile takeover bids, Fido has flat-out rejected any bids so far.

In another development related to the cellular telcos, BCE and Telus both posted lower-than-expected growth in the past quarter, making advances in mobile services essential to gaining additional customers. Fido's recent launch severely threatens the growth of it's rivals in a new war of mobile services in several Canadian regions.

Something to look at in Canada's technology and telecommunications future is the possibility of similar aggressive marketing plans. Some we have witnessed in the United States and Europe are the marketing of ultra high-tech handsets available at affordable prices, free long distance calling across the country or the reintroduction of unlimited local calling after 6pm; something customers enjoyed before 2001 when most services were increased to 7 or 8pm in the evening.

Consumers should be expecting more value from the telcos after Fido's City Fido service spreads. Something we have been waiting on for several years as the technology and service in other G7 countries has advanced.

Canada might not require an opening of Canadian telecom markets in order to witness a newfound growth in service plans, something we've seen slow to a crawl in the past 3 years.

In the event of a hostile takeover of Canada's smallest mobile carrier, Microcell, the dreams of service enhancement could be shattered. The two players in the hostile takeover, however, are not expected to increase their bids.

The next few months could be critical in determining the consumers' part in the playing field depending on whether Fido will get leashed by Telus or if customers pick up on Fido's new home and mobile service plan.


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