Rogers to launch Chattr

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It was announced at the beginning of the week that Rogers would hold off on releasing it’s Chattr service targeting the discount cell phone market. Slated to be released on the 20th of July, a memo was issued to retailers asking them to keep their chattr stock under lock and key until further notice. The delay may be due to Rogers looking into a complaint issued by Mobilicity chairman John Bitove outlining how Rogers would be infringing on the Competition act if Chatr is released. Chatr’s pricing is in direct competition to Mobilicity’s own offerings. A response from Kathy Murphy, a Rogers spokeswoman, mentions that Chattr will in fact be released “later this summer”. Bell will surely follow suit lowering it’s prices on it’s popular Solo line of phone to be more evenly matched with that of Chatr. Telus will likely release it’s own discount line of phones and services plans targeted at low to average income users. This could mean bad things for wireless carriers like Wind, Mobilicity and Public Mobile whos sole business revolves around the discount cell market. Low priced phones and voice plans will be widespread giving buyers a choice. The current discount wireless carriers are afraid users will choose a big name provider over the small upstart. This could mean good things for the end users with a downward spiral of price cutting, each carrier trying to out do the other. It would be great if we could also see a discount data plan package, but I think we’re a ways away from that kind of offering. Discount carriers are going to need to differentiate themselves if they want to stay alive in this soon to be very competitive market segment.

 

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Rogers (RCI.B-T36.70-0.70-1.87%) confirmed plans last week to launch a Chatr, a new budget wireless brand to complement their existing Rogers Wireless and Fido offerings. Rogers executive vice-president and chief of marketing, John Boynton, spoke to The Globe and Mail about it – and his expectation that BCE Inc. and Telus Corp. will follow their lead.

When did you start on the new brand?

A year ago. A long, long time ago.

This would lend credence to the analysts’ views that this was pro-active, rather than a reactive, move?

Yeah. We were tracking what was going on in the U.S., with (budget cellphone providers) MetroPCS and Leap, knowing that if there’s a trend happening in the U.S., chances are there will be a growing need and trend migrating to the Canadian marketplace, as well.

It wasn’t exactly a secret that Canada’s new entrants were modelling themselves on the ones that launched south of the border.

They’re not the only ones that look at customer needs.

How do you envision this service, are you modelling this on an unlimited talk-and-text model?

Absolutely. It was hard to see the need, back a year ago, with Canadians. [But] as we looked at some of the customers that left Roger to go to [new entrants], and it was a smaller number than we ever imagined it to be, but we still called them: Why would they leave us?

And what were they saying?

They all said exactly the same thing: You get what you pay for. And people want this kind of product, they want this kind of service, but they want it to work.

Are you going after the same type of customers as the new entrants, here – the recent immigrants and low-income Canadians?

This particular brand is going after the basic user, very simple needs, above average usage to heavy usage, doesn’t need a lot of servicing, understands the product, is an experienced wireless user. This is not a newbie like the Fido brand attracts. But what we’re going to tell customers is that the darn thing works.

Do you expect a reaction from the other big players, Bell and Telus, who may also have new discount brands up their sleeves?

You see how often the other guys copy us. I fully expect in this area, that those who are brands in this space will try and copy us.

 

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Head of Mobilicity says new Rogers wireless brand Chatter could kill new competition
Fri Jul 9, 8:40 AM
The Canadian Press
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(The Canadian Press)
By The Canadian Press

TORONTO - The head of Mobilicity says new competition in Canada's wireless telecom industry could be destroyed by the new Chatter brand from Rogers.

Mobilicity CEO John Bitove says his company will pursue legal action under the Competition Act if Rogers launches the new discount service as announced.

Chatter is set to join Roger Wireless and Fido as a third wireless service by Rogers Communications Inc. (TSX: RCI-B.TO).

Bitove says the timing of Chatter's launch is no coincidence and alleges that Canada's largest wireless service is trying to "destroy the little guy."

Mobilicity is just one of several new companies that have launched wireless services in recent months.

They will be up against stiff competition from the three established players in the market, including Rogers, BCE Inc's Bell (TSX: BCE.TO) and Telus (TSX: T.TO).

 

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Rogers chatter

Rumours abound that Bell Canada is moving to match a new discount offering from chief rival Rogers Communications Inc. in what is amounting to a wireless price war that will benefit consumers, but threatens to drag down profits across the $16-billion industry.

Speculation, which began with a posting on a closely watched industry blog Wednesday, but quickly gained standing among analysts, suggests the country’s No.2 carrier will introduce lower-priced plans in its Solo brand.

It is uncertain when the new plans will be launched, but they may arrive at the end of the month or in August. That is when Rogers is expected to launch “chatr”, a discount brand aimed at taking share in the lower end of the wireless market.

If true, fellow incumbent Telus Corp. will have little choice but to follow the other two down, analysts say. What’s more, the downward chase will provoke new entrants already after those customers to retaliate by cutting their prices.

“This validates our concern that a price war may be looming in the second half of the year,” Jeff Fan, analyst a Scotia Capital said in an email message.

A Bell spokesman dismissed the rumours as “pure speculation.” Thane Fotopoulos, chief of investor relations, said it would be “premature to launch anything” because Bell has yet to see chatr’s pricing.

But according to several sources, Solo will replace its current plans with six new offerings ranging between $10 and $60 a month. Like chatr and plans sold by new entrants Wind, Mobilicity and Public Mobile, Solo will provide unlimited talk and text services with no contracts or subsidized handsets.

Rogers, the largest carrier in the country, said its new brand is aimed at “average to below average income” wireless users that want cheap and simple voice services.

It is the very segment the new entrants have been targeting.

“The goal here is to get some share,” said one analyst source. “It doesn’t do Bell much good if the reason why Wind, Mobilicity and Public Mobile aren’t having much sales success is because all of those types of consumers are going to a Rogers brand. They want to get a piece.”

Wireless newcomer Mobilicity said last week it would file a complaint with the Competition Bureau against Rogers over its chatr launch.

It appears Solo’s pricing could also undercut chatr’s, thought to be between $35 and $45/month.

Analysts anticipate a reaction from Vancouver-based Telus, which commands 29% of the national market compared with Rogers’ 37% share and Bell’s 30%. Telus may opt to bring yet another brand into the melee or use its Koodo service.

For new entrants, a direct fight for subscribers against three powerful incumbents operating shadow brands in key markets could be fatal for one or more, some analysts say.

“This battle might cause a bit of disruption for Rogers, Bell and Telus, but it could make ... business plans for the new entrants look even worse,” said one.

While Public Mobile contends it is fully funded, all the new players are likely in need of further investment to build out networks and ramp up marketing. It means the hunt for backers, domestic or otherwise, could be made tougher in the near term.

There is increasing concern a battle will take a greater toll on incumbents than previously thought. It appears that profit margins and revenue per subscriber are willing to be sacrificed to capture share and snuff out competitors.

It is leading a number of stock analysts to question whether a temporary retreat from the sector is warranted.

Data fees are considered crucial to offset declining voice prices. Unlike chatr, Solo’s new offering may include mobile modem sticks, which would pressure incumbent data pricing for the first time.

“We urge investors not to underestimate the competitive risk,” Canaccord Genuity’s Dvai Ghose said.



Read more: Chatter grows that Bell will join discount war

 

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Rogers chatr

Wireless upstart Mobilicity is fighting back against Rogers Communications Inc.'s launch of a new discount brand, chatr, saying the company will file a complaint with the Competition Bureau and consider legal action against the wireless giant.

John Bitove, chairman of Mobilicity, said Friday that the company will consider the launch of chatr as a violation of the Competition Act if it goes ahead with the business model Rogers has proposed. He accused Rogers of trying to crush the newly created competition that emerged out of the Canadian government’s wireless spectrum auction in 2008.

"Had they done this three years ago, there never would have been new entrants because they would have matched government’s goal of lowering prices," he said. "There's absolutely no question in my mind they're leveraging the other parts of their business to kill the competition."

Mr. Bitove said Rogers' launch of chatr constitutes bringing a "fighting brand" into the wireless market, something the Competition Act forbids. A fighting brand is essentially a temporary business launched with the intent to kill off the competition.

"If they succeed in killing us off there's no question they'd kill the Chatr brand off," said Mr. Bitove.

Rogers was unavailable for comment Friday morning.

Rogers expects to launch discount-mobile brand chatr later this summer ahead of the all-important back-to-school season. The carrier said earlier this month that chatr will offer unlimited voice and texting with no contracts, a contrast to the wide majority of Rogers' 8.5 million mobile customers who are locked into multi-year plans that offer no such limitless options on minutes or text messages.

In a report Friday, Greg Macdonald, telecom analyst for National Bank Financial, said the move from Mobilicity is designed to influence Rogers' pricing plans, though he doubts it is enough to stop the launch of chatr.

“Proving that chatr is engaging in anti-competitive behaviour that will lessen competition will likely be difficult unless chatr is launched at a lower price than what is in the market,” the report said.

Iain Grant, an analyst and consultant with the Seaboard Group, said the challenge brought forth by Mobilicity could serve to delay chatr’s entry into the market.

“What [Mr. Bitove] has done is he has shot a cannonball across [Rogers’] bows and said beware. Rogers will now be reviewing every advertisement, every press release — essentially the very business plan of chatr will be under review by many sets of legal eyes.”

He added that although lawsuits between wireless carriers are common, disputes in the past have factored in the millions of dollars, while legal action brought forth by Mobilicity, if it were to occur, could factor in the billions.

Mobilicity launched in Toronto in May when dozens of new stores began selling cellphone services throughout the country's most competitive wireless market. Mr. Bitove did not disclose how many subscribers Mobilicity currently has, but said the carrier is “off to a great start.”

Mobilicity was the last of three independent carriers that began offering alternative services to those of incumbents Rogers Communications Inc., BCE's Bell Canada and Telus Corp. The other new entrants are Public Mobile and Wind Mobile.



Read more: Mobilicity says Roger's chatr may violate Competition Act

 

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screw Rogers, they want everything.