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Wind Mobile a 'cautionary tale' for other new cellphone players to enter market

MONTREAL - Wind Mobile launched its new Canadian wireless business before it was ready and hasn't been able to attract significant customers, a "cautionary tale" for other new cellphone players, a report says.

MONTREAL - Wind Mobile launched its new Canadian wireless business before it was ready and hasn't been able to attract significant customers, a "cautionary tale" for other new cellphone players, a report says.

Market research and technology firm SeaBoard Group said Wind Mobile's customers have had network problems and have been unable to buy the company's mobile phones or pay their monthly bills online. "I think what we've seen is a launch in haste," SeaBoard managing director Iain Grant said in an interview on Tuesday.

Toronto-based Globalive launched its Wind Mobile brand last December to begin to compete against Rogers (TSX:RCI.B), Bell (TSX:BCE) and Telus (TSX:T).

Grant estimated that Wind Mobile has managed to sign up less than 30,000 subscribers in Toronto, Calgary and Edmonton, a pool of about nine million people.

Globalive chairman and CEO Anthony Lacavera said he knows there have been "shortfalls" in some of Wind's offerings, such as paying bills online, but said they're being addressed.

He said he's also looking at offering some discount mobile phones and Wind will offer more variety in handsets as the year goes on.

"I think there are some conclusions that are premature," he said of the SeaBoard Group report. "We're at the start of a very long game."

Lacavera wouldn't disclose how many subscribers Wind has, but said "hundreds of Canadians every day are switching to Wind."

Toronto-based Mobilicity, which will operate in major Canadian cities, and Ontario and Quebec-focused Public Mobile are expected to be up and running in the coming months. Quebec-based Videotron will launch its wireless service this summer.

"We're going to see some more creativity now that Wind has shown what not to do," Grant said of these new players.

Mobilicity and Public Mobile may offer a wider range of handsets with some that are under $100, he said.

"We think that one stumble does not make a fall," Grant's report said of Wind's problems. "For the other new entrants, the early Wind chapter should be looked at as a cautionary tale."

Grant said Wind Mobile offers only four handsets and there's nothing under $100, leaving their customers as "anyone who has got $150 in their jeans to put up with the upfront costs."

Technology analyst Carmi Levy said new players have to start from scratch to win customers and their reputations.

"It's a risky, thankless process that more often than not ends in either outright failure or an eventual acquisition by the incumbents they had hoped to take on," said Levy, based in London, Ont.

The keys to success for the new wireless companies will be their ability to carve out niches in market segments traditionally not well served by the incumbents, Levy said, citing university students, First Nations and rural customers as examples.

"An across-the-board attack on the incumbents would lead nowhere."

Grant's report said two recent senior management departures at Wind are significant.

"We believe that it shows evidence of a company under extreme pressure to get to market before it was fully ready and a flawed launch plan," SeaBoard says.

The industry's regulator blocked Globalive's entry into the Canadian market last October, saying it wasn't Canadian owned and controlled, but the CRTC decision was overturned in December by the federal government.

RBC Capital Markets analyst Jonathan Allen said in a recent note that new cellphone companies will take up to 15 per cent of total subscribers by 2015, with Wind expected to have the largest share.

Allen said Wind could have about 150,000 net subscribers in 2011 and once it improves network coverage and quality it could exceed this number.

He called Wind "just a breeze for now."

Lacavera said he isn't changing his game plan about taking on Rogers, Bell and Telus across the country.

"It's still very much out intention to be national."

 
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