MONTREAL - New wireless player Public Mobile is looking to win customers who don't already have cellphones with a no-contract, no-frills service that lets it avoid competing directly with established carriers.
"We're targeting the working class, ethnic Canadians who make up the vast majority of that 30 per cent of Canadians who don't have a cellphone," CEO Alek Krstajic said in an interview.
Public Mobile opened its first retail stores Thursday in Toronto and Montreal to sell basic mobile phones before its network launches in both cities in mid-May.
Its offering includes a $40-a-month, no-contract, talk-and-text service. However, customers have to buy their phones, starting at $70 apiece and ranging up to $180.
The Toronto-based company is one of several new entrants into the wireless business now dominated by Rogers (TSX:RCI.B), Bell (TSX:BCE) and Telus (TSX:T).
Globalive's Wind Mobile launched its wireless business in December.
"Wind (Mobile) is very clearly going after the same customers as Rogers, Bell and Telus," Krstajic said. "We're going for a very different segment."
Krstajic said when Public Mobile's customers want data services, such as being able to watch video, they will be offered.
"But we will do it as our customer base's needs evolve as opposed to trying go after the customers of Rogers, Bell and Telus. That's not our game."
However, Krstajic conceded that Public Mobile might see competition from Fido, Solo and Koodo, the discount brands of the big three players.
UBS analyst Philip Huang said new wireless players will not have a significant, direct impact on Rogers, Bell and Telus this year.
"We believe it is more important to watch the incumbents' reaction to the new entrants. For example, aggressive promos with their flanker (discount) brands may cause far greater financial impact than the new entrants," Huang wrote in a research note.
New player Globalive's Wind Mobile launched in December and it is estimated the company has attracted only about 30,000 subscribers.
Krstajic said he doesn't want to rush Public Mobile's launch and has learned from the network hiccups Globalive has endured since its launch.
Another new player, Mobilicity, is expected to launch in the coming months and Quebecor's Videotron says it will start up its wireless service in the summer.
Public Mobile doesn't have roaming agreements with other wireless carriers, meaning its subscribers will only be able to use their phones on its network in Toronto and Montreal.
Krstajic said his company opted against partnering with another carrier for roaming services because research has shown that Public Mobile's target customers don't want monthly bills higher than $40.
"We really don't think that our target customers, while they would love to have a larger footprint to be able to use the phone, they don't want it at the expense of an unpredictable bill," he said.
"It's an extra $40 that this segment of the population just doesn't have."
Public Mobile is offering early subscribers free, unlimited long-distance for life if they sign up before the launch, which doesn't cost the carrier a lot but is "valuable" to customers, he added.
He also said he expects Public Mobile to double its current 25 locations in Montreal and Toronto by May, when the service is up and running in both cities.
Deloitte Canada technology analyst Duncan Stewart said once Public Mobile attracts its target market, it still has to find ways to further grow its business.
"Those cannot be terribly profitable customers," he said, adding that Public Mobile's strategy is likely to appeal to a "very, very small percentage of the Canadian population."
Stewart said Wind Mobile's experience has shown that it's not always easy to attract customers even when offering no contracts and subsidies for cellphones.
"We've turned into a no-money-down culture in North America for our phones," said Stewart, director of research in technology, media and telecommunications. "In North America we are subsidy-aholics."