Quebecor launching new cellphone network

Quebec residents will have another cellphone provider to choose from in 12 to 18 months, when Quebecor Inc. launches a wireless network to compete with incumbents Bell, Rogers and Telus.

The Montreal-based company announced on Wednesday that it plans to spend between $800 million to $1 billion, which includes the $554 million it paid to acquire wireless spectrum last summer, over four years to build its network, which will offer services through its Vidéotron subsidiary.

The network will use high-speed packet access (HSPA) technology, a derivative of the global system for mobile communications (GSM) standard, and will be built by Nokia Siemens Networks.

"This project is of more than technical interest. It is a watershed event in the history of Quebecor Media and Vidéotron," said Pierre Karl Péladeau, Quebecor's chief executive, in a statement. "What we are announcing is not just the building of a new telecommunications network.… We are laying the foundations of a new business model for Quebecor Media and all its subsidiaries."

The company did not announce pricing details, but Vidéotron president Robert Dépatie said services will be low cost and include high-speed data. Vidéotron intends to offer wireless internet speeds of up to three megabits per second, which will help it deliver a converged media strategy.

"Our intention is to come up with a very simple plan. We will be very aggressive on price," he told CBCNews.ca. "Our plan is obviously based on voice but our plan is also about convergence of technology... We're going to focus a lot on data, on content and on advanced services. There's no doubt that will be one of our biggest strategies."

Dépatie also said the company's rollout plan, which will create 1,000 new jobs, is provincewide and will not be limited to big cities.

Quebecor currently offers wireless services to Vidéotron customers by reselling airtime it purchases from Rogers Communications Inc. Dépatie said those customers will be moved onto the new network when it is built at no charge to them.

New spectrum, new competitors

Quebecor was one of the big winners in the federal government's spectrum auction, which raised more than $4.2 billion for the public purse over the summer. The auction was conducted with special rules in place for new entrants after the government concluded last year that the Canadian wireless industry was uncompetitive and rife with high prices and poor service.

One of the auction's other big winners, Toronto-based Globalive Communications Inc. — which operates the Yak brand of long-distance calling and internet services — announced in September that it planned to launch a national network in the second half of 2009.

Globalive and Quebecor were lively opponents in the auction, bidding fiercely for spectrum licences in Quebec. Quebecor ended up shutting out Globalive, which will have a hole in its national coverage unless it can strike a deal with the company.

Other big auction winners included Bragg Communications Inc., which runs Maritimes cable provider Eastlink, Calgary-based Shaw Communications Inc., and Toronto-based Data & Audio-Visual Enterprises, a company set up by local entrepreneur John Bitove.

None of those companies has announced wireless plans, and spokespeople for Shaw and DAVE not be reached for comment on Wednesday. A spokesperson for Bragg said the company had nothing new to announce, but is planning to go public with its wireless plans in about six to eight weeks.

New entrants will also benefit from another government rule that forces existing carriers to offer them the ability to roam on their networks at reasonable rates. Quebecor wireless customers will therefore be able to use their cellphones outside of Quebec by roaming onto networks owned by Bell, Rogers and Telus.

The announcement by Quebecor follows a move earlier this month by Bell and Telus to build their own HSPA network by 2010. Rogers also uses HSPA technology.

Dépatie said negotiations are under way with Rogers to gain roaming access to the company's network, but "the progress, as you can imagine, is pretty slow."

Lawrence Surtees, telecommunications analyst for research firm IDC Canada, said that with existing carriers and new entrants all moving toward the same technology, phones could theoretically become more transferable between their networks.

Currently, phones from Bell and Telus — which use code division multiple access technology — do not work on the Rogers GSM network, and vice versa, a fact that prevents many cellphone users from switching carriers.

Mark Goldberg, a consultant for the telecommunications industry, said phones may not necessarily become more mobile because devices from new entrants will work on different spectrum frequencies than networks currently being used by Bell, Rogers and Telus.

Dépatie also pointed out that Canadians don't like to pay for phones up front, preferring instead to sign multi-year contracts that provide subsidies on the devices. Most customers tend to want a new phone once their contract is up, he said, so there may not be much movement of phones from network to network in the short term at least.

Quebecor also won some spectrum in Toronto, but Dépatie said there were no plans for it yet. He said it could be used to provide connectivity to Vidéotron's wireless business customers moving between Toronto and Montreal, or it could be sold.

"We haven't decided yet," he said.