WASHINGTON-The Canadian wireless industry, which slowed considerably last year because of marketplace confusion about PCS (Personal Communications Services)/cellular technology and pricing, appears to have sorted things out and returned to a fast-growth track in 1998.
The two new players, which offer PCS, and the two incumbent providers, with their analog and digital services, produced strong first- and second-quarter showings and pushed the national penetration rate to about 16 percent, or slightly more than 4.5 million total customers. Observers expect the industry to rack up a 1998 growth rate of 25 percent to 30 percent.
That compares with about 20-percent growth in 1997, a dramatic slowdown from preceding years when the Canadian wireless industry was humming along at an annual growth rate of 30 percent to 35 percent. Several factors contributed to the industry’s less-than-superb showing last year, among them the third-quarter entry by two new players offering PCS at 1900 MHz and the subsequent customer confusion about analog cellular, digital cellular and PCS.
“As far as we can tell, people held back on purchasing decisions because the market was really in turmoil at that point, with prices dropping very, very quickly,” said Roger Poirier, president and chief executive officer of the Canadian Wireless Telecommunications Association (CWTA).
Much of the customer confusion and purchasing delays came about when Montreal-based Microcell Telecommunications Inc. and Clearnet Communications Inc., Pickering, Ontario, began offering PCS services in December 1996 and October 1997, respectively.
Just before, in November 1996, incumbent analog-cellular carrier Rogers Cantel Inc. had unveiled its 800 MHz digital service in Montreal, which it calls “Digital PCS,” in conjunction with AT&T Wireless Services Inc. The Toronto-based carrier then rolled out service nationwide in May 1997. Similarly, the 11 member companies of the Mobility Canada consortium, which includes the wireless divisions of the provincial telephone companies, also refer to their 800 MHz digital offerings as “digital PCS.”
Not surprisingly, the marketing messages of all four carriers initially tangled customers in a confusing web of technology and terminology. That, combined with the myriad pricing packages of the four players, caused many Canadians to hold off on joining the wireless revolution.
By now, however, everyone seems to have sorted through all that, pricing has stabilized and customers are signing up. Still, it’s tough to figure out how each of the industry’s technology sub-sets is doing, relative to the others. It seems few Canadians look at wireless in terms of “PCS vs. cellular.” Instead, they talk about “analog vs. digital service.”
Rogers Cantel focuses its marketing efforts on the features and prices that customers want, explained Robert MacKenzie, vice president of PCS and product development. “When a customer says `I want a caller ID phone,’ we don’t say `go to the PCS department’-we sell them a caller ID phone. We sell others a low-cost safety phone, or we sell them a nationwide pager or a two-way data service. We really differentiate at the customer level, based on the services required, as opposed to the technology or the terminology.”
George Cope, president and chief executive officer of Clearnet, said his company from the beginning has positioned its 1900 MHz service as “hey, PCS is everything cellular was, except that it’s less expensive and has better voice quality.” He added that most Canadians now equate “digital” with “PCS” and recognize that analog is “sort of the obsolete technology.” In fact, Canada, Cope said, is making the transition to digital faster than many other nations simply because all four Canadian carriers went to digital at about the same time.
“Every carrier, including the incumbent, is saying [to customers], `the [analog] service you had is yesterday’s service,”‘ he said.
Microcell is luring quite a few analog cellular customers into the PCS fold, said Andre Tremblay, president and CEO, as well as many people who have never subscribed to wireless before.
“At least half our base now, probably a bit more, is ex-analog cellular people,” he said. “And about half our base is made up of new users. So I think we have had a tremendous effect.”
Nevertheless, analog wireless is alive and well in Canada and will remain so for quite awhile yet, said Charles Labarge, president and CEO of Mobility Canada. He pointed to IS-91A technology, which he says enables analog operators to deliver some features previously associated only with digital technology.
“Our customers are still buying analog sets, and we have customers buying PCS sets,” he said. “So we’re quite bullish about the analog network.”
The bottom line is that all the discussion about 800 MHz vs. 1900 MHz; cellular vs. PCS; and GSM (Global System for Mobile communications) vs. TDMA (Time Division Multiple Access) vs. CDMA (Code Division Multiple Access) doesn’t mean anything in the Canadian marketplace. As Microcell’s Tremblay said, “What means a lot in the marketplace is what can you do with this phone you have in your hand and what’s the price for doing that?”
Cope of Clearnet agrees, noting that simplicity, in terms of wireless features, functionality and pricing, finally has taken hold in Canada. “We’ve got a good stable structure, everyone seems to have their own marketing approach, and,” he added, “I believe the [1998] fourth quarter will be by far the best quarter the industry’s ever had in Canada.”
