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Michael9009
join:2006-07-28
Toronto, ON

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Michael9009

Member

Wireless competition done right

I am in Israel on business for a few weeks and I subscribed for a local wireless line. Doing my research, I was shocked how wireless prices here plummeted to about half and even less after new entrants were allowed in the market.

Traditionally, there were three established wireless providers here: Cellcom, Orange and Pelephone. Their prices use to be in same ballpark as those of Rogers, Bell and Telus. However, recently two new entrants were established: HOT Mobile (the cable company) and Golan Telecom, as well as a number of MVNOs (Rami Levy, YouPhone and Home Cellular). This in a country of only 8 million people (a quarter of Canada).

The incumbents were asked to lease their lines at advantageous prices to the new entrants - there are no roaming charges for the end user anywhere in the country - and HOT Mobile and Golan Telecom are slowly building their networks in parallel (they must build their own networks within seven years from the launch of services).

Unlike in Canada, where Wind, Mobilicity and Public Mobile had to spend hundreds of million Dollars to bid for spectrum and build their networks from scratch, in Israel the new entrants had minimal start-up costs and, instead, focused on providing great service at affordable prices.

As a result, prices have spiralled downwards for all providers, including for the incumbents. For example, Golan Telecom offers the Plan Golan Telecom which includes:

- NIS 99/mo. (less than $30/mo.), with the first two months free (incl. tax)
- Unlimited talking
- Unlimited texting
- Unlimited data (slowed down after 3 GB of usage)
- Unlimited international calling to 55 countries (including to Canada).

Check out here (click on English): »www.golantelecom.co.il/web/

Canada should learn from this consumer-oriented business model rather than maintaining the unhealthy protectionist (towards the big three) status quo mode.

Any chance that something like this might ever happen in our country? What would do you think would need to be done?...

Mike2009
join:2009-01-13
Ottawa, ON

Mike2009

Member

That's the way it should be done.
Tikker_LoS
join:2004-04-29
Regina, SK

Tikker_LoS to Michael9009

Member

to Michael9009
devil's advocate here:

is it still profitable for all companies involved?

if not, it'll be a short term boon to consumers before the collapse

Michael9009
join:2006-07-28
Toronto, ON

Michael9009

Member

said by Tikker_LoS:

devil's advocate here:

is it still profitable for all companies involved?

if not, it'll be a short term boon to consumers before the collapse

Well, it's been two years now since the competition was opened and there is no sign of collapse. No talk about going bankrupt or being on sale for the new entrants. Golan Telecom, the newest player has attarcted 280,000 subscribers within slightly more than one year in operation.

»en.wikipedia.org/wiki/Li ··· a#Israel
»en.wikipedia.org/wiki/Go ··· _Telecom
IamGimli (banned)
join:2004-02-28
Canada

IamGimli (banned) to Michael9009

Member

to Michael9009
It would be much cheaper to provide telecommunications services to an area less than 2/3 the size of Vancouver Island with 100x the population density of Canada.

You're comparing apples to moons where market is concerned.
prairiesky
join:2008-12-08
canada

prairiesky to Michael9009

Member

to Michael9009
I'm skeptical that it will be a good solution in the long run. Someone has to maintain the networks, and that costs money. Undercutting people doesn't provide the networks money for upgrades and repairs. My guess is service will suffer greatly when it comes time to change to newer technologies.
BrianON
join:2011-09-30
Ottawa, ON

BrianON

Member

The demand for communications services unlike most products actually goes up when more is sold. As prices per KB / MB / minute / text message etc goes down people use the services more and for new things to the point revenue can actually go up. It is not endless as some DOT COM era fiber build-outs found out but it does happen steadily and at a good pace.

elwoodblues
Elwood Blues
Premium Member
join:2006-08-30
Somewhere in

elwoodblues to IamGimli

Premium Member

to IamGimli
said by IamGimli:

It would be much cheaper to provide telecommunications services to an area less than 2/3 the size of Vancouver Island with 100x the population density of Canada.

You're comparing apples to moons where market is concerned.

No, look at our TPIA providers, they use the incumbents last mile then deal with traffic on their own.

So say Wind could use all of Rogers towers, thennhave the infastucture of their own to handle anything that hits that tower.

Doable? Technically possible?
IamGimli (banned)
join:2004-02-28
Canada

IamGimli (banned)

Member

said by elwoodblues:

Doable? Technically possible?

Yes, but not at the same price as it would cost to do in Israel. Canadian Wireless providers have to provide a MUCH MUCH larger network, to a MUCH MUCH lower number of users per tower.

The math just isn't the same at all and any direct comparison is ludicrous.

elwoodblues
Elwood Blues
Premium Member
join:2006-08-30
Somewhere in

elwoodblues

Premium Member

said by IamGimli:

said by elwoodblues:

Doable? Technically possible?

Yes, but not at the same price as it would cost to do in Israel. Canadian Wireless providers have to provide a MUCH MUCH larger network, to a MUCH MUCH lower number of users per tower.

The math just isn't the same at all and any direct comparison is ludicrous.

The infrastructure is in place, who cares how big the network is?
IamGimli (banned)
join:2004-02-28
Canada

IamGimli (banned)

Member

said by elwoodblues:

The infrastructure is in place, who cares how big the network is?

So the comparison is even less realistic. Besides the infrastructure still has to be maintained, life cycled, etc. All of that still costs money, and is still not the same scale as Israel.

Michael9009
join:2006-07-28
Toronto, ON

Michael9009

Member

said by IamGimli:

said by elwoodblues:

The infrastructure is in place, who cares how big the network is?

So the comparison is even less realistic. Besides the infrastructure still has to be maintained, life cycled, etc. All of that still costs money, and is still not the same scale as Israel.

The fundamental idea is that in Israel new entrants have not had to spend hundreds of millions of Dollars in initial investment like their counterparts had to do in Canada. It's an enormous risk that the latter had to take, impossible without powerful financial backing, and highly dependent on capturing sufficient market share in a record amount of time (which obviously hasn't happened). In Israel, on the other hand, new wireless providers did minimal spending initially. They have been focusing on gaining market share (i.e. making profit) so that they could build their own networks gradually, within seven years from commissioning, as the law requires.

elwoodblues
Elwood Blues
Premium Member
join:2006-08-30
Somewhere in

elwoodblues

Premium Member

said by Michael9009:

said by IamGimli:

said by elwoodblues:

The infrastructure is in place, who cares how big the network is?

So the comparison is even less realistic. Besides the infrastructure still has to be maintained, life cycled, etc. All of that still costs money, and is still not the same scale as Israel.

The fundamental idea is that in Israel new entrants have not had to spend hundreds of millions of Dollars in initial investment like their counterparts had to do in Canada. It's an enormous risk that the latter had to take, impossible without powerful financial backing, and highly dependent on capturing sufficient market share in a record amount of time (which obviously hasn't happened). In Israel, on the other hand, new wireless providers did minimal spending initially. They have been focusing on gaining market share (i.e. making profit) so that they could build their own networks gradually, within seven years from commissioning, as the law requires.

That in part is the problem with the wireless market in Canada. The feds decide they want competition. OK so several businesses start up, they give them a deal on spectrum, tell the incumbents that they must share their towers (in the interim) and then walked away.

They allowed the incumbents to launch deep discount carriers (no frills if you wil) to compte with the startups, the incumbents stalled at every single request to access to a tower (and IC left it hanging fora year).

It's been a total mess from day one, because of the "free market' approach by the Feds.
HeadSpinning
MNSi Internet
join:2005-05-29
Windsor, ON

HeadSpinning

Member

said by elwoodblues:

OK so several businesses start up, they give them a deal on spectrum, tell the incumbents that they must share their towers (in the interim) and then walked away.

The only "deal on spectrum" was the one given to the incumbents back in the '80s when they got their 800Mhz spectrum. The new entrants paid dearly for it.

Public got away cheap, but its garbage spectrum.

Michael9009
join:2006-07-28
Toronto, ON

Michael9009

Member

By the way, here in Israel, it is also illegal since January 2011 for cell phone companies to carrier lock the phones. Older, locked phones must be unlocked by carriers free of charge.

»www.golantelecom.co.il/w ··· sues.php (click on English)

I had my iPhone 5 replaced by Apple under warranty a few days before I left from Canada a couple of weeks ago. It took me more than an hour on the phone with Rogers, calling from Israel, to convince them to unlock my phone as I needed to use it locally for work. They were claiming that the phone has not been active with them for more that 90 days and, hence, unlocking was impossible, even though I had my original iPhone 5 for more than six months on my account. Eventually, I had to request to speak to a manager and in the end the problem was solved after a lot of hassle. Oh, and of course, this exercise cost me $50 + tax. Damn Rogers!