New, foreign wireless companies such as Mobilicity, Public Mobile, and Wind Mobile have been taking away shares from major companies like Rogers, Telus, and Bell. Although these foreign companies are new to the Canadian market, they compete against the big carriers with their voice and data plans that are nearly half the price of those of the major companies.
In response to these concerns, the co-funder of the Telecom and Technology Consulting Group, Brahm Eiley, remarked that “If their prices don’t come up, then they’re dead,” believing that low profits will eventually drive the minor carriers to raise their prices to match with those of the major companies.
Although foreign brands are taking away market shares from Rogers, Telus and Bell, these losses don’t have a significant impact on these major carriers. With their stable phone reception and loyal customers, major carriers are unlikely to lose against the minors in the long term. Not to mention, there is also the switching cost for customers that have signed contracts. However, if the minor companies are able to controvert Eiley’s remark and keep their prices low, they will have the cost leadership and will eventually become a threat to the major carriers.
Resources:
http://www.ottawacitizen.com/Lower+wireless+prices+sustainable+report+warns/8985402/story.html
http://jpress.journalism.ryerson.ca/straightwhiskey/2012/10/04/best-possible-cell-phone-plans-with-data/
Leave a Reply