updated 04:30 pm EDT, Thu July 24, 2008
Bell and Telus HSPA Rumor
Canadian cell services Bell and Telus are both near announcing that they will switch to the same cellular network format as Rogers in a bid to regain their competitive strength, a new UBS investment note says. The two carriers use the same CDMA phone technology as Sprint, Verizon, and numerous smaller providers in the US but are now looking to switch to 3G that would most likely use the High Speed Packet Access (HSPA) technology that underpins Rogers' network as well as most modernized GSM carriers.
This shift is purportedly triggered by concerns from either company that Rogers' much wider compatibility with handsets and services used by the majority of countries gives it a competitive advantage in Canada, as it can offer phones that aren't offered in CDMA versions and promise roaming in countries where CDMA phones won't operate. Visitors from Europe and other regions also have no choice but to roam on Rogers' network, preventing Bell and Telus alike from collecting the associated roaming fees.
The iPhone 3G is cited as a likely sore point for both Bell and Telus, as Apple hasn't revealed any intentions to introduce a CDMA version of its device and had to offer the iPhone through Rogers and its Fido sub-label as a result. These excluded carriers are known to be aware of the deficit and have taken to offering the same iPhone rivals as American carriers, including the Samsung Instinct for both Canadian firms in addition to the HTC Touch Diamond for Telus alone.
Also a likely worry for the two are the results of the 2GHz wireless auction, which has guaranteed the creation of new carriers in Canada that are more likely to use a variant of HSPA or else move directly to the 100-megabit Long Term Evolution standard for a 4G service. Bell and Telus are likely to consider the 4G path regardless, as Verizon in the US is also switching from CDMA.
Any such effort is likely to be expensive and hover between $360 million to $480 million for Bell and Telus to both make the switch, UBS warns. Large-scale network experts such as China-based Huawei or Finland's Nokia Siemens Networks would have to be brought on board to change the underlying infrastructure, including cell towers. The cellphones themselves would also have to be swapped for new versions once the transition is complete, though the ubiquitous nature of GSM and HSPA cellphones would mitigate some of the costs and ultimately save some money in the long term.
Having Bell and Telus share the same network type as Rogers is widely regarded as crucial to making Rogers' cell service prices more competitive. Since Rogers' customers are unable to port their phones over to Bell or Telus and have no immediate reason to purchase unlocked devices than in other countries, Rogers has less incentive to reduce its rates for data and other services or to drop the costs of the phones themselves.
None of the involved carriers have commented on the UBS report.