Analysts Think Rogers Will Clean House with iPhone

by Eric March on May 29, 2008 at 6:38 pm

Rogers Communications, Inc., the parent company of Rogers Wireless, is expected to prosper, despite fears of competition from potential new upstarts generated by the Canadian Radio and Television Commission’s wireless spectrum auction.

Though Rogers’ stock took a significant 8.3% tumble last November when the CRTC laid out the rules for the auction, which reserved 40% of the spectrum for competitive new entrants, it has mostly bounced back as analysts speculated that any new companies to spring forth from the auction would not pose a significant threat to the communications giant. The market seems to think otherwise, feeling that a strong offensive by a new wireless carrier on a fresh block of spectrum could crush Rogers.

This may not be the case, however, as a new carrier would face significant challenges breaking into the market that is currently dominated by Rogers/Fido and Bell, and to a lesser degree, Telus Mobility. Furthermore, Rogers will soon have the strength of the iPhone to reinforce its position in the market, an ally that cannot be underestimated.

The real question, as always, is pricing. The wireless spectrum auction was initiated in an attempt to bring more competition into the market, which would in turn lower prices in the long run as companies compete to offer the best deals and woo customers away from one another. Rogers’ spokesperson Taanta Gupta has stated that their plans are among the lowest in the world. While I am loath to lend credence to a corporate mouthpiece’s self-serving claims, the fact is that they are very competitive on that front, facing significant competition from their main adversary Bell Canada.

Where Rogers falls down however is on their data pricing which, in contrast to their voice rates, are among the highest in the world for general data use. (Excluding WAP access, which isn’t real Internet anyway.) Oddly however, and despite Rogers’ exorbitant pricing, Canadians still increased their data usage as much as 47% for Q108.

So will there be special plans just for the iPhone? Rogers spokeswoman Elizabeth Hamilton declined the opportunity to talk about that, but IDC Canada analyst Lawrence Surtees predicted that “If they do iPhone with flat-rate pricing, they could probably mop the floor with their competitors”. No doubt they could; look what it’s done for AT&T. Except AT&T has great data rates by comparison, and with a surge in data usage this year, no significant competition on the horizon, and the iPhone just around the corner (we hope), Rogers don’t really have any real incentive to offer comparable plans, even though it is likely they will offer something semi-decent to sway consumers over to the iPhone so they can rake in even more of that sweet, sweet data revenue.

With any luck, we’ll know more within a month.

(via Bloomberg)

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