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Dirt Cheap Prices Unsustainable for Wireless Startups, Study Says

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The wireless startups have brought great benefits to Canadian wireless subscribers: they have undercut the Big Three by more than half, and forced them to adjust their prices. But for how long can they resist? A new report cited by the Financial Post says not for long. And they may be right.

“If their prices don’t come up, then they’re dead,” said Brahm Eiley, co-founder of the Toronto-based telecom and technology consulting group. “They can’t make a profit running prices like this.”

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What happened during the past few years since the wireless startups Wind Mobile, Public Mobile, and Mobilicity have launched their services? They have pushed the incumbents to lower their cellphone packages. At the end of the day, Canadians get a better deal… by choosing the incumbents — or their other brands — for multiple reasons.

The current state of the Canadian wireless market clearly shows: the wireless startups haven’t been able to attract too many customers, as Bell, Rogers, and Telus have 25 million subscribers, while Wind Mobile, Public Mobile, and Mobilicity have slightly above 1 million combined.

And this is why each one of them is or was on the auction block looking for a buyer. Okay, there are only two now, Mobilicity and Wind Mobile.

In the end, the entrance of the wireless startups had major benefits for the incumbents: Rogers, Bell and Telus offer more expensive wireless plans, and Canadians choose them for double the price they pay compared to wireless startups.

Hopefully the forthcoming 700MHz spectrum auction will change the landscape.

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