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Verizon Investment to Setup in Canada Estimated at Over $3 Billion [Study]

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According to report by Moody’s Investment Service (via the The Canadian Press), U.S. carrier Verizon is estimated to require over $3 billion dollars in capital costs and three years to establish its network and mobile phone service infrastructure, which would include rural markets:

“Although competitive threats tend to cause uncertainty and can lead to performance pressure, we see limited downside for Bell Canada, Rogers Communications Inc. and Telus Corp. from a foreign company entering the market,” analyst Bill Wolfe said in the report, released Thursday.

The Moody’s report believes the battle in Canada would be focused on the user experience, instead of a price war, since Verizon would be required to build a quality network, seen as costly and time consuming. The time required for Verizon to make an impact would give incumbents time to improve their networks and service in the mean time.

An earlier report estimated the cost to replace WIND Mobile’s Huawei infrastructure with its own equipment at up to $100 million dollars.

An impromptu unscientific poll setup previously today on iPhoneinCanada asked readers if they would switch over to Verizon and whether any particular company should be favoured in the upcoming wireless auction. The results, as of writing, are below:

Would you switch to Verizon?

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Should Verizon or Canadian companies be favoured in the upcoming wireless auction?

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Despite Rogers, Telus and Bell continuing their negative ad campaign against Verizon and Ottawa’s current wireless spectrum policies, the Federal government does not appear to be phased and will continue with its wireless spectrum auction as planned, set for January 2014.

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  • crosseyed_mofo

    <3

  • nick

    enjoy paying high prices at verizon.

  • Al

    Ok… So, for everybody who has been telling me I “don’t get it” and don’t know what I’m talking about, this is what I have been repeating over and over…

    “The Moody’s report believes the battle in Canada would be focused on the user experience, instead of a price war…”

  • 1His_Nibs1

    Lol…..you really like digging your own grave huh?

  • djepsilon

    I don’t really understand how they don’t see at least a bit of a price war happening. I suspect that *MOST* Canadians are price motivated when it comes to wireless service. One thing you can get most people to agree on is that we pay too much for wireless, right? How many people would switch to Verizon if they didn’t offer at LEAST slightly better rates? If it is the same price, I know I certainly wouldn’t switch. Maybe if they offered better customer service, but judging by what our American friends think of Verizon, their customer service seems to be less then stellar too…

  • Al

    Please clarify

  • 1His_Nibs1

    No

  • 1His_Nibs1

    I don’t think I need to. I think the others on here know exactly what I mean by that.

  • Al

    In other words, you just assumed (hoped) it might be a clever smart-ass comment, without really knowing the relevance of what you were saying.

  • 1His_Nibs1

    Whatever Al.

  • Al

    “I don’t really understand how they don’t see at least a bit of a price war happening.”

    They can’t. Americans would freak out if Verizon were to offer better prices here. Imagine of you were a Bell (or whatever) customer and they went into the US market and offered them lower prices than here. To say you would be enraged, I’m sure would be an understatement.

    As such, there is absolutely no way that Verizon will lower their price – other than perhaps “incentives” (“get out of your contract bonus”… “trade-in and save”… etc.) to get you as a customer. But the monthly cost should be steadfast and in-line with what they charge in the US (essentially the same as here).

    The only upside is that we may get more bang for our bucks. Unless, as I’ve said before, the big 3 choose to lower prices just slightly instead of trying to compete on features. But Verizon won’t follow that path. They just can’t.

  • Pat Daigle

    I rather enjoy your insightful comments Al. It’s nice to see someone else who isn’t blinded by hatred of the Big 3 and looks a little deeper into the politics and dynamics of the industry. Cheaper prices at any cost (yes I see the irony in that comment) seems to be dominant thought on these sites, not realizing the catch 22 in the whole thing.

  • djepsilon

    So you mean like how Apple sells things at different prices in different countries? Yeah that never happens.

    You seem pretty sure of yourself for someone who is taking a “wait and see” approach.

  • Chrome262

    this all assumes they will break up wind when they buy it, they could just keep it as a brand, like fido or solo, for they unlimited plans. And djepsilon is right in a way. There are many international companies that sell their products at different prices. So they could do it, its not something that would be unheard of.

  • Al

    Why are you confusing exchange rates and cost of shipping with this?

    I’m just discussing the possibilities, while examining the obvious.

    I gave a rationale response. Why does that upset you so?

  • Al

    Do you seriously think this sort of thing is comparable to a difference in price due to additional manufacturer costs? I mean… seriously man… lower pricing for Canada makes absolutely no business sense. Verizon would lose a ton US customers out of spite. It’s just not worth it to them.

    And Wind is currently off the table, so why even talk about it?

  • djepsilon

    Definitely not upset. But after reading your many, many posts, think your need to be right overtakes your logic sometimes.

    All I’m saying is, services and products can always vary in price depending on the country you’re in. Wireless service I don’t believe is different. Verizon is not going to price their Canadian service or product on the basis of how their American customer base feels about it. Trust me. Two very different markets with very different strategies.

    I dunno, we will see. Verizon may not even come join the party up north at this point.

  • Al

    I’ve been steadfast. My “many” posts simply address those many who simply “want” instead of “think”.

    “Verizon is not going to price their Canadian service or product on the basis of how their American customer base feels about it. Trust me. Two very different markets with very different strategies.”

    I fail to see how you can justify ANY of those statements. To disregard your primary customer base by slapping them in the face like that… I don’t think so. Also – two very SIMILAR markets with very SIMILAR, if not identical, strategies. It’s as if you reached in your hat to pull out a couple of clichés and hoped they fit. Absolutely no logic to those sentiments at all.

  • Chrome262

    How is it off the table, they can buy them regardless. They won’t lose many, in most cases they are the only network with good signal in many a location. Most people in the states would rather use another carrier because of pricing but coverage just sucks. And do you bail on your carrier because they are offering cheaper prices in Saskatoon?

  • Al

    “How is it off the table, they can buy them regardless.”

    Bell and/or Rogers, as well as the original principle share-holder have all indicated they might buy Wind. Verizon, on the other hand, have pulled their offer, which makes it less likely that they will have a shot before someone else grabs them. Therefore, the statement “they will break up wind when they buy it” is without merit.

    Customer loyalty needs to be earned and maintained. In Canada, we have little choice. In the US, MANY people do have a choice. Saying “They won’t lose many” is… I mean… how can you even think that? The US market is HUGE. A small percentage in the US is a huge percentage in Canada. Enough so that it would make no sense to swap one for the other.

  • djepsilon

    My justification comes from my knowledge of marketing and business… and I guess is partly my own personal opinion. I believe that in order for Verizon to be successful in Canada IF they come is to CLEARLY differentiate their product from the big 3. They have to. Canadians are smart. We have been dragged around by our nuts for so long, we will see through any shitty “incentives” Verizon may offer like you suggested. We want REAL change. And lower prices would definitely be one of those changes.

    And that is just my opinion, so take it with a grain of salt. But I think the way to win over customers in this country is by first offering a better price and second offering better service. Otherwise, why switch? If they don’t differentiate their product in some way that has mass appeal to Canadians, they will fail, miserably.

    And really, I don’t know how you can justify YOUR statement – ” two very SIMILAR markets with very SIMILAR, if not identical, strategies.” It’s as if you reached into your ass and pulled out a couple pieces of shit and hoped they stuck on the wall. No but seriously, a 300mil+ market is the same as a 35mil market? One that has a vastly different geological landscape to boot? A market that has dealt with years and years of price collusion from virtually the only carrier options they have? Which, In my opinion, has lead to Canadians as a whole being VERY well educated when it comes to wireless service… and you are telling me that Verizon isn’t going to have to have different marketing and pricing strategies?

    Your argument that “US customers will be pissed” just doesn’t make sense. We are separate countries with separate markets. Period. Verizon can do what they want and won’t have to justify it to the Americans. 80% of them won’t even know a) that Verizon does business in Canada and b) …Canada? Where is that?

    And besides, Verizon will HAVE to lower their prices just to be on par with the big 3. Compare a 1GB data share plan from Verizon for $90 vs. a 1GB data share plan from Rogers $85 (both prices are for BYOD). Add to that Rogers promo: +1GB of data, less $20 for BYOD. So $65 for a now 2GB data share plan from Rogers! That is nowhere close to what Verizon currently offers in the States.

    I actually agree with you on most of your posts about this whole thing. It is a lot of wait and see currently and I am not jumping to any conclusions. This is just what I, ME, thinks needs to happen for Verizon to be successful. I certainly am not touting Verizon as Canada’s savior. Far from it. But if they enter the ring, damn right they are going to have to offer something compelling to compete with the big 3.

    Long post. Sorry!

  • ????Dennis

    The same way that people in Toronto don’t complain about the the cheaper prices in Quebec. We just have to deal with it….. The Americans will just have to deal with it to. I can see Verizon offering North American unlimited plans for $80. At that price we would all jump over with our iPhones. The big 3 could never offer that, so they would have to compete with Canada unlimited plans only. Which they really don’t want to cause it will cut into heir profits. That’s what they are scared of……

  • Chrome262

    Its still all speculation on their part, its not like we all haven’t followed the events as they unfold. All they are doing is running projections based on previous data. They have no real idea of Verizon plan. For all we know they are going to buy the spectrum and sit on it for a while. And while you have valid points, you have one main assumption: that US customers will even care, or even know what is going on up here.

    As I said before, If Rogers is offering competitive plans in other provinces, it doesn’t mean they are losing customers in Ontario, because there really isn’t much choice. Its the same in a lot of areas in the states. My brother would love to switch from Verizon to T-Mobile, but he is still waiting for better coverage in the Albuquerque, and he is right, i have used T-Mobile there and its awful. And the rates reflect that, my mom in Maryland gets better rates from Verizon then my brother does, because there is more choice where she lives and they are actively competing with AT&T.

    Besides all that, all they would have to do is offer no roaming, and free or discounted calls to other Verizon customers, which they already do, and that will pull lots of people away.

  • 1His_Nibs1

    If you stop feeding the troll maybe they’ll go away………

  • Al

    Many Americans DO have a choice. WE don’t.

  • Al

    If you have knowledge of marketing then…
    Marketing 101: Never devalue your product by lowering its price. This is a golden rule.
    There are “tricks” around this when needed to compete, but they are typically shallow (obvious) – yet the market tends to embrace them anyway.

    “a 300mil+ market is the same as a 35mil market?”

    Market “size” does not signify “type”.

    “vastly different geological landscape”

    Let’s see… Rockies, prairies, coast lines, Appalachians… For 99% of the population, I’m not seeing a difference.

    “and you are telling me that Verizon isn’t going to have to have different marketing and pricing strategies”

    Don’t believe me? Believe Moody’s – one of the oldest, established and most recognizable companies around in their field. Or is your “knowledge of marketing” make you more of an authority? Personally, a graduated Marketing and Retailing from Humber 30+ years ago and have been putting said skills into practice ever since.

    “If they don’t differentiate their product in some way that has mass appeal to Canadians, they will fail, miserably.”

    I seem to recall saying almost exactly the same thing a while back. As I’ve been suggesting, they can (if they chose to implement it) boost their business (both with US customers and “some” new Canadian customers) with free North American roaming. Consequently, this is a bigger “plus” for Verizon than you would think (not for us, but for them). By simply establishing a footprint in Canada, a notable part of the US population who are with other carriers would consider switching to Verizon for that benefit (which includes businesses with interests in Canada). And Canadians needing to travel to the US, including the growing, financially stable, snowbird population, may greatly appreciate an all-encompassing, worry-free roaming package. It may even be that whatever Canadian customers they attract will pay the bills, and the increase in US customers will be the gravy? (that’s just wild speculation on my part).

    Your perspective on American’s not knowing is beyond ridiculous. That you think they, and the US media, are that stupid that they wouldn’t notice is astounding. As I said before (to you or somebody), if you were a Bell customer (for example) and they went into the US market and significantly cut their prices, you would be enraged. So much so that you would more than likely switch to Rogers (for example) out of spite and in protest – with the notion that if Bell wants you back, they will have to lower their Canadian prices to meet their reduced US prices. Many Americans who can get decent service in their area from another provider would do the same. Do you seriously think Verizon would take than monumentally stupid risk?

    Promos will always exist. What I pay now for my plan for all devices is essentially the same as Verizon charges (except Verizon offers a tiny bit more in features). Some people have been on these discussions in the past complaining our prices (primarily data) are continuing to go up, and my plan appears to be cheaper than what people are saying they have to pay now. So I think it depends on what plan/promo you look at and when. We’ll just have to see how comparable the prices are when the time comes, as it’s a very long ways away before this happens, assuming it actually does happen.

    I’m personal leaning towards the big 3 dropping their prices just a little, as I don’t see how they can offer a comparable service to Verizon. I think people who tend not to travel much, if at all, will stick with the big 3. Everyone else (likely including me) will jump on Verizon for their roaming and whatever else extra they might offer. I’m already looking at condos in Florida 🙂

  • Al

    Regarding “US customers will even care”… refer to my reply to djepsilon that starts “If you have knowledge of marketing then…”. Specifically the 3rd paragraph from the bottom.

  • Al

    … says someone who loves to bash but doesn’t really have the intelligence to defend their position. Oh wait! — I think THAT’s the definition of a troll ! How about that.

  • 1His_Nibs1

    You sir, cannot or will not admit to being wrong. I kept “bashing” you on the unlimited Canada wide long distance because I KNEW for a FACT you were wrong. Even then you had to state that the big 3 had “just” started offering them. That’s also wrong but you can’t admit to being wrong so you have to spin it so you come out being at least partially right. I think you like the sound of your own voice (in this case typed words). Hence you comment to everyone & on eveything. Get over yourself

  • QRM

    Ok…some simple calculations. The average cost of a cell tower in North America is given as $150k–let’s round up to $250k because you can count that Bell/Rogers will not co-operate and share towers with the newcomer. Bell/Telus have almost 8k towers to Rogers’ 5.6k–so let’s use 8k towers…therefore an entry cost of $4B…so Moody’s numbers make sense.

    OTOH, Roger’s 9.3M subscribers at an average of $40 per month would rake in close to $4B per year…

    The unknown costs would be the backbone infrastructure and switching…

    So, were Verizon to offer competitive rates, and better features like NA-wide roaming at no additional charge, how many of us would be likely to jump ship? Probably enough for them to recoup investment within three or four years and thereafter to own a large slice of the Canadian market…

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