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New Wireless Carriers Struggle to Compete with the ‘Big 3’, iPhone 5 and LTE

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With the launch of the iPhone 5 and the vast superiority of LTE networks from coast to coast being installed by Rogers, Bell, and Telus, it appears the situation remains bleak for new wireless entrants to make a dent in the wireless market.

According to the Financial Post, analysts estimate Rogers has signed up 40,000 customers since the launch of the iPhone 5. This number is what WIND Mobile would typically sign up–in a three-month fiscal quarter.

Like fellow new entrants Mobilicity, Public Mobile and Videotron, Wind is hampered in part because it has never been able to sell Apple’s wunder-phone, which remains the most potent single sales driver for any mobile operator the world over.

The new wireless entrants run their networks on a different frequency that does not support the iPhone, a major disadvantage when it comes to marketing the latest smartphones to customers, which the incumbents are able to do with ease:

Some expect Rogers, Bell and Telus, which together hold 91% of the wireless market, to step up advertising of the superior standard. “The incumbents can show off their LTE networks with the iPhone 5,” Canaccord’s Mr. Ghose said.

[…]

“We believe that the lack of an iPhone offering from new entrants has curtailed their market share,” said Canaccord’s Mr. Ghose.

Even though the iPhone 5 fever is exciting for the ‘Big 3’, it is expensive up front as costs to subsidize handsets affect profit margins for fiscal quarters surrounding launches, and do not drive growth. However, these costs are recuperated over the long term when customers sign onto three year contracts coupled with higher-priced voice and data plans.

As much as we’d love to see the new wireless entrants succeed in Canada, it doesn’t look like they’ll make a big enough dent to hurt Rogers, Telus or Bell, as they dominate more than 90-percent of the wireless market. It’s for reasons like this WIND Mobile’s financial backer regretted entering the “protected” Canadian market.

What do you think? Do the new wireless entrants stand a chance in Canada?

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