Public Mobile, the third new cellphone entrant to the Canadian market in the past six months, is launching with a dramatically cheaper service than originally planned.
The company will begin service in Toronto on Wednesday with a $24-a-month plan that offers unlimited local calling, with voice mail and caller ID for an extra $8. The company's original $40-a-month plan, announced earlier this year, will still offer unlimited local calling and text messaging, but will now also bundle voice mail.
Public Mobile spokesperson Lisa Pappas said the new plan was mainly in reaction to conversations with target customers, who are generally lower-income Canadians that don't yet have a cellphone. Chief executive Alek Krstajic found that in speaking with a cab driver, for example, that not everyone was interested in text messaging.
"He had this experience where [the cab driver] said all he wants to do is talk, so we've now got the $40 and the $24 plan," Pappas said.
The new rates, however, are also a reaction to other new entrants such as Wind Mobile and Mobilicity, which also offer unlimited calling and texting. Mobilicity, which launched earlier this month, for one, has an unlimited talk and text plan for $25.
"It wasn't a direct response to Mobilicity although certainly the fact that they're doing a lot of unlimited makes them the closest to what we're doing in the marketplace," Pappas said. "[However], they're going after a lot of high-end users, which is certainly not the demographic we're going after."
As with other new carriers, Public Mobile is not requiring new customers to sign onto contracts, but is instead asking them to buy their phones up front. The company is starting with four handsets, priced between $70 and $180.
Public Mobile began opening stores in March, with 39 now in Toronto and a further 21 in Montreal, where service will be launched at the end of June.
Unlike Wind and Mobilicity, which have launched or are planning to launch in major cities, Public Mobile does not yet offer coverage outside of its immediate service areas. The company is aiming for urban customers who don't move around a lot and doesn't want to stick them with the surprise roaming charges that usually result outside of the main coverage areas.
"We've chosen to hold off on roaming because we don't want people to roam onto another network without knowing it," Pappas said.
All of the new carriers will compete with established players Bell, Rogers and Telus, who control about 95 per cent of the Canadian wireless market. Wind, Mobilicity and Public Mobile benefited from special rules in a 2008 government auction, where airwaves were reserved for potentially new service providers. The government established the rules in an effort to drive competition into a market that suffered from high prices and poor innovation.
Industry analysts generally agree that all three new carriers are unlikely to survive in the long run, but they are split on which ones may fall by the wayside. Some like Public Mobile's chances because of the company's lower cost structure and the fact that it is focusing on a specific niche.
"Public Mobile is not looking at going after all the bells and whistles and is less likely to cross paths with the incumbents," said an analyst who asked not to be named. "They'll be a much smaller but also sustainable competitor."