Koodo's latest campaign takes aim at wireless fixed-term contracts, calling them 'gross and sleazy.' But Koodo head Kevin Banderk said he would never use the term sleazy 'in everyday conversation.' (Telus)

Since it splashed onto the Canadian wireless scene this spring with a wave of advertisements featuring pastel colours and spandex-wearing spokes-models, Telus Corp.'s Koodo hasn't done things quietly.

The results have been positive for Telus: According to the company's second-quarter numbers, Telus subscribers grew by a record 176,000, almost half the 359,000 total subscribers added by the big three providers — Rogers, Bell Mobility and Telus — in that period. Telus also saw its monthly average revenue per wireless user drop 1.4 per cent to $62.73, a drop analysts credited to Koodo's lower prices.

Part of the secret to Koodo's success has been how it has distanced itself from its parent brand. Koodo uses a different colour scheme, does its public relations through an outside company and even takes indirect shots at the practices of the parent company in its ad campaigns. CBC News spoke with Kevin Banderk, who holds the title of Chief Koodo Officer, about how his brand has managed to travel that tricky path.

How difficult has it been to distinguish your brand from the Telus brand?

For us, it's not just being different from Telus, it's about being different from everybody else out there. When we started up and started looking at the Koodo brand etc., one of the things we realized is it's actually a fairly crowded marketplace with wireless brands, there are at least six big ones and maybe 15 brands in total floating out there. And if you look at the advertising spent on all of those wireless brands, it's fairly intensive. It's very loud overall, especially in the holiday season. You can't walk into a mall without seeing wireless ads, so we had to look at how do we stand out. One of the first things we started with is looking at the customer and really focused on in our mind a customer segment that the majority of the carriers out there had started to neglect.

You can see it in the industry, they had started to evolve into the higher technology and high-speed data networks and smart phones … and stopped thinking about the folks who really just wanted the phone for talk and text or even talk or text, so we went back and looked at that group. So then we looked at how do we reach these folks and we hit on the term fat-free mobility. And we built off that and thought of the colour scheme that really popped and built that into the '80s retro exercise theme as our initial campaign.

Your latest ads include Christmas carols with the lyrics "fixed-term contracts, excess fees, are so gross and sleazy." Sleazy is a powerfully negative word and it seems odd that you would use it to describe fixed-term contracts, which are a staple of not only competitors Bell and Rogers but also Telus, your parent company. Do you actually believe these practices are 'sleazy'?

It's really just about speaking differently to the wireless audience. I think given the context of the carols you wanted words that would pop out and grab people's attention, so it's more to do with grabbing people's attention than it is to try to denigrate any of our competitors. I think that our view here is we offer a smart alternative to the other wireless competitors. There is value to fixed-term contracts, they offer things we can't — you'll never see a zero-dollar Blackberry Pearl from us because we just can't afford it without doing a three-year fixed term kind of thing. So there is value to it, for those people who don't mind being locked in.

But we also know there is a large segment of the population who wants more transparency and flexibility and they tend to just focus more on the talk and text, that's the audience we're seeking and really trying to reach and you know I think that's the approach we're taking.

So you know, if I was using it in everyday conversation I'd never use the term sleazy or the company would never use the term sleazy, but I think given the context of the Christmas carol you clearly want words that pop out and go - wait, that's not a normal Christmas song, what's going on here? And so they listen. That's the approach. I don't think here we have any belief that there is anything really being done by any of the other carriers to trick or to be sleazy but we just want people to be very aware that there are alternatives to what all the big guys offer, that you don't have to settle for having to take a contract to get a decent price on a phone you don't have to pay system access fees and things like that.

There are alternatives, and there are trade-offs for those alternatives. We just offer talk and text, we don't offer the largest lineup of phones but we do a very good job of satisfying customers that just want talk and text and that was shown that we just won the J.D. Power's award for 2008 for highest customer satisfaction in the post-paid market.

If you could go back and alter the ad that is currently running would you change the word 'sleazy?'

I think we're quite comfortable with the approach we've taken to date and just really making people aware that there is an alternative. The key thing is that we let people know that there is another choice out there and that they should take a look that there is a company that is doing things differently.

There has been a lot of discontent this year from wireless consumers that has come to the forefront this year, and it seems your company has tapped into that discontent, with your focus on getting rid of the system access fee. But is there not some inconsistency with tapping into customer frustration with what is ultimately another part of your company in Telus?

There is a frustration within a segment of the population with the wireless carriers and you always get into the challenge especially as the industry matures that there are different groups looking for different things. You can't be everything to everybody and as soon as you try and do that you are going to alienate one group or another. Telus, Bell, Rogers, clearly they thought, if we are going to alienate anyone let's not alienate the folks that are getting into data, smart phones, that kind of thing, and that became their focus.

I think the group that did start to feel a bit alienated by the existing carriers was the folks that just wanted the phone for basic communication. We definitely tried to tap into the fact that there was that segment of the population that wanted an alternative that was slimmed down, straightforward, with no bells and whistles but also no tricks or anything behind the scenes. I think you are always going to see that as an industry matures that there are going to be different segments that are going to have to be attracted to different brands and that's the approach we took.

Would you classify something like a system access fee as a trick behind the scene or as a hidden charge?

A hidden charge is only hidden if people are trying to not talk about it. What I've seen from the big three guys is they are pretty up front that there is a system access fee and about how much it is: it's fairly clear. Could it be a little more straightforward in being built into the rate plan? Sure. And that's the approach we took. What Telus, Bell and Rogers did say about the system access fee is that for them it's a fee they need to continue to build out the network to provide higher data speeds and improve that overall infrastructure. In our minds we want the coverage, but beyond that customers don't care about the data speeds, they don't care about going to the next generation of technology, so why charge your customers for something they aren't going to use? And that was basically the stance we took.

Since your brand has started, Fido and Solo have not only also dropped the system access fee but also prominently advertise this fact. Do you see in the future all the brands dropping it? Is that the direction things are going?

I think what you will get more of is not necessarily the fees being dropped but more transparency in what you are getting for it. I think that's where the industry will move to being very clear: here's why we charge more than the other guys, here's the benefits from us. And customers should ask what the benefit of paying the $8 to $10, whatever the fee happens to be, and I think that's a fair question to ask. Each and every brand needs to be able to explain themselves.

As a result of the spectrum auction of wireless airwaves earlier this year, there is anticipation of a number of new entrants to the market next year. In what ways will Koodo further differentiate itself in what is already a crowded market?

A lot of people tout that we were the first to cut the system access fee, but honestly the biggest thing our customers tell us is that its the simplicity of our offering and the no fixed term contracts and the flexibility we give with billing. The system access fee rates pretty low; it gets incorporated into overall pricing. It's not a huge thing but in our minds it's representative of the simplicity that is our cornerstone. What it seems like with Solo and Fido, yeah it almost seems like they are trying to copy us to a degree and we're fine with that, because I don't think they've captured the true essence of what makes us different, which is … that straightforward and fair approach to giving discounts on a device. And that's our focus, to listen to the customer and understand what they want and deliver what they want.