Rogers About to Get Something they Didn't Want: Competition

I got a news-flash email from the CBC today (I’m no one spe­cial; I’ve signed up for alerts like this):

The fed­eral gov­ern­ment is $4.2 bil­lion richer with the con­clu­sion of the cell­phone spec­trum auc­tion on Mon­day, while cus­tomers stand to win as five new com­pa­nies are now well posi­tioned to launch ser­vices over the next few years. The wind­fall is con­sid­er­ably larger than the orig­i­nal $1.5 bil­lion many indus­try ana­lysts had pre­dicted before the auc­tion began on May 27.

I linked to the related story on the CBC web site, and 3 pas­sages caught my eye. (in all cases, bold and ital­ics are mine) First:

The big win­ner — and biggest spender — among poten­tial new entrants was Toronto-based Glob­alive Com­mu­ni­ca­tions Inc., which cur­rently sells home phone and inter­net ser­vice under the Yak brand. The com­pany has emerged from the auc­tion posi­tioned to launch a national cell­phone ser­vice with 30 licenses broadly dis­trib­uted across the country.

Sec­ond:

The new entrants are widely expected to build third-generation net­works based on global sys­tem for mobile com­mu­ni­ca­tions (GSM) tech­nol­ogy, which is what Rogers and its Fido sub­sidiary use, or its newer fourth-generation off­shoot, long-term evo­lu­tion (LTE).

and Third:

Iain Grant, pres­i­dent of the Seaboard Group telecom­mu­ni­ca­tions con­sul­tancy, said a national car­rier could be up and run­ning by Easter at a cost of $500 mil­lion, although other esti­mates say a launch could take a year or two. The trick­i­est part of start­ing up will be nego­ti­at­ing rights for trans­mis­sion sites, many of which will either be on top of tall build­ings or on tow­ers owned by Rogers, Bell and Telus.

So here we are, look­ing at a Spring of 2009 roll-out for at least one com­peti­tor to Rogers/Fido Wire­less, and did Rogers posi­tion them­selves well for such a sit­u­a­tion? In my hum­ble opin­ion, absolutely not. Any­one in Canada has seen this com­ing (any­one who was not in Rogers man­age­ment, that is). In the past years, months and weeks, Rogers has made so many Cana­dian con­sumers so angry that they can count on no cus­tomer loy­alty what­so­ever. Their brand may very well be dam­aged beyond repair. Any new cell­phone ven­dor who sup­ports a GSM 3G net­work will be able to grab a large pool of cus­tomers ready to switch imme­di­ately, or when their con­tract with Rogers is up (and you can bet that they’ll put that date on their calendar!)

How did Rogers screw this up so badly? The recent his­tory of Rogers, par­tic­u­larly with respect to pric­ing and mar­ket­ing tells some of the story. If you live in Canada and have had any deal­ings with Rogers, you’ll know much of this, so feel free to skip to the end…

First, over the past 3 or 4 years, Rogers charged some of the high­est data and call rates in the world. Then, in 2007, con­sumers and tech watch­ers crit­i­cized them for being slow to bring the iPhone to Canada after it was avail­able in the U.S. for a year.  In April of 2008, Rogers chief exec­u­tive Ted Rogers told investors the iPhone would arrive in Canada some time later in the year. In June, Rogers set the iPhone’s debut for July 11 (along with sev­eral other coun­tries through­out the world), but were quickly met with harsh crit­i­cism about the data pric­ing plan, which was per­haps the sec­ond high­est in the world (with Swe­den being the high­est) . Some high-profile tech per­son­al­i­ties in Canada went on tele­vi­sion to announce that they were going to jump ship (in some cases pay­ing a siz­able penalty). Only after thou­sands of cur­rent and prospec­tive cus­tomers signed online peti­tions protest­ing these rates,  encour­ag­ing Apple Inc. CEO Steve Jobs to put pres­sure on the com­pany, did Rogers relent with a drop of the high­est rate to a rea­son­able level ($30 per month with a usage limit of up to 6 GB per month), but this rate is avail­able only until the end of August. On the day of the roll-out, Rogers’ reg­istry net­works crashed simul­ta­ne­ously with Apple’s iTunes reg­is­ter­ing sys­tem after the new iPhone was unveiled. The Out­age lasted into the after­noon at some loca­tions and it wasn’t until the next week before some cus­tomers could acti­vate their phones. Rogers rep­re­sen­ta­tives said they expected record first-day sales, but declined to dis­close how many phones were shipped to stores or how many they had expected to sell. As I write this, Rogers (through­out Van­cou­ver, at least) is still sold out of the iPhone.

All in all it was a highly vis­i­ble fiasco. Rogers utterly botched the iPhone roll-out in just about every way it could be botched. They could have finally made many cur­rent cus­tomers happy with a new device and would be seen today as the sole provider of one of the most sought-after tech gad­gets. Instead, they gen­er­ated sev­eral days of bad PR, dis­played poor plan­ning, and missed immea­sur­able mar­ket­ing and sales oppor­tu­ni­ties. There have been numer­ous spec­u­la­tions that the rea­son they ran out stock is that Apple was so peeved at the high data rates that they actu­ally diverted iPhone ship­ments from Canada to more rea­son­able Euro­pean car­ri­ers. Whether or not this was true, Rogers’ lack of can­dor regard­ing avail­abil­ity, lack of under­stand­ing of the prod­uct, and com­plete screw-up of logis­tics and net­work vol­ume on the day of the roll-out is some­thing that will not fade quickly from the mem­ory of most Cana­di­ans (and prob­a­bly not by this com­ing Easter).

It will be inter­est­ing to see if the mass exo­dus from Rogers to what­ever new car­rier Glob­alive will fund will be as swift and mas­sive as I expect it will be. Rogers has run their busi­ness ‘like there’s no tomor­row’, but in the Spring of 2009, ‘tomor­row’ will arrive.