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.