Solutions Research Group

by Kevin Restivo
The National Post
Mar 2, 2005

Sir Richard Branson's Virgin Mobile PLC unveiled its long-awaited wireless phone service yesterday, a move designed to put more phones in the hands of young Canadians and shake up the country's $8-billion wireless industry.

The London-based company is trying to win over Canadians between the ages of 12 and 34 with the promise of no contracts, attractive prices, easy-to-understand cellphone plans and innovative services like wake-up calls.

"[Virgin Mobile] is going to create some marketing excitement," said Brian Sharwood, a consultant with the SeaBoard Group in Toronto. "They will keep [competing carriers'] pencils sharp and get them thinking about how they can improve their services."

Bell Mobility has already chopped its prices on prepaid services. Last month, the division of telecom giant BCE Inc. dropped prepaid service prices to 30 cents a minute, a cut of about 5 cents a minute.

Virgin's service, which costs as little as 20 cents a minute after the first five minutes of calling, is available to consumers in Ontario and Quebec and should be available across the country by the summer.

Canada is the third entry point for Virgin's cellphone service. Virgin Mobile first launched in Britain in 1999 and then followed up with a U.S. launch in 2002. Virgin Mobile now has about eight million subscribers worldwide, including three million in the United States.

Mr. Branson, one of the world's most colourful and successful marketers, who visited Toronto to launch the service yesterday, said Virgin Mobile expects to gain two million subscribers over the next few years.

Kaan Yigit, president of market researcher Solutions Research Group Inc., said Virgin Mobile should win over customers dissatisfied with the country's wireless giants and those people that don't want to sign a contract. But he said people would rather sign up for family cellphone plans, instead of dealing with the "hassles" of a prepaid service plan.

John Boynton, vice-president of consumer marketing with Rogers Wireless Inc., said Virgin Mobile's impact will be minimal as the company is competing for a mere 5% of the country's wireless market.

Virgin's competition has had time to prepare for the company's entry into Canada, he added.

"We have taken [the Virgin threat] much more seriously than the U.S. carriers did," he said.

Virgin Mobile first announced its entry into Canada in March of last year. That's when the company said it had formed a $140-million joint venture with Bell Mobility to offer cellphone service over the company's digital wireless network. Virgin has a similar deal with Sprint in the United States.

Mr. Boynton noted that Canadians can already get cellphones at Virgin's advertised rates on evenings and weekends, times most young people want to talk using their cellphones.

Rogers Wireless, the country's largest wireless carrier with about 5.5 million subscribers, is the most vulnerable to Virgin's attack on Canada. Rogers acquired a sizeable young customer base when the company closed its $1.4-billion acquisition of Microcell Telecommunications Inc., the owner of the youth-oriented Fido brand, in November. Like Virgin, Microcell's customers are pre-paid customers. communications.

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