Proinvests.com

As Wind Mobile rushes to start selling wireless phone service in Canada as early as today, the country’s newest cellphone company is about to step into the first real price war the wireless industry has seen in nearly a decade.

Technicians with Wind Mobile’s parent company, Globalive Wireless Management Corp., spent the weekend readying their network for a launch in Toronto and Calgary this week, after getting federal approval on Friday to operate.

Test calls have been made across the network and it is expected Globalive will start selling wireless plans in those two cities by mid-week at the latest, followed by Ottawa, Edmonton and Vancouver in the coming months.

The government granted Globalive special permission to launch last week, after scrutinizing the company’s controversial ownership structure. Wind Mobile is getting most of its funding from Egyptian cellphone giant Orascom Telecom Holding SAE, which the Canadian Radio-television and Telecommunications Commission said in October was against federal ownership rules.

But, Industry Minister Tony Clement overruled the CRTC’s choice, saying the government didn’t share the same concerns about the ownership structure. He also repeated the government’s desire to inject new competition into the industry.

Now, as Wind Mobile enters the market as Canada’s fourth major cellphone player, it faces an aggressive response from phone incumbents Bell Canada, Rogers Communications Inc. and Telus Corp.

Each have used their discount brands in recent months to try to lock up cost-conscious consumers.

They have offered stripped-down, no frills plans, including talk and text packages for as small as $15 a month. Telus’s Koodo brand, Rogers’ Fido and Bell’s Solo Mobile have been the frontier in this price war.

How this will play out for consumers in the years ahead, though, is unclear. Globalive chairman Anthony Lacavera believes the strategies from the discount or “flanker” brands are not viable over the long-term.

“Some of the discounting that’s going on in the flanker brands of the incumbents right now, that’s not real pricing. That’s not sustainable,” Mr. Lacavera said.

“In the very next few days, there’s going to be details of our plans and our phones out there. We will certainly have plans that will compete with them,” Mr. Lacavera said. “But at the end of the day it is a business. And in order for us to be around for the long-term, we have to have, obviously, a long-term, profitable and viable business model.”

Pressure will be on the newcomers to lower prices in a way that is meaningful for the average consumer, since the government could find itself embarrassed if cellphone plans don’t drop substantially as a result of the market being opened up.

In its choice, the federal government said it believes more competition will lead to lower cellphone bills.

But, the deep discount market is not what these new companies or the incumbents necessarily want.

A much larger battle will be fought over the mid-range and upper-end consumer. Wind Mobile, which will offer Blackberries but not the iPhone, is setting its sights on the more lucrative data and voice plans offered by the premium Bell, Telus and Rogers brands.

Such packages, which can result in monthly bills ranging from $60 to more than $200 for the average consumer with an iPhone or Blackberry, come with fatter margins – and offer more opportunity to undercut without slashing too much into profits.

Similar strategies have been talked about by other new entrants coming to market, including DAVE Wireless, which also sees room to undercut the Huge Three on mid-range plans. But, that company is keeping its start date and pricing plans secret, not wanting to provoke a response from the established companies.

“If we go out and we announce our launch date publicly, we potentially expose ourselves to competitive threats and pressures,” said Dave Dobbin, chief executive officer of DAVE Wireless, which may not launch until the spring.

Such secrecy becomes a risky tactic for the new companies though, since consumers looking for a phone will be weighing whether to lock into a plot with an existing company now or hold off for potentially better deals from a new carrier.

When questioned if Wind Mobile got the message from Ottawa last week that the government expects cellphone bills to be lower across the industry in the coming years, Mr. Lacavera said he did. “We’ve heard it loud and clear,” he said.