BUSINESS

A MOVING CLIENTELE

TWO MOBILE PHONE NETWORKS ARE BATTLING FOR 15,000 NEW SUBSCRIBERS EVERY MONTH

JOHN DeMONT September 26 1988
BUSINESS

A MOVING CLIENTELE

TWO MOBILE PHONE NETWORKS ARE BATTLING FOR 15,000 NEW SUBSCRIBERS EVERY MONTH

JOHN DeMONT September 26 1988

A MOVING CLIENTELE

BUSINESS

TWO MOBILE PHONE NETWORKS ARE BATTLING FOR 15,000 NEW SUBSCRIBERS EVERY MONTH

Missing a phone call can be costly for Toronto film and video cameraman Barry Smith. If one of his clients, which include the CBC and The Sports Network, fails to reach him for a fast-breaking assignment, a producer will simply call the next cameraman on the list. For the past two years, Smith, who makes up to $1,000 a day, tried beepers and answering machines but continued to miss jobs. As a result, in frustration, last month he spent $2,000 on a portable cellular phone that weighs about sue pounds and runs on a 12-volt battery. Now, clients can reach him instantly whether he is driving, shooting on location—or even skippering his sailboat in the middle of Lake Ontario. And Smith says

that he wonders why he did not start riding the cellular wave sooner.

Cellular phone use has exploded in Canada. From a standing start just over three years ago, Canada’s two cellular networks now have more than 180,000 subscribers and are adding about 15,000 new customers a month, a faster growth rate than in the United States, the United Kingdom or Western Europe.

The two groups that provide cellular service, Cellnet Canada, a national affiliation of provincial telephone company cellular units, and Cantel Inc., which is 65-per-cent owned by Toronto-based Rogers Communications Inc., are competing for the booming market. Meanwhile, NovAtel Communications Ltd., the only company in Canada that manufactures cellular phone hardware, is g fighting off competition from " huge foreign manufacturers both in Canada and in the United States. And buyers are being tempted with a range of new services, including automated sports scores and ski-condition reports. New phone models have call-forwarding and voice-activation features and can be used to transmit or receive documents. Said Robert Latham, president of Bell Cellular, the main member of Cellnet: “By the year 2000, it could be as natural to have a phone in your pocket as on your desk.”

Cellular phones use radio frequencies rather than telephone wires to transmit messages in small geographic areas called cells. As callers move from one cell and one frequency to another, their transmissions are transferred to the adjoining cell without interference or interruption. The mobility of cellular phones has obvious advantages, but even network officials have been startled by the huge popularity of phones-to-go. That is partly explained by Canadians’ love affair with the phone: on a per capita basis, they spend more time on the telephone than any other nation. But one unexpected development is that, instead of corporate executives, the main buyers are small business operators, independent sales agents, construction workers and other self-employed people who spend a lot of time away from their base or work out of their cars.

Scuba equipment wholesaler John Theobald spends about half the year on the road visiting customers across Canada in his van. By plugging a laptop computer into his cellular phone, he can transmit detailed orders to his Vancouver office from as far away as Nova Scotia. Orders that used to take up to 10 days to arrive by mail can now be processed by a staff member in less than a day. Having a cellular phone allows Calgary real estate agent Paul Betts to respond quickly to customers’ demands. Last October, Betts’s car phone enabled him to make a $148,000 sale in less than two hours after he and his clients spotted a for-sale sign that had just appeared in front of a home. Said Betts, who makes and receives about a dozen calls daily from his car phone: “This thing has paid for itself 10 times over.”

As well, falling prices have also led to in-

creased sales. Since the phones went on the market in 1985, the price for a fixed car phone has dropped to $1,500 from about $2,500 and the cost of hand-held, portable units has declined to $2,000, compared with more than $3,000.

Officials at Cantel and Cellnet now say that they expect their combined subscriber base will double by 1990 to reach 400,000, which would strain the networks’ current capacity.

But once the present analogue cellular equipment is converted to digital equipment, a process scheduled to begin in 1992, the system’s capacity will grow by 400 per cent.

But competition within the industry is already heating up. Both networks are conducting aggressive sales drives and are scrambling to expand service coverage. Earlier this year, Bell Cellular filled in the gaps in its Windsor, Ont.-to-Quebec City transmission corridor and also extended its network into the so-called cottage country north of Toronto. And next year, both Cellnet and Cantel plan to introduce cellular service in New Brunswick, leaving Saskatchewan, Prince Edward Island and Newfoundland as the only provinces without cellular service.

Calgary-based NovAtel, a joint venture between Alberta Government Telephone Co. and Nova Corp., faces different challenges. NovAtel, now the third-largest cellular phone manufacturer in the U.S. market, is facing competition from international giants including Toshiba Corp. and Motorola Inc., which are trying to win back their U.S. market share by slashing prices and launching innovative new products. Last year, Motorola even took NovAtel to court for alleged infringement of its patent on a component used for sending and receiving calls. (The dispute was recently settled out of court.) But NovAtel is fighting back with its own new products. And it is also attempting to raise its profile outside Canada by selling its products under its own name. In the past, NovAtel’s phones have frequently appeared under other corporate labels when the phone is sold as an accessory with luxury automobiles.

Still, the competition is welcomed by many buyers. Prices for handsets and car phones are expected to continue to drop. And industry officials say that cellular phones will soon be common options in most cars. Meanwhile, the list of innovative options continues to grow. Car phones now have memory capability* and speed dialling. Many also provide access to facsimile machines and voice mail systems. Among the newest services offered by Bell Cellular is access to stock reports, automated sports ticket sales and even computerized information on where the nearest service station is located.

For the cellular companies, continuing to come up with an array of technological innovations may be difficult. But as the public’s appetite for the convenience and power of cellular phones increases—and the battle to cash in on that demand grows—it is an investment that will also bring rich rewards.

JOHN DALY

JOHN DeMONT with JOHN DALY in Toronto