TORONTO – While one wireless company is warming up its lawyers in response to the launch of chatr by Rogers Communications, another was welcoming it to the Canadian wireless scene (once such a placid, “rational” playground with three big player, which has become one still with those three biggies, but with many more little guys kicking them in the knees).
To Mobilicity’s COO Stewart Lyons, however, chatr is illegal: A low-price brand formed by Rogers whose only goal is to put his company out of business. Company founder John Bitove threatened legal action when news of chatr leaked out, but this was no idle threat, said Lyons.
“We sent them a letter last week… and we will pursue those avenues,” he told Cartt.ca in an interview Wednesday.
“It’s not just the Competition Act, there’s also civil litigation we’re going to pursue as well as one of the avenues.” However, Lyons declined to expand on what the civil litigation action might target specifically.
“There are various forms of litigation but… we believe that there’s an actionable cause here,” he said.
And with chatr on Rogers’ GSM network, the company can source many cheaper handsets to work on the mature technology (Rogers, Bell and Telus are already onto the next iteration of the GSM curve, HSPA). “Rogers is a monopoly with GSM,” added Lyons.
“What they launched and the cities they launched in, with the pricing of the offer relative to Rogers’ ARPU as a whole for the company, the hit they’re going to take on ARPU to do this, the distribution channels they chose, all of which are expensive distribution channels, costly to operate in… All of those things put together indicate a proposition that may be cross-subsidized by the other moneymaking areas of Rogers,” explained Lyons.
We asked how this is different than, say Montreal-based Aldo Shoes, which has a number of store brands (like Spring, Feet First and Globo) it uses to take advantage of real estate and target different price points and customers.
“If they launch a brand that loses money and it’s only launched to drive out the competitors in that price point, then that’s a violation of the Competition Act,” said Lyons.
Despite the market conditions, Lyons added that things are going pretty well for Mobilicity. “We’re ahead of expectations and we’re doing really really well,” he said.
Wind Mobile, however, provided a cheekier response to chatr, offering $1 hot dogs to Torontonians at Yonge and Dundas, right near Rogers’ flagship store, while taking a little jab at the big red machine.
"We have said from the beginning that Canadians deserve more choice in wireless,” said Wind CEO Anthony Lacavera (pictured with his lunchtime hot dog). “Today we are welcoming the competition by extending our $150 offer to customers who bring their phone to Wind from any carrier including Rogers, Fido and their new 2G, voice and text only wireless experiment, chatr. It’s one more great reason to make the switch to Wind."
