Shaw Mobile is a big reason why Freedom stores are struggling, another witness says
OTTAWA – Today was the third day of the Competition Tribunal hearing on the Competition Bureau’s application to block the proposed merger of Rogers Communications and Shaw Communications.
Yesterday and today, two Freedom Mobile dealers appeared as witnesses, each answering questions about the struggles they say they have faced since the merger was announced.
The first of the two witnesses, Sudeep Verma, opened his first Wind Mobile store in 2011 and continued on to open a total of 19 stores. He operated all of those stores until December 2021, after which he closed four.
When Shaw bought Wind Mobile there was “a sea change” he told the tribunal panel yesterday. Shaw “invested a lot of money in getting the network to be upgraded, better customer service, better quality of the network,” he said, adding that Shaw also brought in Apple products including the iPhone, which he said was “one of the biggest wins that we had.”
“A launch date was pending and then all of a sudden the merger came out and then things kind of went down south from there, then we were told that the 5G launch was being indefinitely postponed” – Sudeep Verma, Freedom Mobile dealer
Now, however, “it’s almost like the business is put on ice.”
Freedom Mobile has become less competitive, Verma explained. “We’ve also seen on the consumer side phone subsidies seem to have dried up or have been diminished, absolute zero devices that was one of our unique selling propositions… many of those devices are no longer free or have no longer been free after the merger was announced.”
Furthermore, Freedom dealers have not been able to get any answers about what the proposed merger will mean for them, according to Verma. Questions about leases and the future have gone unanswered, with the dealers only being told “you should go month-to-month with your leases or do whatever you want,” he said.
On the topic of 5G, Verma indicated Freedom dealers were told during a dealer forum there was a roadmap for rolling out 5G. In March 2021, retail stores were sent window posters and other marketing material for its launch. “A launch date was pending and then all of a sudden the merger came out and then things kind of went down south from there, then we were told that the 5G launch was being indefinitely postponed,” said Verma.
Freedom dealers are “cautiously optimistic” about the divestiture of Freedom to Quebecor’s Videotron, Verma said, going on to explain they know about the proposed divestiture only because the media reported on it – they have not heard anything from Videotron or Freedom.
“…the business impact started mostly when Shaw Mobile was introduced” – Sameer Dhamani, Freedom Mobile dealer
The second Freedom dealer the tribunal heard from was Sameer Dhamani who currently owns three stores. He acquired the first store around 2016, starting out as Wind Mobile.
Dhamani told the tribunal panel today that he owned eight stores in 2019 but they hit a roadblock in 2020 when Shaw launched Shaw Mobile just before back-to-school. He explained that “because the plans were so aggressive it was hard for us to compete…”
They were told the offer of 25 gigs for $25 was a promotional offer and would go away but it is still being offered, said Dhamani. (It is listed on the Shaw website as an offer when bundled with Shaw’s Fibre+ Gig 1.5 Internet.)
When things closed in 2020 because of the pandemic, the situation was “dire” but then things started to open up again and “the business impact started mostly when Shaw Mobile was introduced,” he said.
Both Verma and Dhamani were also asked about a lawsuit they are involved in as members of the Association of F-Branded Wireless Dealers, which is made up of 22 independent dealers and dealer groups operating Freedom stores in Ontario and Alberta.
The lawsuit was filed in April 2022 on behalf of the association’s members against Shaw subsidiary Freedom Mobile Distribution Inc.
“Since early 2020, and increasingly following the public announcement of the transaction entered into between Shaw and Rogers whereby Rogers was to acquire all of the assets of the Freedom Mobile network, the Freedom dealers are alleging that they and therefore the markets they service have been negatively and severely impacted by Freedom’s programming and compensation plans effecting the network,” a press release announcing the lawsuit explains.
“The lawsuit seeks damages for each of the dealers representing the alleged losses they have suffered as a result of Freedom’s operation of their various channels of distribution and in the compensation paid to the dealers.”
The tribunal hearing is scheduled to continue tomorrow morning at 9:30 a.m. ET. For instructions on how to listen in, please click here.
