Videotron Goes Mobile - Finally, Some Real Competition

Been totally backed up today, but I feel it's important to comment on yesterday's mobile launch from Videotron. I was all primed to be on the analyst call yesterday, but for some unexplained technical glitches I was blocked out and missed it. The window has since closed for me to comment in near real-time, but I did want to add a few thoughts while it's still relatively fresh.

The main thing I want to say - and haven't been hearing from others - is that Videotron is finally bringing some real competition to the Canadian wireless market. We all know how successful and disruptive they've been with VoIP in Quebec, and I think the same thing will happen here with wireless.

There's a lot to like about this news - unless you're Bell. First, this is the first major wireless play from a cableco since the AWS auction, so now we're seeing competition from a different side of the market. Of course Rogers is a cableco, and they're the #1 wireless provider in Canada - how cool is that? - but they've been in this from the beginning, and are really an incumbent for mobility. Shaw is actually Canada's largest cableco, and they've been biding their time for wireless. Am sure they want to see how Videotron does first, since they both are in similar positions in terms of what they can bring to market.

Another first of note is Android. Videotron is first to market to support an Android device - HTC. That will also be interesting to follow. They don't have the iPhone yet, but I don't think that's going to hurt them too much.

It's also worth adding that Videotron's launch is totally different from all the other new entries, which are built 100% around breaking into this market. They have to live and die by stealing subscribers with low priced plans or bottom feeding from first time wireless users who don't have much money to spend. In my view, there's zero innovation or disruption here aside from some short term pricing strategies to grab the low hanging fruit. But that's a treadmill with no loyalty - or contracts to keep customers from jumping to the next deal that comes along as they price shop at all those kiosks in the malls.

By its nature, Videotron has much more to offer, and they're chasing an entirely different piece of the market. First and foremost, mobility strenghtens the bundle to keep existing subscribers from running to Bell or Rogers. Secondly, they have what I think is the real differentiator - content. Videotron - more so its parent, Quebecor, is a media company. They're not in the telephony business, and their entry into mobility is not about voice. I've been writing about the post-AWS space a fair bit, and I've been saying from Day 1 what most people are just saying now.

Videotron doesn't really have to make its money on selling voice plans. Long term, it's all about data services and content. Mobility is really just another - and sexier - channel for their vast empire of content. Not just any content, btw. Sure, they have lots of mainstream stuff that everyone likes - but the real value of course is French language content. If you don't know the cultural landscape up here, you need to understand how important this is in Quebec. Videotron is a homegrown favorite, and you can be sure interest for this type of content will be off the charts. I don't think they'll run into pricing issues around this - they'll probably be more concerned that the network can hold up and meet demand.

Bell will really have its hands full now, and the more successful Videotron becomes, the more confident Shaw will be about their plans to go up against Telus out west. This type of competition is SO much more interesting than what the pureplays are trying to do, and with flanker brands like Chatr from Rogers coming to further clutter up the market, I just don't see these players having a sustained impact. For my money, as I've been saying all along, Videotron is the one to watch, and I'm sure Telus will be taking good notes to prepare for what's coming their way when Shaw is ready to go.