MONTREAL - Consumers in Ontario and Quebec would be able to pay $40 a month for unlimited talk and text with no-frills wireless company BMV Holdings, a new player to Canada that aims to be running by next fall.
The Toronto-based company plans to be up and running by the end of September 2009 and will announce its brand name in about a month, says CEO Alek Krstajic, a former executive at Bell and Rogers Cable.
"We're starting from scratch and we're only going to have one rate plan," Krstajic said, adding that it wouldn't be higher than $40 monthly.
The new wireless company will cover almost 19 million Canadians from Windsor, Ont., to Quebec City, he said, and will build its own network that can eventually be upgraded. There are plans to hire 100 employees.
BMV is among new players entering Canada's cellphone industry and has two U.S. backers that are experienced in building wireless companies from scratch in the United States.
Industry Canada's recent wireless spectrum auction, which raised more than $4 billion for government coffers, was designed to open up the industry to new players and give consumers more choice.
Rogers (TSX:RCI.B), Telus (TSX:T) and Bell (TSX:BCE) are Canada's three dominant carriers, each with a national network. There are also several resellers that don't own their own infrastructure.
Virgin Mobile, for instance, has a joint venture with Bell Canada that uses the Montreal-based company's network.
BMV has no plans to offer smartphones like Apple's iPhone or Research In Motion's BlackBerry, Krstajic said.
Instead, Krstajic said lower income Canadians are looking for a discount cellphone brand that fits their pocketbook and a predictable monthly bill.
"Their biggest issue: `I live paycheque to paycheque. I can't afford to go one month from $50 to one month where I pay $80 and another where it's $120 because I used it a lot," said Krstajic, former head of Bell Mobility.
Krstajic noted that an estimated 60 per cent of Canadians have cellphones, meaning there's 40 per cent of the market that is untapped.
But BMV will have competition at the low end of the market.
New player Globalive, a Toronto-based company that also offers the Yak long-distance and Internet services, said it also plans to roll out no-contract, flat-rate cellphone plans with texting.
Like BMV, Globalive also said it won't charge consumers a system-access fee when consumers buy phones.
They will also have to compete against discount brands offered by the big three carriers, which Krstajic said he doesn't believe are attracting people who don't use cellphones.
Krstajic said he believes there's enough room in Ontario for both BMV and Globalive to appeal to the lower end of the market. In southern Quebec where Globalive doesn't have any spectrum, Krstajic said BMV will leave the mid-to-higher end of the market to Montreal-based Quebecor Inc. (TSX:QBR.B).
BMV Holdings' partners include Americans Columbia Capital, M/C Venture Partners and Canadian venture capital firm Rho Canada. It spent just $52 million on spectrum in what's known as the G block.
The SeaBoard Group said spectrum on the G block "may well have been the buy of the decade" because it wasn't considered "prime real estate" in the auction and was sold at bargain basement prices.
Iain Grant, managing director of the telecommunications consultant group, said while that part of the spectrum doesn't operate high-functioning cellphones, it will work for a discount cellphone player that's going to build a new business from the ground up.
Grant noted that MTS Allstream (TSX:MTB) in Manitoba and Saskatchwan's SaskTel also bought spectrum on the G block.
BMV won't be able to offer a variety of cellphones, he said.
"In so far so far as the sex appeal of wireless is all about the devices, that's not where they're going to play," Grant said. "They will be looking at much more utility at low cost, at user friendliness and at no fees or at no hidden charges, no fees."
He also said there's enough room in the market for both BMV and Globalive to go after the low-end consumers and there could be a lot of competition among the new players in two years.
Competition is already heating up in the cellphone industry.
On Monday, Bell Mobility announced it will let its wireless customers carry over unused local voice minutes into their next month of service.
