Expert: DebiN - 3/26/2011

Question
hi debi,

i'm in canada but i'm sure my question applies to business in general around the world.  in canada, we have rogers wireless that offers cell phone service, among other things.  rogers owns a newly started company called chattr wireless and an established cell phone company called fido, in which rogers says is their budget line.  what i don't understand is that if rogers (a giant in wireless communication) owns chattr wireless and fido, why does rogers refuse to offer the better prices that chattr and fido currently do?  you can see their website at www.rogers.com, www.chattrwireless.com, and www.fido.ca  why would rogers open a company in which people will most likely move to that offers better rates?  for e.g. chattr is offering almost unlimited everything across canada for $45/month (current promo $35), but rogers will not do that for me. that will just decrease revenue for rogers, no?  this is the same case for telus that owns koodo, bell that owns virgin mobile and solo.  i would be even more perplexed if they are actually using the same cell phone towers and same technology.  i need a course on basic business models!!

thanks,

sk in ottawa, canada

Answer
In the case where a larger company owns a "budget" company, what makes service with the two companies different is what they offer. And as a FYI, Fido operates completely independently from Rogers.  When you sign up for service with Fido or Chatter, you aren't getting the same thing as if you have an agreement with Rogers. Your calls go over parts of the same network, but Fido also has it's own network also. Calls that don't go across the expanded Fido network are not part of the unlimited plan and you would be charged a roaming fee for those calls. With Fido, for example, you get unlimited everything across Canada in many major cities but not all of Canada, so there is still some roaming. Also, keep in mind that Rogers didn't start Fido, they bought the company. And it is still run separately as I mentioned above. The revenue associated with Fido is on Fido's books since they operate separately. Remember that there is typically a catch and sometimes a carrier will offer a special like the current $35.00 promotion and if you are able to sign up for service during that period of time, you get the price. But if you signed up before or after, you don't. It's a way to get new subscribers. Virgin is a separate company also and their model is to offer no contracts in many places. If you compare everything side by side, you will see that they aren't equal. I always tell people who ask me about MetroPCS and whether they should go with them here in the States because they are so much less expensive, is that they should if (a) MetroPCS provides superior service where they live and work, (b) it offers the phone choices they want, (c) it offers the service features they need. There are hidden costs with all low cost carriers regardless of who owns them, it's typicaly when you roam off of their network or area of the network. I'm not able to find chattrwireless.com. It appears to be something else, but I'm pretty sure, it's the sme scenario.

My advice is that if Fido or Chattr or Virgin offers what you want in the choice of phones and calling plans, etc., the that's where you should have your service. Cost is only one factor in the decision and remember that the networks aren't 100% the same as in the case of Fido where only a portion of the network of Rogers is part of Fido's footprint. It's typically the more built out sections that have additional capacity. Hope this helps.