Help
Quote
Shaw Communications has pulled the plug on expanding into an increasingly crowded cellphone market, citing cost and the number of players already there.
The long-awaited decision comes after months of delays while the Calgary-based cable giant considered its options and the rapidly evolving technology.
“We have decided to focus on strengthening our core business and leveraging our media and programming assets to support our leadership position in broadband and video,” Shaw CEO Brad Shaw stated in a release. “Our decision not to pursue a conventional wireless business is consistent with this strategic approach and our focus on shareholder value.”
Instead, Shaw says it will concentrate on a Wi-Fi network that “will allow our customers to extend their Shaw services beyond the home. This will achieve our objectives without risking well over $1 billion in capital expenditures on a traditional wireless network build.”
Shaw bought room on the country’s cellphone spectrum during the last auction, but first delayed its entrance into the market in January, when they also lost their head of wireless. In April, the company halted moving forward while it reviewed the technology available, including LTE.
At the time analysts worried that would leave the TV and Internet provider further behind competitors already gaining market share in its core businesses.
Telus, for example, has been eating into Shaw’s subscriber base, in part because of promotions afforded by the money it makes from its cellphone arm.
Analysts felt Shaw had a number of options at that point, none with a clear advantage. Those included abandoning plans to add the service, partnering with an existing network provider and the expensive choice of going it alone.
Not proceeding with plans to become a wireless carrier left the company more vulnerable to Telus, some believed.
“When we first started looking at the wireless opportunity we saw wireless as a complementary product in a world where broadband Internet access is moving increasingly to wireless devices (smartphones, tablets, laptops, netbooks, etc.),” the company said in its Thursday morning release. “However, the economics of a conventional wireless business as a new entrant are extremely challenging.
“New entrants lack the economies of scale and scope to compete effectively against well-established incumbents with ubiquitous coverage, extensive device ecosystems, deep spectrum positions and large retail networks. Even with our established base and considerable strengths and assets, we could not justify a wireless network build at this time.”
Concentrating on Wi-Fi, Shaw said, takes advantage of all the devices customers now use, pointing out that major wireless carriers now off-load their traffic to Wi-Fi when possible.
“Given that Wi-Fi spectrum is free and there are no device subsidies, we can build extensive Wi-Fi coverage at a substantially lower cost relative to a traditional wireless network and still provide our customers with an excellent broadband wireless experience.”
Company executives will speak to analysts about their decision this morning.
The long-awaited decision comes after months of delays while the Calgary-based cable giant considered its options and the rapidly evolving technology.
“We have decided to focus on strengthening our core business and leveraging our media and programming assets to support our leadership position in broadband and video,” Shaw CEO Brad Shaw stated in a release. “Our decision not to pursue a conventional wireless business is consistent with this strategic approach and our focus on shareholder value.”
Instead, Shaw says it will concentrate on a Wi-Fi network that “will allow our customers to extend their Shaw services beyond the home. This will achieve our objectives without risking well over $1 billion in capital expenditures on a traditional wireless network build.”
Shaw bought room on the country’s cellphone spectrum during the last auction, but first delayed its entrance into the market in January, when they also lost their head of wireless. In April, the company halted moving forward while it reviewed the technology available, including LTE.
At the time analysts worried that would leave the TV and Internet provider further behind competitors already gaining market share in its core businesses.
Telus, for example, has been eating into Shaw’s subscriber base, in part because of promotions afforded by the money it makes from its cellphone arm.
Analysts felt Shaw had a number of options at that point, none with a clear advantage. Those included abandoning plans to add the service, partnering with an existing network provider and the expensive choice of going it alone.
Not proceeding with plans to become a wireless carrier left the company more vulnerable to Telus, some believed.
“When we first started looking at the wireless opportunity we saw wireless as a complementary product in a world where broadband Internet access is moving increasingly to wireless devices (smartphones, tablets, laptops, netbooks, etc.),” the company said in its Thursday morning release. “However, the economics of a conventional wireless business as a new entrant are extremely challenging.
“New entrants lack the economies of scale and scope to compete effectively against well-established incumbents with ubiquitous coverage, extensive device ecosystems, deep spectrum positions and large retail networks. Even with our established base and considerable strengths and assets, we could not justify a wireless network build at this time.”
Concentrating on Wi-Fi, Shaw said, takes advantage of all the devices customers now use, pointing out that major wireless carriers now off-load their traffic to Wi-Fi when possible.
“Given that Wi-Fi spectrum is free and there are no device subsidies, we can build extensive Wi-Fi coverage at a substantially lower cost relative to a traditional wireless network and still provide our customers with an excellent broadband wireless experience.”
Company executives will speak to analysts about their decision this morning.
