Telus switch to iPhone-capable system predicted

Grant Surridge and Barbara Shecter
Canwest News Service

Tuesday, January 15, 2008

It is inevitable that B.C.-based Telus Corp. will switch its wireless network to the more widely used GSM technology -- the kind needed to provide service for Apple Inc.'s iPhone -- although observers say the costly move may be several years away.

And that may not be quick enough to cash in on the iPhone, which one analyst predicted could become available in Canada as soon as today.

GSM is the primary platform used on cellphone networks outside North America. Rogers Communications Inc. is the only Canadian telecom employing the technology.

This means it can offer subscribers a wider range of cellphones than its rivals Telus and Bell Mobility that use the CDMA platform, and take a bigger chunk of international roaming fees from visitors to Canada.

Telus will undoubtedly switch to GSM within five years when they upgrade their network to the next generation, 4G, to accommodate higher data transmission speeds.

Bell Mobility's parent company, Bell Canada Inc., is preoccupied with a lengthy privatization bid and isn't likely willing to share the cost. Bell Mobility is Canada's third wireless player, although the federal government will auction off wireless spectrum for a fourth entrant this year.

The cost for Telus to switch its network to GSM is believed to be between $400 million and $500 million.

Shares of Rogers were down as much as five per cent on Monday following a weekend news report that Telus executives are considering making the GSM upgrade.

RBC Capital Markets analyst Mike Abramsky issued a note suggesting Apple Inc. could unveil its wildly popular iPhone in Canada as early as today. Rogers is the only Canadian carrier capable of offering the iPhone, which is configured for GSM technology.

It would take Telus up to two years to build out GSM coverage in Canada's urban areas alone, he said, and even then it would not enjoy the monopolistic pricing and product clout that makes GSM a bonus for Rogers.

However, an industry consultant said that every year Telus delays the decision, it is losing potential revenue.

"There's about $500-million worth of revenue that Rogers gets that the other guys don't get a chance at," said Eamon Hoey of Hoey Associates, referring to Telus and Bell.

Telus spokeswoman Julie Smithers declined to comment Monday.

The Vancouver Sun 2008

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