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The Canadian Press - ONLINE EDITION

Rogers' new cellphone brand Chatr takes on competition at low end of market

By: LuAnn LaSalle, The Canadian Press

28/07/2010 2:22 PM | Comments: 0

MONTREAL - Rogers launched its Chatr brand Wednesday for cellphone users who just want to talk and text, taking aim at new wireless players offering the same low-priced services.

Chatr is offering no contracts with unlimited talk and text — similar to packages available from Wind Mobile, Public Mobile and Mobilicity, which rolled out their networks in recent months.

New cellphone company Mobilicity sees Chatr as a threat and said it will go ahead with a legal action against Rogers Communications Inc. (TSX:RCI.B).

"We feel that this is an attempt to try to drive us out, so that they can eventually raise prices," said Mobilicity's chief operating officer Stewart Lyons.

"They have done it before and they will do it again," Lyons said.

Toronto-based Mobilicity said it will challenge Chatr under the federal Competition Act and is also working on civil litigation and complaints to federal authorities such as Industry Canada and the CRTC.

"We have many, many levers at our disposal that we will take and we will use to be highly competitive," said Lyons.

Mobilicity can't be acquired for five years as a new wireless company under the rules of the federal wireless spectrum auction.

Rogers, which bought rival Fido in 2004, said its new Chatr brand is good for competition.

"It offers more choice for Canadians," said Garrick Tiplady, senior vice-president of Chatr.

Telecom analyst Iain Grant said Rogers was copying from the new players.

"If you're sitting in the dugout's at camp Mobilicity, this is your worst nightmare," said Grant, managing director of the Seabord Group Inc.

Globalive chairman Anthony Lacavera said Chatr is a reaction to his Wind Mobile brand.

"I do think this Chatr is a nice experiment for Rogers and we'll see how long it lasts," Lacavera said.

"It demonstrates the impact that Wind is having in the market," he said. "I think it does help spur more competition in the marketplace, which I think is great for Canadians."

Tiplady said Chatr is marketed toward consumers such as a taxi driver who is "on the phone quite a bit during the day but wants cost certainty, or the family who is sending one of their children to school."

The other two established wireless carriers, Bell (TSX:BCE) and Telus (TSX:T), also have discount brands in addition to their main services.

Rogers said Chatr will start out being available in Vancouver, Calgary, Edmonton, Toronto and Ottawa. It will be in Montreal this fall with plans to enter other Canadian markets.

RBC Capital Markets analyst Jonathan Allen said Chatr will put direct pressure on the new cellphone players and could affect their business plans and future access to financing.

"This could have the impact of hastening the exit of some of the independent new entrants (Wind, Mobilicity, Public)," Allen wrote in a note to clients.

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