Telco giant takes on 'Morty' by dangling free iPhone 5 in front of MTS customers

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Bell's Wade Oosterman says the time is right for his company to flex its muscles in Manitoba.

Santa has apparently signed a regional marketing agreement with Bell Mobility in Manitoba.

Either that or Bell is really keen on dramatically increasing its market presence here.

That's because the Canadian telco giant is offering the almost unprecedented offer of a free iPhone 5 to MTS customers who switch to Bell Mobility.

The aggressive new offer is Bell's statement that it is ready to become a real presence in the Manitoba wireless market.

Since Bell's divorce with MTS in 2004 -- prior to that Bell had a 20 per cent stake in the Manitoba telco -- it has not been a serious player in the mobility business in Manitoba, never capturing more than five per cent of the market.

Wade Oosterman, president of Bell Mobility, said the timing is right for the Montreal-based company to flex its muscles in Manitoba.

"Over our history there was connections with local provincial telcos and Bell did not compete," Oosterman said. "But that has changed and we realized we have not been in Manitoba in an aggressive, meaningful way. That's changing now because we have the scale and cost structure that allow us to do it and we can deliver lower prices than what had been available."

The lower prices he speaks of largely come in the form of a free iPhone, which is as much as a $700 value.

Oosterman touts Bell's live mobile television service with 29 channels, including live NFL and NBA channels, as one of the technical innovations that he thinks will be able to win customers over. (Most of the wireless service providers offer live television services for varying costs.)

Iain Grant, one of the principals of the Seaboard Group, said giving away free handsets is not an uncommon way for competitors to try to grab some market share, but he's not sure if anyone has ever given away the iPhone 5, Apple's latest and greatest device.

"It's a clever move by them, also an expensive move," Grant said. "But given their market position, given where they want to be and where they are, they made a judgment call that it is worth the price."

Oosterman would not say how long the offer would last.

It's available only to current MTS Mobility customers and requires a three-year term. Instead of an iPhone, customers who switch from MTS can also select from a Windows Phone 8X by HTC, Sony Xperia T or BlackBerry Bold 9900 -- all free.

"They want to break out of the basement where they are now," said Grant. "They believe this will get them some market share among the high-spending crowd and hope that they will then buy more stuff."

Over at MTS they are keeping a close eye on the blatant raid on their customer base.

Kelvin Shepherd, president of MTS, said there's always been competition and it is not getting any less intense.

But he's also not rushing out right away to match Bell. He said they will analyze the market and see if they need to adjust their offerings.

"It's a very new offer, only in the market a couple of days," he said. "Christmas is always a competitive time of the year, usually a strong buying season for customer. Many service providers offer some kind of special promotions."

Even Shepherd acknowledges giving away the newest iPhone model is a very aggressive offer but he does not give an inch when it comes to the competitiveness of MTS's own service.

"If I wanted to tell you the bad things (about such an offer) I would tell you that a free handset on a network that is not very good in Manitoba probably does not equate to a really great offer," he said. "Our strength is we have 97 per cent coverage in Manitoba, Bell has less than 60 per cent. We have LTE (long term evolution, faster and more powerful than a 4G network), they don't. We have more than 100 stores, they have a lot less than that."

Bell's 4G network only includes Winnipeg and the southern strip of the province along the TransCanada highway to Brandon. Although the phones will work outside the network footprint, roaming charges would apply.

Since August, Bell has opened six stores of its own and hired about 40 people and also has about 44 other locations with partners like The Source, Future Shop and Best Buy.

Oosterman admits there are trade-offs. He said Bell is not finished the build-out of its network in Manitoba but he would not provide details as to how quickly or how extensive the build-out will be.

It's generally accepted MTS has about 55 per cent of the Manitoba wireless market, Rogers has about 30 per cent, Telus has a little more than 10 per cent and Bell has about five per cent.

martin.cash@freepress.mb.ca

Republished from the Winnipeg Free Press print edition December 7, 2012 B4