Shaw scraps plan to build wireless network, opts for Wi-Fi network

Ian Hardy

September 1, 2011 8:42am


It’s been a long time in the making but Calgary-based Shaw has finally announced what they are doing about their wireless plans, or now lack of. Shaw won 18 licenses in Western Canada and Norther Ontario and has been sitting on their $189 million investment since the 2008 wireless spectrum auction.

Today Shaw stated in a press release that they have “completed a thorough strategic review of the wireless business opportunity” and “we could not justify a wireless network build at this time”. The reasons are the high upfront cost for a new entrant to build out a wireless network, coupled with the incumbents coverage and their “extensive device ecosystems, deep spectrum positions and large retail networks” it would basically not pay off for their shareholders.

So what are they doing? Shaw has decided that “a more prudent approach” is to deploy a Wi-Fi network. Shaw stated the rationale for this move is that it’ll save “well over $1 billion in capital expenditures on a traditional wireless network build… 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”. So you can expect tablets and other Wi-Fi only devices.

CEO Brad Shaw said that “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. Our decision not to pursue a conventional wireless business is consistent with this strategic approach and our focus on shareholder value.”

TELUS, Rogers, Bell and the other new entrants must LOVE this news. No word on what they have planned for their spectrum licenses.

Source: MarketWire

  • dbzero

    I think this plan makes sense given the upfront capital layout for the network build. Could this be the beginning of the WiFi wave of mobile voice products? Maybe Telus, Rogers and Bell *should* be worried.

    • TNSF

      WiFi us useless as a wide area network technology. The other telcos are probably loving this announcement.

    • CADDMan

      Shaw’s WiFi ‘plan’ was mentioned merely to soften the impact felt by shareholders who are pissed at Shaw for exiting the only Telecom sector that’s actually growing right now (home phone and CATV customers are dropping left and right). There is little to no money to be made by releasing a WiFi network as it’s only a stationary network with no mobility capability at all (you can’t use Google Voice in your car on WiFi as you’ll drop your call as you lose signal at one hotspot and acquire another).

      Shaw is only talking about putting out a WiFi network to ‘try’ and maintain what customers they have and to maintain some sort of prescence in the market. However, incumbents like Bell and Telus have already got agreements with the likes of McDonalds and Starbucks, and other high capacity locations like airports and libraries are usually maintained by civil authorities and not Telcos.

  • Rich

    Too bad they didn’t make an LTE network just out west (stronghold), I think they could have done reasonably well, especially with bundled services.

    Bell / Telus / Rogers are becoming too powerful and involved with so many products that Shaw might just get rag dolled as they’re losing more leverage by the day.

  • Reggie Noble

    Smart move. Wifi Networks will be the future of telecom in the next decade or so. Soon, all calls will be made through wifi instead of all this GSM, LTE, 3G, 4G, 8G nonsense.

    • bob

      Don’t expect anything better than Bell’s Wifi network in Starbucks. Wifi isn’t designed for large coverage.

  • JT

    WTF. seriously. so much for competition in Calgary. that sucks. Who are they going to sell their spectrum to now? Rogers? WIND?

    • Telurian

      Most of the sweet spot LTE spectrum (2.5GHz and soon to be auctioned 700MHz) spectrum has or will be acquired by the three telephants (Bell, Rogers and Telus – Inukshuk is a 50-50 Bell and Rogers partnership so that battle has already been lost for the consumers with the help of CRTC. It is all about spectrum. Shaw could not compete with the the telephants because they do not have the spectrum to compete. The only reason any operator chooses the pure WiFi strategy is due to lack of licensed spectrum. Shaw sold their spectrum. They do have a good portfolio for content though and there strategy to do what they are doing here may indicate they are moving their business case away from the bottom three layers and getting more into the content side… this will also set them up as a better take over target and thus provide a good exit strategy for the family.

  • mark

    With people concerned about risks of wifi use in public areas, there’s a chance that Shaw will struggle with acceptance.

  • Slype

    While it sucks for rural folk, Wifi sounds like the best option here. I’m sure Rogers and Bell will be trying to devise a plan to either muddle the wifi connection or destroy the access/relay points because that’s the way they roll). :) Well not really but they are not known for trying to compete on fair terms so I wouldn’t be surprised by anything they try.

    There is a definite barrier to entry into the market given the huge investment required to build up a wireless network in a country as vast as Canada. Happy that the new entrants took the plunge though.

    • Telurian

      Those companies building WiMAX networks in the rural areas (like Barrett and Corridor) are mostly deploying 3.5GHz spectrum (which is the least attractive spectrum for rural applications due to the range of 3.5). I give this spectrum about 3 years since the Telephants will deploy 700 MHz or some of their 3GPP re farmed spectrum when they future tune to HSPA+ and the market leaves the GSM devices… The 700 MHz spectrum and the 2.5GHz spectrum will be deployed as fixed wireless HSPA+ then on to LTE while also providing Mobile service via the same UTRAN and E-UTRAN infrastructures. The new technologies have no problem offering Fixed/Nomadic/Mobile services from the same Nodeb’s or eNodeb’s. This will provide better range and diverse utility for the Telephants and the current WiMAX providers will be shoved out of the market with most of their value whittled down to site acquisition (their towers). CRTC has already allowed this fixed service to be provided in rural locations (Bell Ontario). My advice to the new players (especially those who only have 3.5 or 3.6 spectrum is to get together and buy as much 700 MHz as you can from the auction. Let’s hope the smaller players will be given some advantage in the purchase of 700MHz from CRTC in the name of future competitive advantages which will benefit subscribers.

  • Justinshaw

    Not surprising at all. and if i recall correctly there is a cell phone network in japan that uses wifi.

  • KidCanada

    Wait, unless their wifi networks are built like the cell networks, this might not be a good idea. Why? because when you’re out of range, your call will drop as well as everything else that requires an internet connection so idk if this will be reliable or not yet.

  • KidCanada

    Btw if those spectrums don’t include central canada then idc who they sell it to cuz I live in winnipeg and I was hoping they had some here so they could sell it to Wind but oh well, a longer wait I guess…

  • bob

    So what are they going to do with their AWS spectrum?

  • stephen

    What! Way to throw away $189 Million! Can I have some of it?

  • John

    Retards over at shaw, what were they smoking weed when they thought building out wireless would be a cake walk.

  • A

    they lose their spectrum if they don’t sell it before the requirement to build expires. As far as WiFi goes, its build in unlicensed spectrum…. I wonder how well it will work urban areas, friggin microwave ovens operate in the same spectrum as 802.11 B/G so forget voice over Wi-Fi as an option… or we need to get rid of microwave popcorn…lol

    • Sid

      And as a “New Entrant” they can only sell to another new entrant before the “use it or lose” it clause kicks in.

      Mobilicity, you don’t have any spectrum across the prairies, I’m sure you can pick it up on the cheap now.

  • KidCanada

    Big ups to Wind and Mobilicity for having the guts to build a wireless network, going up against the big 3, and exceeding everyones expectations. You got my full support! :D

  • roger

    no shaw in toronto anyway

  • Plaz

    Hmmmm, many thoughts on this…

    In one way it’s a smart move, having a WIFI network over a city is awesome because you can pretty much accomadate any mobile device out today. A customer can pay a low monthly fee, $5-$10 a month and have access to WIFI when they hit the road or go to work.

    On the other hand it sucks because it means no competition now in that city, the Big 3 win… for now. Would be awesome if they sold the spectrum to WIND Mobile.

    • Alpha

      You’re dreaming if you think Shaw will charge only $5-$10/month for any service. Try $20-$40/month. They have to pay for the $189M that they just burned AND the pension for the Shaws @ $5000/DAY x 3.

  • Terry

    While I want to see more competition in the wireless industry, Canada REALLY REALLY needs national wifi coverage.
    It’s pretty pathetic that when I was in London I had wifi options where ever I went, but Toronto and Ottawa is like a wifi desert.
    Barren of any options.

  • roman129

    So how are they going to make money? No one wants to pay for public wifi hotspot, because it’s so limiting, and there are free alternatives at nearly every coffee shop.

    • Terry

      Ad supported maybe?
      Maybe before you can use the Wifi you see an ad, and since you’ll probably need an account, with user permission, they could sell your email to partners.

      I can see that working.

  • Rider

    Did the City of Toronto not already try this with Toronto Hydro’s Telecom Division. I know some assets were sold to Cocego. Does anyone know what happened to that WiFi network. Most airports are free now did they not start charging for it? And did it kill the network?

    • Mike

      It’s call One Zone it’s owned by Cogeco and it covers 6 sq km of the down town core. They charge $4.99 a hour or you can buy various plan monthly plans..what tthey call an IPad plan is $5.00 per month.

  • George

    Another fail by shaw, as smartphone progress everyone will have one that can tether. Wifi building is useless as the future everyone will have data plans on their phones and not bother with wifi hotspots. Even with 6 gb data I never have wifi on and never go over.

  • RMesser

    You can use Google Voice for free from a Wifi Connected device. Makes mobile obsolete, if you have wifi everywhere.

    ——————–
    Hoping for a free Smartphone – September Mobile Syrup contest.

  • GENERAL WONG

    They should sell their Spectrum so the Big Three and the new guys could expend their network or build LTE.

  • Steve

    This will be WiMAX.

  • Steve

    WiMAX

    • aka

      or the failure of WiMax, LTE is the future.

  • Breeze

    I believe this is a good move for Shaw. The wireless business comprises: (1) voice and text part, and (2) data part. The voice business has already become a commodity and the profit margin is very slim, thanks to the new entrants and the sub-brands of the incumbents. It is wise for Shaw not to be in this business. But for the second part, wireless data, most of new smartphone and tablets have Wi-Fi capability and this is a growing business.

    There is a limit on how much time people can make phone calls (you only have 24 hours in a day anyway), but there is no limit people can download data. Therefore the voice business has a limit for growth potential while the data business does not. It is wise to concentrate resources on the business with growth potentials.

    By the way, how about their spectrum? Sell them to Videotron and let it expand to the West!

  • Bill

    Hopefully they can build it cheap enough so I can get rid of my Telus ADSL line.

  • John

    Good for Shaw. WIMAX, seems to be a good system. 50km range.
    Telus and Rogers should be worried…

  • Ryley

    I think this is a brilliant idea. Given I had a decent wifi connection everywhere I went I’d ditch the conventional 3G voice plan and use services like Skype Or Google for my voice calls. This is the future folks!!

  • EraqEE

    What a waste of $189 millions! Their AWS spectrum should be sold to either Wind or Mobilicity.

  • Mike

    Wo HOO! THIS IS GREAT NEWS. I work for TELUS and I my job security just increased! Optik TV will kill the hell out of Shaw.

    • aka

      Telus’ OpticTV has been very aggressive in competing against Shaw. That’s why the company is concentrating on their strengthening their core-services to stop the negative growth.

  • Len

    They chose a different market then many of you were hoping but this is better for many. Many of us do not use the “phone” in our smartphone. A cheaper cost faster speed network is 1000 times better for us. Im sad this is not in my area and iwll not be any time soon.

  • Breeze

    Actually, this is not a new strategy for a cable company. In the US, a cableco called CableVision has already adopted such a strategy, opted for a Wi-Fi network rather than a telecom network. And it is quite successful.

  • jesseps

    This will greatly help WIND or Mobolicity have a greater service area.

  • Don

    Given that they snapped up spectrum that had others got, would have built a cellular network, and improved competition and service levels, they should enforced to give it back to the government.

  • moe

    last i heard shaw was already in talks with rogers for months now. none of this is really news, they have been saying this off and on for 6 months now. the only thing that has not changed is rogers saying they are the ones talking to them.

  • telco_crazy

    5$ that we will see a press release identical to this one in a few weeks from now, coming from Eastlink this time….

  • Clearwire

    Shaw,
    Good call. Look how successful we’ve been.
    Thanks,
    Clearwire