Telus, Bell to switch cellphone technology: report

An iPhone from Bell Canada Inc. or Telus Corp.?

It's possibleas the two cellphone companies are about to announce a shift to network technology that is compatible with Apple Inc.'s hot-selling mobile device, according to reports that have surfaced over the past few days.

The two cellphone companies Canada's second- and third-largest providers, respectively, after Rogers Communications Inc. are poised to announce a conversion from their current wireless technology andtoward the more popular kind used by their rival, according to a reportMonday from UBS Investment Research.

Bothcompanies have cellphone networks that run on Code Division Multiple Access (CDMA) technology, which isused by fewer than 20 per cent of the providers in the world, while Rogers uses the near-ubiquitous Global System for Mobile communications (GSM).

Bell and Telusare looking to switch to either Wideband-CDMA (WCDMA) or High Speed Packet Access (HSPA) technology, both of which are similar to GSM in how they transmit data, UBS said.Over the past few years, Bell and Telus have seen Rogers run away with signing up new customers, who are attracted toflashy GSM phones including the iPhone that are not available to CDMA carriers.

The move would cost the companies a combined $360 million to $480 million, UBS said, while equipment vendors Huawei and Nokia Siemens Networks would be the likely candidates to do the work.

Spokespeople for Bell and Telus declined to comment.

A switch would bring the networks of Canada's three big cellphone providers into closer alignment and allow customers to take their phones with them when switching providers, rather than buy new ones as they currently do. It would also give the cellphone companies access to a greater variety of handsets, including the iPhone, and lower their costs because such devices are manufactured in greater volumes than CDMA phones.

Rogershas also benefited fromGSM-using cellphone customers from other countries, who pay the company to roam on its network while they are in Canada.A conversion would give Bell and Telus a slice of that pie.

Winners of the just-concluded government spectrum auction are also expected to stay away from CDMA and choose the more popular network technologies.

With the reasons for a switch mounting, a move is inevitable for Bell and Telus, the UBS report said.

"If Telus (and BCE) comes through with this decision, one could conclude that they had little choice if they want to secure their future competitive position, especially in the face of potential new entrants within 12-18 months," the investment bank said.

Cost savings questionable

The report, which followedrumours in the industry last week,called into question the potential cost-savings for the two companies, however. While the savings of a straight-up move to GSMwould beobvious, it isdifficult to see the benefit of a halfway switch to the other technologies.

"The handset savings from CDMA to GSM is very apparent," UBS said."With our assumption that Telus (and BCE) are deploying WCDMA/HSPA and not GSM, the handset savings are less clear."

The reportpointed out that a number of CDMA providers elsewhere in the world have recently begun switching their networks to the more popular technology, including Telstra Corp. in Australia, Telecom New Zealand and SKT in South Korea.

While aswitch wouldn't automatically mean Bell and Telus would offer the iPhone or any other GSM-exclusive handsets it would at least give them the abilityto do so.

Multiple iPhone carriers would likely be music to the ears of the more than 50,000 people who signed an online petition against Rogers' rates ahead of the device's launch on July 11. Australia, with its three carriers including Telstra, has some of the lowest prices on the device in the world, according to CBCNews.ca's iPhone iNdex. Switzerland, with two iPhone carriers, also ranks well in pricing.

Rogers' iPhone, meanwhile, ranks roughly in themiddle of the pack in terms of monthly pricing but is the second-most expensive in the world in terms of total commitment by virtue of its mandatory three-year contract, the longest offered by any carrier in any country.