The Fall of Affordable Cell Phone Service
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The Fall of Affordable Cell Phone Service

2004-01-28-fido.JPGFrom the moment Fido came onto the market they were perceived as a threat to the large margin, big profit cell phone carriers like Rogers, Bell, and especially Telus. The competition cause by Fido’s entrance into the market drove prices down and service quality up. If you’ve ever dealt with Rogers or Bell before, you already know that’s not their business plan. So when the unlimited local calling City Fido plan was released in Vancouver then Toronto, the other carriers decided they had enough and took action.
Telus made the first attempt to take over Fido with a $1.1 billion offer, but news of takeovers boosted Fido’s stock and the deal was deemed inadequate. Then Rogers came in with a friendly $1.4 billion offer. Fido’s stock holders ate it up.
Right from the beginning, Rogers made the intentions of their purchase clear. In December 2004, after Rogers bought Fido, Ted Rogers said this “We have no commitment to keeping the price levels the same as they were and we’ve already announced a significant increase in the price for City Fido for new customers.”
On Wednesday the details of that change were revealed. Rogers is changing City Fido to a more expensive, limited usage, and narrower service that is no longer in competition with landline phones.

Analysts say the elimination (they call it ‘redesign’) of City Fido is a clear signal that competition is ‘beginning to cool off.’ It doesn’t matter what cell phone provider you use, reduced competition means higher prices and worse service.
Although, Fido customers can lock the price and service they already have for a year, starting March 1st any new customers will be subject to the new pricing scheme.
There is one possible beacon of hope in the near future. Richard ‘The Rebel’ Branson’s >Virgin Group signed a deal with Bell Canada, to bring Virgin Mobile to Canada. Will Virgin use the conservative pricing of existing carriers as an advantage sparking competition and price wars? Or will they team up with Bell to keep prices high? We’ll find out soon.