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Poaching iPhone users no easy task for smaller mobile carriers

The iPhone 5: Smaller carriers, which include Mobilicity and Public Mobile, doubled their collective market share of subscribers from 2 per cent to 4 per cent in 2011, but are eager to poach more valuable smartphone users – including those loyal to Apple’s iPhone.

Eric Risberg/Associated Press

Selling the iPhone is so costly that it would be a "challenge" for Canada's smaller mobile carriers – even if Apple Inc. eventually agrees to make a version of the device that is compatible with their wireless spectrum.

Simon Lockie, chief regulatory officer of Globalive Wireless Management Corp., gave that assessment Thursday, one day after Cupertino, Calif.-based Apple unveiled the latest iteration of its trendy handset, the iPhone 5.

Privately held Globalive, which operates under the Wind Mobile brand name, is the largest of Canada's wireless newcomers, with nearly 500,000 subscribers to date. But its inability to sell and support the iPhone is often cited as a competitive disadvantage for Wind and other small mobile carriers that launched service following the federal government's last auction of wireless spectrum in 2008.

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Although those smaller carriers, which also include Mobilicity and Public Mobile, doubled their collective market share from 2 per cent to 4 per cent of subscribers in 2011, they are eager to poach more valuable smartphone users – including those loyal to Apple's iPhone.

Mr. Lockie's comments, however, cast serious doubts on whether any new entrants would ever be in a position to offer the handset.

A key stumbling block for Wind is that the iPhone does not contain a chip set that works on the type of spectrum that it currently owns, which is known in industry lingo as AWS.

T-Mobile USA, is the only major U.S. carrier that uses AWS spectrum. As a result, Wind's handset lineup largely mirrors that of T-Mobile. And despite rumours that an AWS-compatible iPhone could eventually be in the offing, T-Mobile was notably excluded from the launch of iPhone 5 this week.

"We don't have an iPhone. And why don't we have an iPhone? Because there isn't an iPhone that works on AWS. Now would we like it? Absolutely," Mr. Lockie told delegates at the Canadian Wireless Trade Show in Toronto.

"That it is something that we … see as a good phone and it obviously has a lot of loyalty. But the simple practical reality is that not even T-Mobile has the heft to move Apple to do something that Apple doesn't want to do," he said.

"They're a behemoth. And their terms … are so prohibitive that even if they made a handset for AWS, it would be a challenge to carry it due to the volumes they require ... and the profit margins are non-existent. In fact, it is a loss for anyone who does carry it," Mr. Lockie stressed.

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Canada's big three wireless carriers – Rogers Communications Inc., BCE Inc. and Telus Corp. – may have a lock on offering the iPhone but they, too, have grumbled about the onerous costs of subsidizing the popular device. As a result, those carriers have recently introduced new upgrade programs to keep consumers hooked on the latest smartphones, while keeping their own costs in check.

"We don't dictate our own market for handsets. We rely on the U.S. … That's just the reality of living in Canada," Mr. Lockie said.

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