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Telus weighs mothballing legacy wireless network to cut costs

Telus store at 25 York st. in downtown Toronto. July 15, 2013.

Gloria Nieto/The Globe and Mail

Telus Corp. is eyeing a potential shut down of at least one of its legacy wireless networks over the next two years.

The Vancouver-based telecom, which is looking to rein in costs across its businesses, sees the potential to save money by decommissioning its older CDMA (Code Division Multiple Access) network as growing numbers of its customers upgrade to smartphones that run on its ultra-fast LTE (Long-Term Evolution) network.

It may also eventually mothball another outmoded network that supports its push-to-talk Mike service now that U.S. carrier Sprint has powered down a corresponding network south of the border.

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"On wireless, there is good opportunity [to reduce costs]. We still run a CDMA network, we still run an IDEN network. Those will have to be shut down in time," John Gossling, Telus's chief financial officer, told a CIBC investor conference in Montreal on Wednesday.

"IDEN has been shut down now in the U.S. Sprint has done that. So, you know these things will also provide good savings on the wireless side."

Although a "relatively large piece" of Telus's more than 7 million wireless subscribers still uses old-fashioned CDMA cellphones, that number is expected to tumble fairly quickly as customers take advantage of upgrade opportunities.

"There are certain people that will just not give up what they've got. They've had it for a long time and they like it, they've got all their accessories. For whatever reason, they don't want to give up their CDMA phone," said Mr. Gossling.

"So, there will be a point where we will have to force that issue a little harder, but certainly it's declining fairly rapidly. So, it will happen in the next probably, in at least the next two years I would think."

Telus's CDMA network predates its fourth-generation wireless network, based on HSPA+ technologies, that it jointly-built with friendly rival BCE Inc. starting in 2009. The two companies have since begun rolling out a shared national LTE service that provides even fast data speeds.

Questions about the future of Telus's IDEN network, however, have been swirling for months. In late June, Sprint shut down its IDEN network after migrating its push-to-talk customers to a more modern network that offers broadband data.

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At that time, Telus gave assurances that it would continue to offer its Mike service, but would give its customers alternative options for U.S. roaming with HSPA and LTE.

The potential decommissioning of an older network would not necessarily spell the death of its push-to-talk service. In fact, competition for push-to-talk customers -- a niche market estimated at roughly one million workers in key industries such as energy, transportation, construction, retail, agriculture and security -- is growing between Telus and BCE.

In June, BCE expanded its lineup of rugged handsets through an exclusive deal with U.S. phone maker Sonim Technologies. The Montreal-based telecom has said it is taking a deeper dive into the push-to-talk business market amid increasing demand for the niche service.

BCE owns a 15-per-cent stake in The Globe and Mail.

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