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Shaw network delayed, but primed for 4G push

Shaw's main office building in Calgary

TODD KOROL/Todd Korol/Reuters

Shaw Communications Inc. said Thursday it will delay the launch of its wireless network until early 2012, yet another delay in the Calgary-based cable giant's crucial push into the mobile space.

The man heading Shaw's wireless efforts, Laurence Cooke, abruptly quit the company this month, prompting more speculation that the company was grappling with core issues surrounding the new wireless network at a time of unprecedented change in the Canadian telecom industry. But it could have meant something else entirely separate from the gloomy narrative that has coalesced around Shaw in the past few months (a narrative that includes bizarre investor luncheons, fierce competition, the shuffling of top executives and the resignation of another).

Thursday's delay, which was buried low down in a quarterly report of Shaw's financial earnings, may have meant that Shaw was planning on launching a 4G, or fourth-generation, wireless network as opposed to the 3G networks that are currently in place across most of Canada and the world. Jim Shaw, the former CEO who handed the reins to his younger brother Brad late last year, at times fuelled that speculation himself.

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However, on a conference call with analysts later on Thursday, Michael D'Avella, the senior vice-president of planning who is the point man now for wireless, tossed a bucket of icy water on that notion. If you flipped on the network today, he said, it would be HSPA-plus - the same type as those of the incumbents. However, he added that the company is building the network very much with 4G LTE (Long Term Evolution) technology in mind.

"We're going to be well positioned to migrate to LTE," Mr. D'Avella said.

Industry insiders have talked in the past of a possibility that Shaw might forgo 3G and launch a 4G network, which is meant to have much faster data speeds, though the term is often used as a marketing ploy. When Shaw originally said it would launch its network in late 2011, analysts spoke about the possibility of LTE, which would give the company a marketing advantage over established competitors flogging smart phones and newer discount providers that are selling unlimited talk-and-text products.

But, as Telus CEO Darren Entwistle pointed out last year and as an analysts repeated Thursday, if Shaw launched as a relatively small new wireless entrant with LTE technology - where everything is "packetized" into little bits of data on 4G's requisite all IP (Internet protocol) network - it would have no roaming partners among the incumbents, which all use 3G technologies. Shaw wireless customers would then be stuck with great service in a very small area for quite a while, waiting as Shaw slowly built the network - while 3G customers on Wind and Mobilicity could walk around outside of their network zones and roam onto companies like Rogers.

But a 4G launch by a major telco in Canada is still likely at least a year away. Back in early 2010, when Shaw originally floated the idea of 4G, it was still a distant technology. At the time, in the United States, there was only really one handset - the HTC Corp.-designed Evo, which runs on Sprint's network - and a lot of executives were dismissing the technology because it didn't have an "ecosystem" of devices that they could confidently market to their customers.

At the recent Consumer Electronics Show in Las Vegas, however, it seemed that every new device was being advertised as 4G capable. By the time Shaw launches its wireless network, perhaps around this time next year, there is likely going to be a much wider selection of 4G handsets.

Shaw's executives have also likely thought through the marketing disaster that would befall them should they launch in early 2012 with a 3G network, only to have Telus or Bell or Rogers start declaring their own networks as superior 4G technologies. All three of those incumbent wireless carriers have been conducting field tests for 4G technologies - and the upgrade from advanced 3G technologies to 4G is a much easier software-related upgrade than the monumental efforts it takes to transform a 2G network into a 3G one.

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Regardless whether 4G will provide noticeable consumer benefits beyond the advanced 3G or so-called 3.5G technologies currently in use by incumbents, the threat of a 4G marketing onslaught is a fearsome one, indeed, especially at a time when new entrants Wind Mobile and Mobilicity have launched in Western Canada's big cities - otherwise known as Shaw territory.

These new entrants have launched with attractive unlimited data plans, but Shaw is likely to pursue a strategy more similar to Quebecor Inc.'s Videotron Ltee., the Montreal-based cable giant in Quebec. Videotron launched a network built entirely around smart phones that have access to their French-language broadcasting content. With Shaw Media, Shaw's wireless network is probably going to try and do the same thing - although getting people to buy access to English language content, which is mostly American and everyone offers, is likely to be more difficult than with Quebecor's attractive Francophone media assets.

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