Wireless users worry not – prices may yet fall (but not for long)

To no one’s surprise, Rogers won’t follow the lead of its U.S. counterparts and offer all-you-can-eat wireless plans.

But that doesn’t mean prices won’t drop over the next two to three years as (an) additional competitor(s) enters the wireless field.

More Canadians will own cell phones at that time making it harder for Bell, Telus and Rogers and other wireless service providers to add new subscribers in future. The penetration rate, or the percentage of Canadians that own a cell phone, is expected to reach the 70% mark by 2010 if not sooner. (Canada’s largest telecom service providers depend on the wireless divisions for top-line growth.)

That means the challengers in the market, likely Bell and Telus along with a variety of new entrants, may have to compete on price to lure customers away from Rogers. Even if the incumbents hold the line on prices, which will be a lot tougher to do as the market becomes saturated, new entrants to the field will probably offer aggressive pricing plans to attract customers. A new national carrier or regional entrants will be operational presumably in Quebec, Videotron’s home turf, and other parts of the country as early as next year. New entrants have a chance to grab available spectrum designated specifically for such purposes in May when Industry Canada is scheduled to auction off 105 Mhz of the country’s wireless airwaves in the 2 Ghz range.

So Rogers may be able to position itself as a "premium player," like Rogers Wireless president Rob Bruce indicated on Friday, because of the company’s GSM network/BlackBerry advantage (this means the company can usually offer the latest handsets before its competitors.)

Last week, Verizon introduced a plan that allows subscribers to talk all they want – AT&T and T-Mobile quickly followed suit. The plans are designed to lure people away from their landlines.

Despite the fact Rogers and Mr. Bruce aren’t "fans of unlimited plans," the company may have no choice but to offer Verizon and AT&T-like plans if its competitors are desperate for wireless revenue and subscriber growth and decide to take a page out the U.S. providers plan books. One can only hope.

Over the long term, expect price competition to vanish once new entrants attract a critical mass of users or are swallowed up by the leading wireless service providers (e.g. the purchase of Microcell by Rogers Wireless in 2004.)