Critical Issues
In order for the Mike network to prove successful in the competitive wireless market, TELUS Mobility must address the following issues/opportunities: * How to position Mike as an essential business tool for key industries in order to collect on an untapped market. * How to ensure the continuation of Mike’s profitability and success as wireless technologies progress. * How Mike’s network services can remain a leader in the industry with the rising risk of competition.
Situational Analysis
After acquiring Clearnet in 2000, TELUS’s digital coverage expanded to 22.6 million Canadians, a growth from 16% of the total population to 73% in one year. (Exhibit 4,5 ) This acquisition helped to expand their customer base by 27% bringing the total to 2.1 million subscribers. In 2000, 56% of the subscriber base had browser capable handsets, a technology rapidly gaining popularity among users. The iDEN network now offered by TELUS provided the fastest data service (19.2kbps), dedicated Push To Talk services, as well as all the regular services offered by CDMA handsets. At the time, TELUS was the only dedicated dual network provider in Canada. Five Forces: Due to the current level of industry competition and the limited number of substitutions, TELUS’s Mike network offers a host of untapped markets to pursue. TELUS expects growth of Mike’s market to include airlines, film and television industries, government agencies and utilities; however the service provides a universal tool which is applicable to many others such as mining, oil/gas, transportation etc.
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Current Mike network coverage includes a portion of Alberta major oil sands, however further expansion could provide a major spike in service use. (Exhibit 1,8) Swot: As the current sole provider of dedicated Push To Talk services, TELUS needs to focus on developing the current untapped market available for its iDEN network in order to gain market share, increase revenues and retain customers for its services in the event new providers offer similar services in the future. Currently dependant on Motorola as the sole handset provider, Mike capable handsets are not up to date with the current demands of consumers who are interested in the features provided by other manufacturers.
iDEN handsets are higher priced than PCS, raising subsidizing costs. Currently adopting 2.5G and 3G, the wireless industry will surpass the data speeds offered by iDEN. The PTT technology offered on the iDEN network may emerge on 3G capable handsets. (Exhibit 3) Financial: With operating revenues of almost 1.3 billion dollars, TELUS is in an excellent financial position to complete any necessary capital expenditures necessary to ensure its place as an industry leader. In order to capture certain aspects of the untapped market, infrastructure addition would be necessary; however the potential gains from investments are promising. (Exhibit 6, 7)
Decision Criteria
In order to ensure a successful future for TELUS`s Mike network, options will be evaluated against the following criteria: * Provide a short term strategy for the continuation of Mikes services * Increase current subscriber numbers by accessing currently untapped markets * Minimize market confusion
Options
Further expand the iDEN network:
By adding additional iDEN capable towers to specific locations within Alberta and British Columbia, TELUS can reach a large number of untapped customers in the oil/gas and mining industries. These towers could be dual use, offering both iDEN, CDMA and future 2.5G/3G technologies, which would expand their overall market share and profitability. Shown in exhibit 7, the cost to erect a tower when related to the number of customers needed to break even is relatively low. This would satisfy the criteria of increasing current subscribers, accessing untapped markets as well as allowing for the continuation of services as more clients make effective use. Status Quo (For Target Market):
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Currently, TELUS markets its Mike handsets towards business users and its PCS handsets to its everyday consumers. Despite the increasing popularity of basic two way radios, the average non business consumer it not likely going to be enticed by the Mike service, as basic two ways do not require contracts, are not expensive and their users do not need to exceed the range provided. Even with the benefit of a live demonstration, business customers do not often see the benefits of Mike until personal use, something which will result in greater market confusion if introduced to the everyday consumer. PCS handsets offer SMS instant messaging already, which provides an alternative to the PTT of Mike for everyday consumers.
Continue with Mike’s iDEN network for the short-medium term: Exhibit 3 shows the current technology path expected for TELUS’s networks, as well as the option to continue iDEN’s services for the short to medium term. As iDEN offers services not currently available on other networks, the Mike network will continue operating until the emergence of 3G technology, where a review will be conducted and evaluated to determine if PTT can be integrated within the technology. In integration is not possible, iDEN will continue to operate as is, if integration is possible, the current iDEN spectrum can either be used for a different purpose or sold to raise capital for other projects.
Recommendations and Action Plan
It is recommended that TELUS combines the three recommendations and implements them accordingly in order to maximize the current and future market share associated with being the sole provider of a unique service as well as have the greatest effect on future revenues. As they have a unique service which many businesses will come to rely on in the future, the success of TELUS`s Mike network will have a direct impact on the future success of TELUS Mobility. The recommended detailed implementation plan as well as a brief breakeven of the iDEN expansion are listed in Exhibits 7 and 9, as well as a current (2000) Mike coverage map related to the potential industries for expansion. (Exhibit 8) (WORDS: 991 of 1000)
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