New wireless player Public Mobile to launch in Toronto and Montreal in mid-May

MONTREAL - New wireless player Public Mobile is looking to line up customers who want a no-frills service and don't already own a cellphone, the company's chief executive said Thursday as the company opened its first stores in Toronto and Montreal.
"We're targeting the working class, ethnic Canadians who make up the vast majority of that 30 per cent of Canadians who don't have a cellphone," CEO Alek Krstajic said in an interview.
Public Mobile will launch its network in mid-May in both cities, offering unlimited talk and text for $40 a month with no contracts. The 15 stores in Toronto and 10 in Montreal were opened early to pre-sell Public Mobile's four basic cellphones priced from $70 to $180 in preparation for the launch.
The Toronto-based company is one of several new entrants into the wireless business, now dominated by Rogers (TSX:RCI.B), Bell (TSX:BCE) and Telus (TSX:T).
The company doesn't have roaming agreements with other wireless carriers, meaning its subscribers can only use their phones on Public mobile's network in those two cities. Krstajic said his company opted against partnering with another carrier for roaming services because research has shown that Public Mobile's customers don't want monthly bills higher than $40.
"We really don't think that our target customers, while they would love to have a larger footprint to be able to use the phone, they don't want it at the expense of an unpredictable bill."
"It's an extra $40 that this segment of the population just doesn't have."
Krstajic said he doesn't want to rush Public Mobile's launch and has learned from the network hiccups Wind Mobile has endured since its launch. Wind Mobile started its services in December and it is estimated the company has attracted only about 30,000 subscribers.
Public Mobile is offering subscribers free, unlimited long-distance for life if they sign up before the launch, which doesn't cost the carrier a lot but is "valuable" to customers, he said.
He also said he expects Public Mobile to have twice the number of locations open in May when the service is up and running in both cities.
Deloitte Canada technology analyst Duncan Stewart said once Public Mobile attracts its target market, it still has to find ways to further grow its business.
Stewart said Wind Mobile's experience has shown that it's not always easy to attract customers even when offering no contracts and subsidies for cellphones.
"We've turned into a 'no-money down' culture in North America," said Stewart, director of research in technology, media and telecommunications. "In North America we are subsidy-a-holics."
Stewart said consumers routinely say they don't want contracts for their cellphones but, paradoxically, they also don't like to pay the full cost of the phone in order to avoid having a contract.
Wireless carriers typically subsidize phones, often several hundred dollars, and consumers then sign three-year contracts in order to have mobile phones be less expensive.
In most other parts of the world, people pay month-to-month for their cellphones and don't have contracts.