Shaw cancels plans to build a Wireless Network

In 2008, Shaw spent $190 million for wireless spectrum in Western Canada. The company’s goal at the time was to offer its more than two million customers in the west the quadruple play of services – Internet, wireline phone, TV and wireless.

Now, after a strategic review of the wireless marketplace, Shaw Communications has announced that it is no longer economically viable to build a wireless network.

In its place the company says it will build a broadband wireless network using WiFi technologies.

The decision is not a huge surprise. Shaw has been slow to move on wireless. The company waited almost two years after the auction before it announced it would begin offering wireless service in late 2011. Earlier this year, however, the company said it had put the roll-out on hold and would be conducting a strategic review.

In a written statement this morning, Shaw admits that the economics of a conventional wireless business as a new entrant are extremely challenging. It believes that new entrants lack the economies of scale and scope to compete effectively against Bell, Rogers and Telus who are well established with ubiquitous coverage, extensive device ecosystems, deep spectrum positions and large retail networks.

Despite its established base and considerable strengths and assets in the west, the company feels it can’t justify spending well over $1 billion in capital expenditures on a traditional wireless network build at this time.

Broadband Wireless Alternative

In its place, the company has decided to invest in building a broadband wireless network in Western Canada using WiFi technologies which it says are now capable of providing seamless hand-off and extensive metropolitan area coverage.

Shaw believes that given that Wi-Fi spectrum is free and there are no device subsidies, they can build extensive Wi-Fi coverage at a substantially lower cost relative to a traditional wireless network and still provide our customers with an excellent broadband wireless experience.

“We have decided to focus on strengthening our core business and leveraging our media and programming assets to support our leadership position in broadband and video,” said Brad Shaw, Chief Executive Officer of Shaw. “Our decision not to pursue a conventional wireless business is consistent with this strategic approach and our focus on shareholder value.”

Shaw will be holding a conference call later today which it says will provide additional details regarding the announcement.

Company representatives will also be answering questions about the new broadband wireless network later today in Digital Home’s Shaw High Speed Internet and Home Phone discussion forum.

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