Chill sells the dream of cheap wireless
Imagine paying $35 per month for a wireless phone plan with unlimited data, talk and text to anywhere in Canada at any time of the day on a 4G network.
That’s an unheard of deal in a country with notoriously high cellphone prices, but it’s what one young entrepreneur is promising with the launch of a new telecom dubbed Chill Telecom.
Roujeh Ramadan, the 19-year-old who started the Kitchener, Ont.based company after realizing it was cheaper to keep his Israeli mobile plan than sign up for a local one when he moved to Canada in June, claims his venture pulled in more than $180,000 from 13,000 investors in a 20-day crowdfunding campaign that ended last week. He asserts another 289,000 people registered for more information about the service that promises to “change the wireless game for Canada.”
Industry players and tech bloggers have questioned whether Chill is too good to be true — they point to numerous errors on the website, Ramadan’s failed Indiegogo campaign for another startup and his lack of knowledge of Canada’s notoriously hard-to-enter wireless market. But they say the numbers, if accurate, demonstrate deep demand for more competition in a wireless industry dominated by the Big Three telecoms.
In a Skype interview from Israel where he’s visiting family, Ramadan defended Chill’s numbers (he sent the Financial Post a screenshot of his Stripe online payments account) and its fundraising methods. Numerous early adopters asked for refunds, and at least one filed a complaint with the Canadian Anti-Fraud Centre, after Chill revealed it hadn’t yet inked a deal with a network owner.
“It’s a startup … we need money to make an actual change,” he said, adding he’s hired four people with industry experience to work from Communitech, the tech hub in Kitchener that hosts his other startup. “With a good team, with funding and support from people, we can make a revolution in that industry.”
He intends to buy wholesale access from a mobile network operator and resell it before establishing his own network.
“We are still negotiating with some Canadian carriers to provide us with wholesale services,” he said. He wouldn’t disclose which companies but added that one offered to buy Chill for cheap.
Spokespeople for Telus Corp. and Rogers Communications Inc. said they are not in negotiations with Chill. Bell declined to comment.
If Ramadan can convince a carrier to sell him wholesale wireless access, he would be the first to do so in Canada, said Samer Bishay, president of Iristel, Ice Wireless and Sugar Mobile.
“Canada has zero indie-owned mobile virtual network operators that are completely separate. In the U.S., there are about 250 operating,” said Bishay, who has been in the business for 17 years. His company Sugar Mobile is Canada’s only MVNO (it has a couple thousand customers and uses some of its parent company’s infrastructure), but it’s operating in a grey area and Rogers is trying to kick it off its network.
Bishay said it’s “definitely possible” to start an MVNO with minimal investment but that it will be a challenge.
“The demand is there, we don’t deny. But which company is going to sign with them?”
Catherine Middleton, a Ryerson University professor and Canada Research Chair in communication technology, said incumbent telecoms in other countries have been willing to sell access to MVNOs but that Canadian network operators have been “very, very reluctant.” She noted that Ting, a Canadianowned MVNO that operates only in the U.S., hasn’t been able to negotiate its way into the market.
“It they haven’t been able to crack this, it seems highly unlikely that a total startup would be able to,” she said. Without access to a network, the economics of building a new network are very challenging, she said, pointing to Wind Mobile’s and Mobilicity’s financial woes after the 2008 wireless spectrum auction.
MVNOs typically serve the low end of the market, but they’re “limited trick ponies” that typically can’t offer as much as network owners do, said Carleton University communication professor Dwayne Winseck.
“For this, we really need to have facilities-based operators,” he said, repeating calls for at least four major carriers across the country.
As for Ramadan, he said he has almost 20 meetings lined up upon his return to Canada on Aug. 1.