Telus sues Rogers over advertising

Telus Corp. (TSX:T) is suing Rogers Communications Inc. in an attempt to force its competitor to abandon claims to Canada’s fastest and most reliable network before the holiday smartphone rush heats up.

Telus Corp. (TSX:T) is suing Rogers Communications Inc. in an attempt to force its competitor to abandon claims to Canada’s fastest and most reliable network before the holiday smartphone rush heats up.

In documents filed in B.C. Supreme Court, Telus said that since a network upgrade announced Nov. 5, the Rogers (TSX:RCI.B) network is not faster or more reliable than those operated by Bell (TSX:BCE) and Telus.

“Rogers no longer has a network advantage, so should not be misleading the Canadian public with false superiority claims,” Telus spokesman Shawn Hall said, adding Bell is not involved in the case.

Telus’ statement of claim said Rogers advertisements boasting “Canada’s fastest network: two times faster than any other,” are now false and misleading.

It added similar advertisements that Rogers provides “Canada’s most reliable network,” have also been false since Telus’ upgrade.

None of the allegations have been proven in court.

Hall said Telus approached Rogers on Nov. 5 demanding that Rogers stop making the claims, but its competitor refused. Telus filed its lawsuit Nov. 12.

Rogers said in a statement Wednesday it stands behind its claims and looks forward to vigorously defending its position in court.

“All of our internal and third party external testing since 2007 has consistently demonstrated that we have the most reliable network,” it said.

“We’ve established our reliability over time with millions of customers on our network. Telus has not submitted any data on their network performance. ”

Telus said the ads were first introduced in 2007, when Rogers upgraded its network, giving it a competitive advantage over Telus and Bell.

Telus is seeking a declaration from Rogers that its advertisements breached Canada’s Competition Act, in addition to injunctions against distributing and publishing the ads, damages and compensation.

Hall said that the company hopes the court will move as swiftly as possible to force Rogers to abandon the claims as the wireless market moves into the pre-Christmas season, the busiest time of the year.

Due to the economic slowdown in Canada, this year the competition for wireless customers will be even fiercer, the company filed in its statement of claim.

“Consumers are becoming more price conscious and, as such, the false and misleading fastest network representation and most reliable network representation are particularly damaging to Telus.”

Competition between Telus, Bell and Rogers, which control about 90 per cent of Canada’s wireless market, intensified when Bell and Telus upgraded their wireless networks, enabling them to sell Apple’s coveted iPhone for the first time earlier this month.

Rogers had been offering the iPhone exclusively for more than a year.

Carmi Levy, a telecom analyst at AR Communications, said the timing of Telus’ lawsuit is convenient because it comes after its iPhone launch, and is now competing on a level playing field with Rogers.

In an earlier attempt to attract new wireless subscribers, both Rogers and Telus introduced new rate plans this fall with no system access fees or carrier 911 fees for businesses and consumers.

Levy said it is easier for Telus to focus on the lawsuit about network speed, rather than offering lower prices.

“It takes less effort to hire a few lawyers and go to court than it does to rewrite an entire business model,” he said.

“Network performance could potentially be a factor that pushes some consumers toward one carrier and away from another.”

Levy said 2009 has been the tipping point for smartphone adoption, adding they will soon become the dominant player in market.

Network speed doesn’t matter to regular cell phone users, he said, because it makes no difference for voice usage, but becomes crucial to the smartphone experience when using bandwidth intensive programs, he said.

“Being perceived by consumers as having the best network is an important factor for carriers who are trying to get consumers who don’t already have phones into their stores before the holiday season starts.”

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