TORONTO (Reuters) - Quebecor's Videotron cable arm launched 3G wireless service on Thursday, a move likely to pressure prices in an increasingly congested Canadian market.
The market is dominated by phone companies Telus and BCE's Bell Canada unit, and by cable and telecom company Rogers Communications, though a number of new entrants are encroaching.
Videotron's offering, initially limited to the province of Quebec, will directly challenge established incumbent Bell as an integrated provider -- offering cable television, broadband Internet, landline and mobile telephony.
"This new service that we are launching will benefit all Quebecers, be they entrepreneurs, creative types, television watchers, fans of culture and entertainment, or those who just want to be unplugged," Videotron Chief Executive Robert Depatie told a news conference in Montreal.
Quebecor has estimated it will spend between C$800 million ($777 million) and C$1 billion and hire more than 600 employees for the network.
Videotron was the first major Canadian cable company to offer residential landline telephony via cable, in 2005.
Aggressive pricing has since won it a third of Quebec's home phone market, and analysts predict more gains to come.
"We see this as a substantial opportunity for Quebecor, with bundling opportunities and regional calling patterns on its side as it attacks the unlimited talk and text marketplace," Northland Capital Partners analyst Rob Goff said ahead of the launch.
"Videotron's fibre-optic network can handle huge quantities of information at an affordable cost," he added.
Alberta-based cable and telecom company Shaw Communications bought wireless spectrum in the government's 2008 auction and plans to launch a network late in 2011.
Rogers Communications on Wednesday said it would launch its discount text- and talk-only service, called chatr, in Montreal on September 16. The service has been rolled out in Vancouver, Calgary, Edmonton, Toronto, and Ottawa.
Reporting by Alastair Sharp, additional reporting by Julie Gordon; editing by Peter Galloway