Chatr is offering unlimited talk and text with no contracts, similar to packages available from new players Wind Mobile, Public Mobile and Mobilicity.
But like some of its competitors Chatr's low-priced plans stop short of data packages that allow for Internet browsing, video streaming and email.
"We believe competition is good, it offers more choice for Canadians," said Garrick Tiplady, senior vice-president of Chatr.
Rogers says Chatr is different from new competitors because it offers a better network that Tiplady said has "fewer dropped calls than what's currently available."
Chatr is marketed toward consumers such as a taxi driver who is "on the phone quite a bit during the day but wants cost certainty, or the family who is sending one of their children to school," he said.
Rogers Communications Inc. (TSX:RCI.B) owns Canada's largest cellphone service and already operates Fido which also offers discount prepaid cellphone plans.
The other two established wireless carriers, Bell (TSX:BCE) and Telus (TSX:T), also have discount brands in addition to their main services.
Rogers said Chatr will start out being available in Vancouver, Calgary, Edmonton, Toronto and Ottawa. It will be operating in Montreal this fall and there are plans to enter other Canadian markets.
Chatr will offer $35 monthly unlimited talk plan and a $45 monthly unlimited talk and text plan with no other costs added to plans, Tiplady said. Phones for the service will start at $60.
The emergence of Chatr has drawn the ire of competitors, in particular new cellphone player Mobilicity, which said it plans to pursue legal action under the Competition Act if Rogers launches the service.
Mobilicity has said it will file a complaint with the Competition Bureau alleging that Rogers has contravened the "abuse of dominant position" section of the Competition Act.
Canada's cellphone industry is at its most competitive in about a decade with the recent launches of new wireless companies.
Quebec's Videotron (TSX:QBR.B) will grab some of the market when it begins services this fall and Shaw Communications (TSX:SJR.B) says it will join the market in late 2011.
RBC Capital Markets analyst Jonathan Allen said Chatr will put direct pressure on the new cellphone players and could affect their business plans and future access to financing.
"This could have the impact of hastening the exit of some of the independent new entrants (Wind, Mobilicity, Public)," Allen wrote in a note to clients.
Allen said Chatr has the potential to affect Bell and Telus, too.
"Chatr is likely to force Bell and Telus to match strategy, and in turn could push new entrant pricing down too in retaliation, all of which puts the wireless market on a slippery downward slope," he wrote.
"The risk here is that with all the incumbents pushing in this niche, the heavy marketing and media attention is likely to tempt existing customers to switch down for a better deal," Allen said.
That will contribute to lower average revenue per cellphone user for Rogers, he said.
