Bright Spark
Posts: 289 
Location: Montreal
Location: Montreal
May 16th, 2005, 11:12 AM
CRTC decision dealt blow to Bell, an ace to Rogers
TYLER HAMILTON
Ted Rogers is on a tear.
Rogers Communications Inc.'s wireless business is booming in a market that's been whittled down to three. It has bulked up by making three significant acquisitions or strategic investments within the past year, including last week's $330 million deal to buy Sprint Canada.
And on Thursday, the federal telecom watchdog reaffirmed that Rogers and other cable companies can market, price, and bundle local phone services based on Voice over Internet Protocol, or VoIP, without the restriction of regulation.
These gains for Rogers have, to some degree, come at the expense of arch-rival Bell Canada, the country's largest phone company. Bell's wireless business has struggled recently and it stands to gradually lose Sprint Canada as a purchaser of wholesale network access once Rogers takes it over.
The CRTC ruling was also bad news for Bell. The regulator confirmed it wasn't going to regulate phone-over-cable services, but it also confirmed that it would regulate VoIP services offered by Bell and other phone giants.
In other words, by being forced to seek regulatory approval whenever it wants to change the price of a VoIP service, Bell will be battling Rogers with one arm tied behind its back. That's on top of the fact that every VoIP sale it makes is likely to cannibalize its traditional local line business.
What irks Bell even more is that pricing changes, even if approved, are still tied to certain service "bands." For example, band A represents large urban cores such as Toronto and Montreal, while band B is for smaller cities of more than 150,000 household lines.
Rogers, when it launches its phone service this summer, will be free to offer different pricing in different markets. Someone in Toronto could pay $30 a month, while in Ottawa the same phone-over-cable service might cost $35.
Not so for Bell. If it wants to reduce the price of a VoIP service to $30 to compete more effectively in Toronto, it would have to also lower it to $30 in Ottawa, which is in the same band, even if there's no competitive reason to do so.
Take the case of Videotron Ltd., which in January launched phone-over-cable service in Montreal's South Shore. In its first two months the company sold nearly 15,000 lines, an impressive number given the limited size of the market. Videotron was reportedly so overwhelmed with requests that it decided to stop advertising the product.
Bell can't lower the cost of its service just in the South Shore, or even just in Montreal, to compete against Videotron. If it did, it would have to lower the price accordingly in other band A markets, such as Toronto.
This is part of the reason why Bell, perhaps for the first time in its recent history, has something to truly fear. Bell said earlier this month it lost 10,000 local phone customers in the last quarter because of Videotron's launch.
That's just in the two months. Imagine the impact when Videotron expands its service across its Quebec operating territory? Now, imagine what Bell will be contending with this summer when Rogers comes to market with its own phone service, emboldened by its acquisition of Sprint Canada and the half a million local phone customers that come with it?
Should we feel sorry for Bell and the other big telcos, a group with a 98-per-cent share of the residential local phone market? No way. By the end of next March the CRTC is expected to outline criteria for deregulating all local services — VoIP or otherwise — so it's only a matter of time before the muzzle is taken off and Bell is unleashed into the open market, fangs and all.
Between now and then the CRTC is hoping that new VoIP providers will firmly establish themselves as competitors. Bell will just have to tough it out during this period.
Unfortunately, the CRTC has reduced this to a battle between cable and phone companies. The group to feel sorry for is the smaller independent VoIP providers, such as BabyTEL, Inter.net and Comwave. They may not have as much to fear from Bell anymore, but they're still up against big cable companies like Rogers, left free under the CRTC ruling.
The answer is clear after Thursday's CRTC ruling: Absolutely nothing.
Source:TorontoStar
CRTC decision dealt blow to Bell, an ace to Rogers
TYLER HAMILTON
Ted Rogers is on a tear.
Rogers Communications Inc.'s wireless business is booming in a market that's been whittled down to three. It has bulked up by making three significant acquisitions or strategic investments within the past year, including last week's $330 million deal to buy Sprint Canada.
And on Thursday, the federal telecom watchdog reaffirmed that Rogers and other cable companies can market, price, and bundle local phone services based on Voice over Internet Protocol, or VoIP, without the restriction of regulation.
These gains for Rogers have, to some degree, come at the expense of arch-rival Bell Canada, the country's largest phone company. Bell's wireless business has struggled recently and it stands to gradually lose Sprint Canada as a purchaser of wholesale network access once Rogers takes it over.
The CRTC ruling was also bad news for Bell. The regulator confirmed it wasn't going to regulate phone-over-cable services, but it also confirmed that it would regulate VoIP services offered by Bell and other phone giants.
In other words, by being forced to seek regulatory approval whenever it wants to change the price of a VoIP service, Bell will be battling Rogers with one arm tied behind its back. That's on top of the fact that every VoIP sale it makes is likely to cannibalize its traditional local line business.
What irks Bell even more is that pricing changes, even if approved, are still tied to certain service "bands." For example, band A represents large urban cores such as Toronto and Montreal, while band B is for smaller cities of more than 150,000 household lines.
Rogers, when it launches its phone service this summer, will be free to offer different pricing in different markets. Someone in Toronto could pay $30 a month, while in Ottawa the same phone-over-cable service might cost $35.
Not so for Bell. If it wants to reduce the price of a VoIP service to $30 to compete more effectively in Toronto, it would have to also lower it to $30 in Ottawa, which is in the same band, even if there's no competitive reason to do so.
Take the case of Videotron Ltd., which in January launched phone-over-cable service in Montreal's South Shore. In its first two months the company sold nearly 15,000 lines, an impressive number given the limited size of the market. Videotron was reportedly so overwhelmed with requests that it decided to stop advertising the product.
Bell can't lower the cost of its service just in the South Shore, or even just in Montreal, to compete against Videotron. If it did, it would have to lower the price accordingly in other band A markets, such as Toronto.
This is part of the reason why Bell, perhaps for the first time in its recent history, has something to truly fear. Bell said earlier this month it lost 10,000 local phone customers in the last quarter because of Videotron's launch.
That's just in the two months. Imagine the impact when Videotron expands its service across its Quebec operating territory? Now, imagine what Bell will be contending with this summer when Rogers comes to market with its own phone service, emboldened by its acquisition of Sprint Canada and the half a million local phone customers that come with it?
Should we feel sorry for Bell and the other big telcos, a group with a 98-per-cent share of the residential local phone market? No way. By the end of next March the CRTC is expected to outline criteria for deregulating all local services — VoIP or otherwise — so it's only a matter of time before the muzzle is taken off and Bell is unleashed into the open market, fangs and all.
Between now and then the CRTC is hoping that new VoIP providers will firmly establish themselves as competitors. Bell will just have to tough it out during this period.
Unfortunately, the CRTC has reduced this to a battle between cable and phone companies. The group to feel sorry for is the smaller independent VoIP providers, such as BabyTEL, Inter.net and Comwave. They may not have as much to fear from Bell anymore, but they're still up against big cable companies like Rogers, left free under the CRTC ruling.
The answer is clear after Thursday's CRTC ruling: Absolutely nothing.
Source:TorontoStar
