2004 November | Mark Evans

Mea Culpa

November 29th, 2004 | No Comments | Posted in Main Page

You've got to hand it to Nortel CEO Bill Owens who said today he is
“embarassed” by the company's failure to get out its restated financial
results. It's healthy to see a CEO admit to being anything other than
confident and/or arrogant. The again, Owens set himself up to be embarassed
when he vowed a couple weeks ago Nortel would have its results out by
mid-November. He obviously forgot the old adage of “under-promise and over
deliver”.
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Sent from my BlackBerry Wireless Handheld

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What will Bill Say?

November 29th, 2004 | No Comments | Posted in Main Page

You have to wonder what Nortel CEO Bill Owens will say today when he speaks at Scotia Capital's Institutional Lunch in Toronto. One would hope for his sake that Owens doesn't say “our restated results will be out next week, I guarantee it” because that's what he said last month at an investment conference, and we all know what happened. Owens may be well intentioned but anything he says about the “business” will ring hollow until Nortel puts out its restated results from 2000 to the first half of 2003. How can you take anything Owens says seriously if you've got no idea of whether Nortel's results are legit? There have been some suggestions Nortel's restated results will only see minor adjustments, relatively speaking, but regardless of whether that is accurate or not, something was terribly wrong with Nortel's financial system that made things look much better than they really were. If Nortel's senior executives - Roth, Dunn, Chandran, etc. - didn't take walk away with so much cash during the go-go days of the telecom boom, then you could have said everyone felt the pain. But when John Roth pulls in $135-million from exercising stock options in 2000, you know something's wrong in the state of Nortel.

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Last Mile Strategy

November 27th, 2004 | No Comments | Posted in Main Page

With all the talk about VOIP and telecom TV these days, it has got me thinking about how big of a “pipe” the carriers need to deliver the growing vareity of IP-based services into the homes of consumers. At the present time, the general thinking is they will need 20 to 25Mbps to deliver data, voice and basic television service. The issue/challenge is down the road this requirement to easily climb as HDTV and other services come into play. If this materializes, a bigger pipe will be needed.
Verizon and SBC are already ahead of the curve with plans to spend US$8-billion to extend fiber to 21 million homes within the next three years. Verizon, for example, figures it will be able to provide as 30Mbps to deliver multiple-HDTV channels, according to research done by Kona Shio of Conscius Capital.
In Canada, meanwhile, Bell Canada insists it will be able to deliver HDTV by using fiber to the node as opposed to fiber to the curb. This approach seems to be a challenge unless last-mile technology improves down the road. I think one of the reasons Bell is loathe to talk about fiber to the curb is it would mean a significant capital investment, which goes against the grain of Sabia's cost-control mandate. Before Bell can commit itself to such an expensive program, it will likely need to prune its costs even more as it scrambles to adjust to the realities of the IP world.

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CRTC Wants More Competition

November 26th, 2004 | No Comments | Posted in Main Page

The CRTC issued its annual report for 2003 on Canada's telecom industry. Once again, the focus was on the need for more competition, particularly in local telephony where the ILECs still dominate the market. Of course, the ILECs argue their market share is far less when you take into account wireless usage and wireless substitution. With wireless penetration expected to reach 50% by year-end, it's hard to totally dispute the ILECs' claim.
As for the need for more competition, the CRTC will discover that 2005 will provide everything they want and more. With Internet telephony finally breaking into the mainstream, the number of residential customers jumping on VOIP will take off. This will be buoyed by the entry into the market by Bell Canada and cablecos such as Rogers and Shaw. At the same time, Bell and perhaps Telus Corp. will get into the TV business.
On the wireless front, Virgin Canada will apparently launch in the first quarter, although I do not expect Virgin to be much of a price rebel given it is a joint venture with Bell. If the CRTC really wanted to buoy competition, they should approve local number portability across the board. Now, that would be interesting.

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Hello, 311?

November 25th, 2004 | No Comments | Posted in Main Page

If you've ever had trouble reaching someone at city hall (what's with those confusing Blue Pages, anyway?), help is on the way. The CRTC has approved a joint application from the cities of Calgary, Toronto, Halifax and Halton to use 3-1-1 for non-emergency municipal government services.
For those of us in Toronto, this is a far cry from the days of former mayor Mel Lastman who refused to let civial servants use voice mail in the bizarre belief it would hurt customer service. 3-1-1, which is already being used in several U.S. cities, makes it easier to deliver programs, reduce costs and boost awareness among people of local sevices.

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Comparing VOIP in Canada

November 24th, 2004 | No Comments | Posted in Main Page

A friend who's interested in getting Internet telephony service stumbled across a pretty good story outlining what's available in Canada and the pros and cons of each service provider. The companies in the story include Vonage, Primus, Call-Net, TeleHop and Yak.
Here's the link: http://www.broadbandmarket.ca/news1027.html
On another note, I received a comment about an assertion I made that VOIP would gain little momentum in Canada because local prices are so low. This fellow rightly pointed out the monthly bill adds up if you have basic service for $22, voice mail for $8, call display for $7 and you make a lot of LD calls. For people who want multi-feature service and use a lot of LD, Internet telephony service can make sense. It will be interesting to see if these people actually jump ship.
If price is going to be a/the key factor in Internet telephony adoption, check out Comwave Telecom, which has two packages priced at $9.95 and $14.95 a month respectively. Not sure about the quality of the service but the price seems hard to beat.

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Where's My Local # Portability

November 24th, 2004 | No Comments | Posted in Main Page

Today marks the first anniversary of wireless number portability in the U.S. - an option used by about 8.5 million people to switch carriers. Of that total, 732,000 apparently gave up their home service to go completely wireless. Given there are about 170 million wireless users in the U.S., LNP has been far from the mayhem the carriers were worried about.
Here in Canada, LNP portability isn't even on the radar screen - an issue that will no doubt please ARPU-happy carriers. In informal chats with the CRTC, there is little call for among consumers. As a result, LNP is low on the priority list, if it exists as a priority at all.
LNP is another example of the philosophical differences taken by telecom regulators in the U.S. and Canada. Given this situation, it will very interesting to see how the CRTC comes down on Internet telephony in light of the FCC's decision to adopt a laissez-faire approach.

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Nortel: lots and lots of numbers

November 23rd, 2004 | No Comments | Posted in Main Page

There's been plenty o' Nortel coverage but this story is the absolute best -
and most entertaining - I've seen in ages. Read and enjoy:
Nov. 23 (Bloomberg) - Nortel Networks Corp. board member John Manley said he's “very optimistic” that the telephone- equipment maker will file arestatement of its financial reports within the 30 to 60 day deadline itset on Nov. 11.
The reports that will be prepared for filing by Brampton, Ontario-based Nortel are more than 2,000 pages with over 8,000 numbers, Manley, who joined Nortel's board in May, said in an interview.
“People can't work any harder than they are,” said Manley, a former deputy prime minister of Canada. “The limiting factor is there's a lot of numbers. Everything has to be right this time. We can't revise them again.”
And to think that Manley was Canada's Finance Minister. Makes you think that perhaps the federal government's accounting system is much less complicated than Nortel's.

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Ericsson's New Math

November 23rd, 2004 | 1 Comment | Posted in Main Page

Ericsson Canada did a survey recently that suggests 63% of Canadians between
the ages of 15 and 69 have a wireless phone. The company got this number by
interviewing 2,000 people.
What's troubling about it is Ericsson's decision to ignore widely-accepted
industry standards when it comes to wireless penetration. If it had gone
that route, the real penetration rate would have been about 46%.
So what's Ericsson thinking? Why are they trying to pull a fast one over on
everyone? Are they simply trying to get some media attention? Are they
trying to convince the federal government the wireless industry in Canada is
healthy, and allowing the Rogers-Microcell acquisition will not harm
competition?
Regardless of Ericsson's motives, it has been a successful PR exercise given
the fawning coverage in today's Globe and Mail, and widespread radio spots.
The problem, however, is Ericsson is manipulating data to serve its own
purposes. They are producing misleading information, and that's just wrong.

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VOIP Gets Going in Canada

November 23rd, 2004 | 1 Comment | Posted in Main Page

There has been so much written about Internet telephony in Canada, it's hard to believe there are only about 25,000 consumers actually using the service. The market, however, could get a jump-start now that Vonage has launched an aggressive marketing campaign to mark its “official” entry into the market. If Vonage spends a small part of the US$105-million it raised earlier this year on marketing in Canada, it could educate the market enough to spark some serious growth. NRI/Michael Sohn Associates expects there will be 1.1 million residential households using an Internet telephony service by 2007. That's an ambitious number but Michael Sone believes it's achieveable once the technology gets easier to use and people learn more about it. I've got my reservations about whether this optimism is realistic - mostly because local phone service in Canada is so inexpensive it leaves little room for VOIP players to come in under the competition on price.
Speaking of Vonage, some back of the napkin calculations suggest it may be worth as much as US$2-billion. It makes some sense if you consider 8×8 Inc. has 28,000 subscribers, third-quarter revenue of US$2.5 million and a market capitalization of $144-million. Compare that with Vonage's annual revenue of US$120-million, 300,000 customers and a takeover/IPO premium, and the idea of US$2-billion is not that much of a reach. When this figure was thrown at Vonage CEO Jeff Citron, he declined to comment but had a smile on his face much like a cat looks like after he's swallowed the canary. Citron is well on his way to scoring yet another start-up jackpot. He may not be the best company builder around but he sure knows a fertile investment opportunity.

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