Videotron: VOIP Update
Financial Post
Videotron Ltee. is expected to jump into the Internet telephony market soon, which would make it the first Canadian cable company to offer the fast-emerging service.
According to analysts who attended briefing sessions with Videotron senior management yesterday in Toronto, the Montreal-based company will roll out a residential primary line service with eight hours of back-up power, access to 911, the ability to keep your existing phone number, as well as features such as 411, 611, voice-mail, call-waiting and call-display.
There is strong speculation Videotron, the country's third-largest cable company, with 1.45 million customers, could launch its service as early as Jan. 1. This will put the company into the telephony market ahead of peers like Rogers Communications Inc. and Shaw Communications Inc., which plan to unveil telephony service by the middle of next year.
Videotron said it expects to spend $80-million over the next four years on fixed capital costs to support its telephony plans. It estimates the average acquisition cost per customer will be $250. The company, which will offer telephony as part of a bundle, has been conducting trials with 2,000 customers in Montreal.
Eamon Hoey, a senior partner with Hoey Associates, said Videotron did not disclose its launch date or pricing strategy but he said it does not make much sense for a company to hold analyst briefings a week before Christmas to discuss a product to be launched several months down the road.
He believes Videotron will pose a more dangerous threat to Bell Canada than Internet telephony players such as Vonage Holdings Corp., Comwave Telecom Inc. and Primus Canada Telecommunications Inc. because Videotron has a stronger brand name.
“Consumers in Quebec have a strong belief in Bell, and it has been much more difficult for competitors to penetrate [the market], even in long-distance,” Mr. Hoey said. “People in Quebec believe bigger is better so you need a big company that consumers believe in, the same way they believe in Bell.”
Videotron, which has 500,000 Internet access customers, aims to differentiate itself from Vonage, Primus, and others by playing up its 15-year track record in the telephony business.
Its Videotron Telecom subsidiary operates a 11,000-kilometre broadband fibre-optic network in Quebec and Ontario, and offers services to business customers.
“Videotron is well positioned for the future of residential telephony using VoIP,” the company said in an executive summary given to analysts. “It has a solid, reliable and saleable network, and delivers carrier class quality of service.”
