Mark Evans

Bell's IP Momentum

Bell Canada's new and enthusiastic focus on IP-based services produced
another dividend today with a new deal with BMO Financial, which will
connect 1,100 branches across the country using a virtual private network.
“This agreement with BMO is a perfect example showing that our strategy is
not only working but the marketplace is responding,” said Isabelle
Courville, who heads up Bell's corporate division. “Bell Canada is now
executing on its vision, working closely with customers to achieve the
efficiencies and increased productivity anticipated with migration to IP.
Bell's excitement about the agreement is a no-brainer because it needs to
move quickly into the IP world if it wants to stay competitive and reduce
its costs, which have an essential part of BCE Inc.'s corporate makeover in
the past three years.

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Who's Going to be Nortel's Next CEO?

You have to assume Peter Currie will be Nortel's CEO at some point. It seems like an odd move for him to go back to a job he's had before at a company still troubled by accounting, regulatory and police investigations. You can expect a flurry of speculation/media stories into who might become a candidate. Tyler Hamilton believes Nortel needs a CEO with “vision who knows the industry”. While I think Currie's promotion is a slam-dunk, it would make a lot of sense to have a strong CFO who can talk to Bay St. and Wall St. and a strong CEO who can to customers.

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8X8's Q3 Results

8×8 - a.k.a. the other VOIP service provider - posted a loss of $5.7-million on revenue of $3-million in the third quarter, while the number of Packet8 customers rose to 40K from 26K in Q2. The company has a market cap of $132-million. It means each subscriber is worth $3,300. If the same valuation is applied to Vonage, it works out to $1.3-billion. Is 8×8 over-valued, or is Vonage really worth this much, or is the market's true value?

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Nortel Talks

I guess my meanderings about whether Bill Owens will be supplanted as Nortel's CEO have struck a chord. I got an e-mail from the company with following comment: “Bill Owens has said many times that he is proud to be the CEO of Nortel and is excited about our future prospects and growth opportunities.” I still think Peter Currie has come back to the fold to become CEO one day, which doesn't entirely conflict with Nortel's comment.

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SBC-AT&T Marriage?

Will SBC spend US$15-billion to buy AT&T? Now, that would be a mega-telecom deal. If the deal is consummated, it would combine AT&T's 30 million long-distance customers with SBC's 50 million local customers, and mark the end of AT&T's 120-year history.
SBC would not be buying AT&T for its LD business, which has been under competitive pressure for years. The real prize would be AT&T's extensive data network, which has been the focal point of CEO Dan Dorfman's plan to re-invent the company. The data network's potential let Dorfman justify AT&T's decision to leave the local [circuit-switch] telephony business. Instead, AT&T is jumping on the IP bandwagon by offering VOIP service to consumers and a variety of value-add services to corporate customers.
An SBC-AT&T marriage would be a blockbuster and a real test for the FCC's new chair, who will replace Michael Powell.

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Nortel's new CFO

Peter Currie, who was Royal Bank of Canada's CFO until last September, has re-emerged as Nortel's new chief financial officer. It appears to be positive move because Currie was the company's CFO from 1994 to 1997. Currie has a good reputation within Canada's corporate ranks, and his appointment can only give Nortel some much-needed credibility. The big question is whether the CFO job is just a warm-up zone for the CEO job.

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Aliant Moving into IP-TV

Aliant sure has a nice way with the numbers. The company plans to save $40-million a year through a voluntary early reitrement program, and spend $40-million over the next three years to launch an IP-TV service over its high-speed Internet network.
The move into TV is a strategic necessity if the Atlantic Canada carrier wants to stay competitive with Eastlink, the country's seventh-largest cableco, which offers a bundle of TV, high-speed Internet, VOIP and wireless telephony.
Before Aliant became engulfed in the BCE Inc. empire, it was known as NB Tel, and had a reputation for being among the most innovative carriers in North America. NB Tel was playing around with interactive TV service long before IP-TV became the next hot thing for carriers. BCE shelved the project because it owned its ExpressVu satellite service. It's too bad Aliant wasn't left alone to operate as a test lab for BCE and Bell Canada

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CityFido is Neutered

You knew it was only a matter of time before Rogers started to hack away at CityFido, which it picked up in the $1.4-billion acquisition of Microcell last year. Calling it a redesign - my colleague Tyler Hamilton rightly calls it the “euthanizing” - Rogers took two swipes to CityFido: first, it scrapped the eat-all-you-can plan for $45 a month plan. This has been replaced by a 750-minute plan for $45 and a 1,500-minute plan for $60. second, it shrank the calling zones so that many calls that used to be local will now be considered long-distance. Rogers will happily charge a whopping 50 cents a minute for LD.
CityFido was a huge thorn in the side of Canada's big three wireless carriers - Telus, Bell and Rogers - because it went against the grain of the higher ARPU mantra chanted these days throughout the industry. It was only a matter of time before someone took Microcell down. The sad thing is Microcell was the most innovative player in the bunch. Who knows, maybe Virgin Canada will breath some excitement back into the industry obsessed with meeting Bay St. expectations.

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New VOIP Growth Forecast

While I'm always leary of industry forecasts, I like to use them to provide colour. Seaboard Research has stepped up to the table with a fresh set of forecasts for Canada's Internet telephony market. Seaboard expects there to be 2.1 million residential customers using VOIP by 2008, compared with a miniscule 32,800 in 2004.
The research firm believes cablecos will dominate the market with about 50% of the market three years from now. While I'm far from convinced about the actual numbers, cable dominnation seems obvious given the country's largest cablecos - Rogers, Shaw, Videotron and Cogeco - will have products in the market this year.
So what do the carriers do? They probably have little choice but to jump on the VOIP bandwagon if they want to compete on price and features. The more VOIP develops, the more you realize it's much more than just a cheap voice application. It's features such as Web-based voice-mail and point-and-click ways to forward calls and do mulit-person conferencing that will make circuit-switch technology pale in comparison.

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Vonage's local number portability plans

Apparently, it is only a matter of time before Vonage Canada lets new customers keep their existing telephony numbers when they make the switch from Bell, Telus, et al. This would resolve yet another issue keeping consumers from adopting “independents” such as Vonage. So far, some of the other issues addressed have been back-up power and access to 911 service. It was interesting to see Videotron's new telephony service, which was launched earlier this week, focus on these issues as well as the service's compatability with in-house security systems.

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