2005 May | Mark Evans

Primus' QoS Issues with Shaw

May 31st, 2005 | 3 Comments | Posted in Main Page

The packet prioritization bogeyman raised its ugly head again yesterday when Primus Telecommunications Canada lashed out at Shaw Communications for providing terrible broadband service to Primus' Internet telephony customers. This is not a new problem for Primus but one that doesn't seem to be going away despite attempts to raise it with Shaw. Primus V.P. Matt Stein said his company has been “suffering”, and that he is particularly disturbed by Shaw's sale of a $10 a month “quality of service enhancement” product that improve the performance of third-party Internet telephony services such as Primus and Vonage. Stein derided it as a “VOIP Tax”. Shaw, meanwhile, seems untroubled by Primus' complaints. CEO Jim Shaw said Primus is riding on the Internet for free so it shouldn't be complaining. For an extra fee, he said Shaw could offer better QoS. You pay for what you get is how it came across. While Bell and Telus have told the CRTC they will not fool around with the packets of rivals on their networks, Shaw has made no such claims. Can it only be a matter of time before Primus complains to the regulator?

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The World According to Jeff Citron

May 31st, 2005 | No Comments | Posted in Main Page

When Vonage CEO Jeff Citron makes a speech, you know what you're getting - a smooth, marketing-heavy presentation focused on the company's “goal is to improve people's lives”. He certainly didn't disappoint today at the Canadian Telecom Summit in Toronto during an early-morning keynote. Among the highlights were:
- Vonage added 114K subscribers in Q4 and 250K in Q1
- his approval of the Canadian telecom regulator's decision to regulate incumbent carriers offering VOIP service
- plans to work with the FCC to introduce 911 and e911 service
- the need for a broadband bill of rights to ensure that network operators don't de-prioritize third-party traffic
- another attack on bundles, which he says limit consumer choice and innovation
- plans to introduce a multi-handset broadband cordless phone system for the home.
Not surprisingly, there were some sexy numbers: Citron expects the number of broadband users in the U.S. is expected to increase to 68 million by 2008 from 33 million in 2004, while the number of VOIP subscribers will rise to 17.5 million by 2008 from 1.1 million in 2004. In Canada, broadband users will hit 8.6 million by 2008 from 6.8 million in 2005, while VOIP customers will hit 2.36 million by 2008 from 154,000 in 2005.

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Bill Owens: I Stand on Guard for Thee Canada

May 31st, 2005 | 1 Comment | Posted in Main Page

Maybe Nortel CEO Bill Owens reads my blog. I mean, a regular criticism of Nortel's new and improve senior management team is the fact it has very low Canadian content (CFO Peter Currie and CSO Brian MacFadden). In an IP/global world, Nortel management doesn't even work out of corporate headquarters in suburban Toronto. This might explain why he started a keynote speech today at the Canadian Telecom Summit with some fawning comments about this country. For example, here's a nice Canada-friendly quote:
“We are all great Canadians, and I say that proudly. I grew up North Dakota not far the Canadian border. I spoke Canadian, I felt Canadian, and we even have had resolutions in North Dakota in years past to secede from the U.S. and join Canada. I feel involved with this Canadian marketplace and this great Canadian company, Nortel.”
Now, if Owens can sing all the lines to O Canada - something some Canadians have difficulty doing - I'll truly be impressed.

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U.S. Residential VOIP to Surpass US$1B in '05

May 31st, 2005 | No Comments | Posted in Main Page

Answer: US$1-billion. Question: What does Vonage plan on spending on marketing before it finds a suitor, or the amount of revenue expected to be generated by U.S. service providers in the U.S. residential market this year? For now the right answer is the latter based on a new research done by TeleGeography. It forecasts the number of VOIP customers will rise to 4.1 million by the end of the year compared with 2 million in March 2005. TeleGeography also forecasts that Cablevision, Comcast and Time-Warner will have two million subscribers in 2005 and nearly 50% of the residential market.
One of the key questions is why the VOIP market has so much momentum. Clearly, an important factor is price as consumers look to pay less for telephony service while getting more features. It was interesting, however, to hear Steven Koles of AOL Canada in a presentation yesterday at the Canadian Telecom Summit talk about price inelasticity - meaning lower prices do not have much of an impact on demand. This stood in contrast to Primus Canada, which saw a huge bump in second-quarter subscriber growth after it dropped its prices to as low as $15.95 a month. Koles' view is not surprising given AOL has a track record in trying to position its services at premium prices. While AOL may not want to play the price game in Canada with its TotalTalk service, it may have little choice but to play this game to be competitive with Vonage and Primus.

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What Will Bill Owens Say?

May 30th, 2005 | 2 Comments | Posted in Main Page

You know the feeling you got - or still get - on Christmas Eve where the anticipation of what's to come the next day is almost overwhelming. Well, it kind of feels like Dec. 24 today given Nortel CEO Bill Owens is slated to give a keynote speech at the Canadian Telecom Summit tomorrow morning. The excitement is almost killing me. Will Owens talk about Nortel's ambitous plans for India? Will he discuss the fast-moving world of U.S. government services? Will he articulate Nortel's plans for strategic acquisitions? Or will he will he finally provide details of the company's strategic vision? Personally, I'm planning on getting there early to get a prime seat. Of course, this will probably be a necessity for reporters hoping to lob a question or two at Mr. Owens given there won't be a press conference afterwards, and it's likely he will be whisked back to the friendly confines of Nortel's corporate headquarters in Brampton.

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You've Got Nothing to Say?

May 30th, 2005 | 1 Comment | Posted in Main Page

To be honest, I'm baffled by Bell ExpressVu/Bell Mobility CEO Robert Odendaal's decision to not do a Q&A with the media today at the Canadian Telecom Summit. Given that Nadir Mohamed, Odendaal's counterpart at Rogers Communications, pulled out on his keynote speech today at the last minute, Odendaal has an excellent platform to deliver the Bell message. Maybe Bell hasn't got much to say, or perhaps it's got a lot to say about issues such as its IP-TV strategy but it's not ready to talk yet. Either way, his post-keynote “no comment” decision is puzzling.

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Wi-Fi Woes

May 30th, 2005 | No Comments | Posted in Main Page

Toronto-based venture capitalist Rick Segal - a.k.a. The Post Money Value - has some gripes this morning about accessing “free” Wi-Fi at Cora's, a local breakfast spot. He criticizes the access provider - Sesame Networks - for its user-unfriendly process to log on to the free service. Among his woes is some fine print the user may be charged for a SMS message that Sesame sends out to verify people trying to access its network. In the end, Rick talks about getting a Sierra Wireless card, and signing up for a wireless data plan. His comments are a nice complement to a column in the National Post last week and blog posting about why the business model for Wi-Fi is disappearing. If 3G and Wi-Max technology live up to the hype, Wi-Fi may soon become marginalized into just an inter-household networking technology.

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Vonage: Raise a Lot, Spend a Lot

May 29th, 2005 | 1 Comment | Posted in Main Page

According to ClickZ, Vonage spent $21.8 million in April on advertising. As Om Malik succinctly puts it: now you can see why they needed to raise $200-million in private equity recently. Clearly, Vonage believes it's in an “Amazing Race” to establish itself as one of the VOIP service providers in North America before the cablecos and carriers take over the market. Vonage CEO Jeffrey Citron knows the art of making the deal (see previous entrepreneurial success stories: Datak and Isand ECN), and Vonage is just following the formula of creating a large business and then selling out at the right price. If spending $21.8 million a month on advertising is how the game needs to be played, Vonage will follow the rules. The big question is when someone will step up to the plate and spend the $1-billion to $2-billion to take out Vonage? Frankly, I do not believe this company will ever do an IPO unless it's backed into a financial corner. Unless Vonage's balance sheet (i.e bottom line) suddenly becomes a lot healthier, it will try to avoid the scrutinization of the investment community. For the time being, you have to wonder how long Vonage will/can keep up the advertising spend. I'm thinking it will be for as long as it takes to lure of suitor and/or several hundred more thousand subscribers.
By the way, if you're at all curious about the top online advertising spender in April, it was a Tickle by Emode, which is an IQ test, that spent $23.7-million. The company Tickle is called Progressive Boink, which emerged from the ashes of Whatever-Dude.com.

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Canadian Telecom Summit: The Who's Who in Toronto

May 29th, 2005 | No Comments | Posted in Main Page

One of the events of the telecom industry - at least in Canada - is the Canadian Telecom Summit, which goes from Monday to Wednesday in Toronto. The keynote speakers include Nortel CEO Bill Owens, Vonage CEO Jeff Citron, MCI CEO Michael Capellas, BCE CEO Michael Sabia and Avaya CEO Don Peterson. While a jam-packed agenda, the conference will provide an in-depth look at many of the key industry issues, developments and trends from a Canadian and global basis. Watch this space next week for regular postings during the conference. We'll also be providing extensive coverage in the National Post.

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Skype: We Now Accept PayPal

May 28th, 2005 | No Comments | Posted in Main Page

Skype resolved a major sales hurdle for customers living outside Europe when it officially launched PayPal today as a payment option. This means people who buy premium based services such as SkypeIn and SkypeOut at skype.com can use PayPal to pay using a credit card, bank account or stored balance. While I was once a Skype skeptic, this company continues to impress me with their ability to convince a large user base nurtured on free service to buy fee-based services. Of course, the one thing I would like to see Skype spell out is the buying patterns of its 1.4 million premium service users. It's one thing if these people make one purchase a year, it's quite another if 250K are buying a weekly or monthly basis. Much like Vonage, Skype likes to throw big numbers around - 39 million registered users, for example - but it is impossible to really get a handle on how well either company is doing without seeing some basic balance sheet figures - revenue, cash flow, EBITDA, profits, etc.

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