What's Next for Canadian ILECs?
I've got an analysis piece in today's National Post about the next move for Canadian ILECs following the CRTC's decision to regulate Internet telephony. ILECs have a number of options: they can do nothing on the VOIP front and wait for an appeal of the decision to the federal cabinet to be ruled upon over the next year (a highly unlikely scenario); they can offer Internet telephony service out of territory so they don't have to file pricing information with the CRTC (unlikely); or they can file for pricing approval and just go for it (likely).
For ILECs such as Bell and Telus, the big challenge is being competitive without over-cannibalizing their existing traditional phone businesses, which are still highly profitable despite declining revenue. It means having a VOIP service that is priced right with the right features to compete with cablecos and third-party players such as Vonage and Primus. Without a doubt, it's a delicate balancing act. Just for fun, I called Bell customer service yesterday to see if I could order its Bell Digital Voice service. Their friendly automated service “person” told me it was only available in three Quebec cities but I could leave my information so they could contact me when it moved into Toronto. I wonder how long it's going to take Bell to move beyond Quebec City, Sherbrooke and Trois Rivieres? You have to believe it's going to happen before July 1 - the date targeted by Rogers to launch its cable telephony service.
Another VOIP thought is whether the market is ripe for U.S. competition. If Canadian cablecos and ILECs decide to be “disciplined” about pricing and ARPU, it could open the door for an unregulated, creative player from just across the border to snare customers who are interested in VOIP but looking for a less expensive option.
May 17th, 2005 at 12:27 pm
It could open the door for an unregulated, creative player from just across the border to snare customers who are interested in VOIP but looking for a less expensive option. Isn't that pretty much a description of Vonage (among others)?
ILECs have a number of options: yet another option would be for them to roll out a VoIP product which didn't look exactly like their existing home phone service — ie to innovate, knowing that new products wouldn't be regulated even in the territories where they hold significant market power.
May 18th, 2005 at 5:07 pm
The ILECs could also really compete - i.e. Bell Canada could offer VoIP outside of Ontario and Quebec and Telus could over VoIP in Eastern Canada. Why don't they do that or are they worried about provoking potential competitors to attack their home turf?