High-speed Internet a popular choice for Canada, survey finds

Canadians have a voracious appetite for broadband access that isn't expected to be satisfied anytime soon, according to a new study by the Yankee Group in Canada. Figures contained in High-Speed Internet - 2000 in Review show that high-speed had 1.3 million subscribers in Canada last year, a leap of 140 per cent from 1999. It credits the promotional push by Bell Canada of Sympatico in Ontario and Quebec, along with the cablecos' similar campaign, for leading the demand. While cable companies have spent millions in advertising their high-speed services, newspapers and broadcasters have run stories on the technical glitches that have caused problems for cableco subscribers. This has hurt the reputation of the firms. "The very public problems have not lent credence to the marketing claims," the report says, "and subscriber growth, while still strong, has no doubt suffered as well. The beneficiary has been the DSL providers." The Yankee Group notes, however, that cablecos have been quick to respond. Shaw Communications Inc has formed the Big Pipe Inc subsidiary, which will eventually replace the Excite@Home network the Alberta company has been using. The study also finds that the linguistic side to the digital divide seems to have been addressed. At one time it was believed that rollout of high-speed would be slower in Quebec than in other provinces due to the lack of francophone content on the Internet. "However, the past year saw some dramatic changes with the launch of a number of French-language portals such as www.canoe.fr, www.canoe.qc.ca, and www.infinit.com," the report states. "In the year 2000, Quebec caught up with the rest of Canada, and subscriber numbers exhibited strong growth alongside of English-speaking Canada." The Yankee Group says it's surprised the wholesale market is so weak in this country, despite a CRTC order mandating telcos and cablecos to provide wholesale access to resellers. In addition, most communities are served by regional ISPs that provide little more than dial-up service. These ISPs should logically be interested in becoming resellers, the report notes. But the study shows the wholesale cost is so high that it's nearly impossible to make a profit on retail sales. For example, Bell Canada has a wholesale cost per end user of $35.22 per month. Since the present retail standard is $39.95, wholesalers are left with a mere $4.73 margin per subscriber. Out of that money, the ISP must pay for service charges, installation fees and costs maintaining the customer base. "While it is clear that the market for high-speed services will continue to exhibit strong growth over the next three-to-five years, it is not yet apparent whether there will be a winner in the battle for subscriber dominance between DSL and cable modem services," the report concludes. "Key to tipping the balance will be the introduction of a wholesale offering that greatly increases the marketing and sales channels."

High-speed Internet a popular choice for Canada, survey finds

News | 07/03/2001 4:00 am EDT

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