Telecom market logical opportunity for non-traditional companies

It makes perfect sense for utilities to enter the telecom market, an executive of one utel reported to a conference last month. While traditional telcos may complain about newcomers encroaching on their territory, Victor Viola, VP sales & marketing for Hydro One Telecom Inc., maintains his firm is just following its core business to its logical conclusion. He took issue with a statement from former Futureway Communications Inc. president Stephen McCartney, who said: "The equivalent would be telling Bell Canada or even Futureway that we have a right to enter into the electrical market, which of course we don’t." (NL, May 7/01). Viola, whose company is a subsidiary of Ontario’s electric utility, finds one flaw with that argument. "Futureway doesn’t have to provide electricity," he told the Competition and Access in the Local Loop conference. "Hydro had to build a telecommunications network for itself." Hydro One Telecom has been providing access through four primary methods: reseller arrangements with local utilities or local exchange carriers; buying utel subsidiaries, as it did in Brampton ON; building local loops in acquired utility jurisdictions; and getting into joint ventures with other local utilities. One of those joint projects was with SCBN Telecommunications, which serves the Simcoe County Access Network (SCAN) (NL, Dec. 18/01). Desmond Lorente, the SCAN president, reminded delegates that telcos must actively take part in the planning process for municipal and community networks. For a community network proposal to be successful, new investment in telecom infrastructure is essential. "The traditional local loop price model must be re-evaluated," he said. Much of the initial effort must be spent on educating local officials as to the advantages inherent in a community network. Politicians must be told the advantages of a fibre network before they will approve any expenditures, Lorente explained. He said it helps to outline the benefits to public sectors like hospitals and schools. SCAN has created partnerships with district school boards, libraries, and hospitals, including the Penetanguishene Mental Health Centre. The network has opted for an all-fibre grid, choosing this solution over proposals for copper, wireless or part-fibre. The politicians are also likely to be impressed by the financial implications of going to a community network. William Crosbie, the president/CEO of FibreTech Telecommunications Inc., gave a clear illustration of that in his presentation. The firm, which is owned by the hydro holding companies in the southwestern Ontario communities of Cambridge, Kitchener and Waterloo, managed to turn a profit in less than a year. It has $15 million in assets and last year brought in more than $3.5 million in revenues. The company is content to be a carrier’s carrier, with no plans to move towards offering other services. Crosbie drew an analogy with the parent firm’s primary business. "We deliver electricity to homes," he remarked. "We didn’t get into making light bulbs." One of the places where community networks have taken hold the strongest is also the unlikeliest. Alberta’s SuperNet is moving ahead to be one of the leaders in broadband connectivity. Grant Chaney, the chief technology officer for the innovation and science ministry in the proudly free enterprise province, said the government was merely responding to demand. "The private sector came to us with some very, very good proposals," he noted. The final project features an innovative IP network that has the province’s telecom business as the anchor tenant. Chaney expressed hope that the recommendations of the National Broadband Task Force, which Alberta strongly supports, will eventually be implemented. "We didn’t get our big bag of money the first time we went to Cabinet either," he laughed.

Telecom market logical opportunity for non-traditional companies

News | February 11, 2002

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