MCI Canada set to compete with incumbents and competitors

The de facto head of MCI Canada says that after two years of building stronger customer relationships and controlling customer churn the company is ready to break its silence and aggressively attack the Canadian telecommunications services market. "We’ve been able to sustain our business in Canada, spent the last couple of years nailing down our processes and how to run our business, made sure our network was stable, customer service was top notch … and what we’re now turning our attention to is how we grow our business in Canada," Tim Dickins, VP of sales for the reseller, tells Network Letter. Part of that evolution has involved shedding the company’s roots. Recognizing that the carriers’ carrier model was no longer going to be sustainable due to significant price erosion from greater network availability, the former UUNET abandoned the model, under which it grew to become the largest independent ISP in the country, second only to PSINET, which was acquired by TELUS Corp. The company has since entered the traditional voice market, selling services such as long distance, toll free, calling cards, audio conferencing services and international private lines. One area where MCI Canada has experienced strong growth in the recent past is wholesale Voice over IP, says Dickins. "Where we’ve been able to carve out a niche in the Voice over IP market is on those phone card companies, those companies that you buy a phone card for $20 at a corner store. They aggregate their traffic, it hits us, we take it out via Voice over IP, and if the call is going to Europe, India or China, chances are it’s terminating on the traditional PSTN network," Dickins explains. He adds the reason these companies do this is purely for cost saving purposes. "We’ve done extremely well in the last 18 months on that (service) and we’ve been very quiet about it," he adds. "If you give out the low rates, the business just comes to you naturally." Despite the emerging popularity of VoIP services as a way to significantly reduce long distance charges, Dickins says costs aren’t a compelling enough argument for VoIP implementation since there has already been substantial price erosion in long distance, combined with the fact that the ILECs and CLECs won’t abandon this business. "If it is strictly a cost thing, it’s difficult to sell. So what I think will happen is as we go along it’ll come to the functionality of what VoIP can do," Dickins says. Dickins is bullish on MCI Canada’s opportunities going forward, saying that both its legacy ISP business and the fact that it has MCI as a parent company are two key assets. "We have a very large customer base where we have connected them to the Internet for email, for their hosting, and now what we have to do to be really successful is to leverage that expertise," he states. "Because we’re not facilities-based, I think we have to be strategic in the markets we go after and be very strong in certain urban cores, and we have to leverage the success of our parent. If a company has locations outside of Canada, we’re a good bet to do business with," says Dickins. Not only will MCI Canada exploit the international presence of its parent company, it will also try to import service offerings into the country. Dickins says that the MCI Advantage product, which is similar to an IP PBX or IP Centrex system that allows voice and data over a single Internet connection, will likely be brought into the Canadian market in the near future. He adds that the next generation of the product will be introduced in 2005 and the company is currently working on a possible Canadian launch. Dickins is confident that the company is not only ready to compete with incumbents and competitors, but will fare well in a head-to-head battle with the competition. "If we can provide an Internet connection where you handle the local long distance and data on the same connection, then yes we will compete with them," he states. Consolidation not bad for the industry Industry consolidation in the recent past has raised questions about a re-monopolization of the telecom services sector or at least result in fewer competitors in the market, but Dickins says for a reseller consolidation hasn’t yet had too great of an impact. For MCI Canada, it’s about access to the local loop at reasonable rates. "As a reseller, we want cheaper access to the local loop to the business customer. With further consolidation, if that means our prices go up or we can’t negotiate better prices through competition, then that’s bad for us," he explains. He adds, however, that hasn’t been the case so far and that good pricing is available from both incumbents and competitors. Pricing incumbent facilities was the subject of the competitor digital network access (CDNA) proceeding, launched by the CRTC two years ago. A decision on that front may still be a long ways off as TELUS Corp. recently applied to re-open the record of the proceeding (NL, Sept. 1/04). Despite downplaying the impact of industry consolidation, Dickins is, however, concerned that further consolidation could be on the horizon if price erosion in Internet access and long distance continues. "If the core Internet bandwidth and long distance price erosion continues, and if all our competitors themselves can’t come up with new types of products, you’re going see margins erode. With eroding margins, you’re going to see consolidation just like Allstream and MTS. It has to happen." It is because of this price erosion, stresses Dickins, that MCI Canada is putting substantial effort in marketing its IP-based products and services.

MCI Canada set to compete with incumbents and competitors

News | September 15, 2004

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