Allstream urges cablecos to join it in fight against incumbent telephone providers

An MTS Allstream Inc. executive has urged cablecos across the country to join with his company to take on ILECs in the provision of primary line local residential service. "We have common enemies – Bell Canada and TELUS (Corp.)," Ron McKenzie, executive VP of marketing and business development, told delegates at the Canadian Cable Systems Alliance Inc. (CCSA) annual meeting in Toronto last month. "(Local residential phone service) is not a market we’re in, but it’s a market where we want to enable everybody else to compete in that space, and anyone that wants to get into that space is a partner of ours." McKenzie added that the key was for cable companies, large or small, to offer telco-like primary line services with 911 and 411 capabilities, but also with uniquely differentiated local options that aren’t offered by Bell Canada and TELUS. "Those of you familiar with Bell Canada and TELUS – if you analyze where they generate their cash, do you know where they generate 80% of their profits today? It comes from the local telephone service. Every time you order call waiting, call display, or caller ID, it’s pure profit. So the cash cow for Bell and TELUS is the local residential service, and they will do everything, trust me, to protect that base," he said. With Bell Canada and TELUS contemplating launching a TV distribution business, McKenzie noted that it was imperative for cablecos to get into Voice over Internet Protocol (VoIP) primary line service quickly and to bundle it with cable’s high-speed Internet and TV services before the major ILECS add television to their offerings. "You’ve got an advantage in terms of time," he said, indicating that Allstream could provide the regulatory expertise and the necessary infrastructure to help cablecos jump immediately into VoIP with its Network Resident IP Telephony solution. McKenzie stressed that Allstream’s solution would provide cablecos with speed to market, reduced cost of entry, solid quality service, features such as 911 and 411, and would meet all the primary line regulatory requirements. Officially launched on October 5, Allstream’s Network Resident IP Telephony service offers features such as unified messaging, conferencing, visual call management, and custom web portal support tools. The solution is built on Allstream’s national QoS-enabled MPLS infrastructure, and doesn’t involve carrying voice over the Internet. "The primary driver for why you want to do this is the same key reason that Bell and TELUS want to get into the TV business – churn (NL, Sept. 15/04). All the studies point to bundling driving up present value right away by dropping churn. With two products (in a bundle), the churn rate drops from 2.5 to 1.8 for a cable operator, and it goes down to 1.6 if three things are offered," he stated. McKenzie stressed that to compete with Bell and TELUS, it was necessary to have a full-service local telephony. "It’s not Vonage (which is offering a secondary line telephony option) that is the competitor. It’s the ILEC services that are," he told the gathering of small cableco owners and executives. "You want to go after the primary line customers because that is the cash cow, and you have the facilities to do it." Mountain Cablevision, based in Hamilton ON, is the first customer to adopt Allstream’s Network Resident IP Telephony service. Pat Kiely, director of business operations and development at Mountain Cable, told Network Letter that the solution had been tested to ensure that the technology worked, but that it had not yet been tried by actual customers. He added that Mountain would use Allstream’s solution to roll out its digital voice services commercially, but did not have a firm date for wide deployment. "If you are going to go into the (telephone) market and compete with the incumbent, the quality of the service has to look and feel just like an incumbent phone service," said McKenzie, which Allstream can do by interconnecting its infrastructure with the fibre of the cablecos. With Mountain, he said that Allstream also provides unique telephone options. The telephony support provided to Mountain, McKenzie said, includes traditional service options but also other things such as integration with Outlook mail, instant messaging, the ability to transfer to a wireless device, and multi-market integration of local phone service. For example, a phone number registered in the Ottawa 613 area code could have two other phone numbers – such as a 604 line in British Columbia and 514 one in Montreal – connected to it. Therefore, any calls between the three numbers would always be considered local. McKenzie told cable operators that Allstream was willing to partner with any cableco to take on the ILECs. But during a question-and-answer session following his talk, he conceded that things were different in Manitoba, where parent company Manitoba Telecom Services Inc. (MTS) offers a TV service along with its local telephone service in Winnipeg MB. But McKenzie made it clear that he sees Bell Canada and TELUS as the targets of attack. "Even at the CRTC hearings into VoIP, we cast our flags against the ILECs," he said. "Our goal is not to be in local telephony in residential on a national basis, but to help others get there."

Allstream urges cablecos to join it in fight against incumbent telephone providers

News | October 14, 2004

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