Independent VoIP Players Face Tough Market

Decima survey finds preference for telcos, cablecosIndependent Voice over IP providers such as Vonage Canada and Primus Telecommunications will find it difficult to win a lion’s share of new VoIP subscribers, according to recent data from Decima Research. More than two-thirds of Canadian Internet users who plan to subscribe to VoIP service within the next 12 months either as a standalone product or as part of a discounted bundle of communications services say they will choose VoIP service from either a cable or telephone company. This scenario is already starting to play itself out. Quebecor’s Vidéotron ltée recently reported that it now has 23,000 subscribers to its VoIP service in the limited regions of Quebec where it offers service. The Decima research suggests independent VoIP providers need to work that much harder at building their brand and promoting their services, says Mario Mota, a VP at Decima Research. "Clearly, the telcos and cablecos have better brand awareness with consumers. That’s because they have large existing customer bases and have had a relationship with customers for many years. The independent providers need to show consumers that there are alternatives in the market that can deliver a quality product and service." Primus Telecommunications, Canada’s first national Internet telephony supplier, recently reported it had 40,000 subscribers, 90% of whom take Primus long distance service as well. Rogers to Buy Call-NetRogers Communications has agreed to buy Call-Net Enterprises, which operates as Sprint Canada, in a share deal worth about $330 million. Rogers adds about 600,000 consumer and business customers. In addition, Rogers scoops up the former 360networks assets that Call-Net has just acquired from Bell Canada, including fibre access to 1,000 commercial buildings. The acquisition is expected to close in the third quarter. Rogers Wireless CEO Nadir Mohamed says that Rogers will establish a single point of contact for customers of both business wireline and wireless services.For Telemanagement’s view of the deal, see Editorial in this issue. Survey: Canadians Want Stronger Phone Companies The vast majority of Canadians (72%) would prefer to see future telecommunications policy help "Canadian companies become larger, world-class competitors," according to a new survey from Decima Research. The alternative of "encouraging the greatest number of competitors possible in Canada, regardless of whether they are Canadian-owned" was supported by 24% of survey respondents. Opinions are not so clear-cut, however, on the relative importance of the consumer and business user communities. If forced to choose between "emphasizing more choice and savings for consumers" and "ensuring Canadian businesses have the telecommunications they need to stay competitive and healthy," a modest majority put emphasis on consumers rather than businesses (57% versus 38%). Decima Research CEO Bruce Anderson says, "We interpret these results as a signal that people not only have a strong interest as consumers in the outcome of this policy review, but they recognize there are important stakes for the business world as well." Avaya Commits to InteroperabilityAvaya Inc. unveiled details of a strategic product road map and introduced new products last month that are designed to help businesses make the transition to "Intelligent Communications." The new products and services aim to expand Avaya’s share of a global business communications applications market valued at US$30 billion in 2006. The cornerstone of the company’s new strategic plan is an interoperable, multivendor approach to intelligent communications. As a first step, the company is creating an open applications environment, simplifying the design of new business communications applications. Intelligent Communications promises to combine communications and business applications, giving employees, customers and processes the ability to link to the right person at the right time by the right medium over any network. The new Avaya products support its MultiVantage suite of business communications applications. Avaya also announced that it would be extending its relationship with Juniper Networks Inc., to integrate Avaya’s communications applications with Juniper’s routing and security technology. Mail Boxes Etc. to Offer Wi-FiMail Boxes Etc. is equipping most of its 275 Canadian office services locations with Wi-Fi Internet access for business travelers. Bell Canada, which is partnering with Boldstreet Wireless to provide the service, hopes to enlist other carriers to bill usage to cellphone accounts. Consumers Lead Rogers Wireless Data UsageRogers Wireless Inc. noted during its recent first quarter financial results conference call that BlackBerry application revenue had been overtaken by sales of consumer data services. Rob Bruce, executive VP and Chief Marketing Officer for Rogers Wireless, said that until the first three months of this year, BlackBerry had commanded 60% or more of Rogers’ wireless data revenue. Wireless data grew to 7% of per-user revenue in the quarter and is expected to hit 10% of ARPU by the end of the year. Neither Bell Mobility nor Telus Mobility reported data sales in their first quarter results, but in previous quarters, both carriers had noted it to be close to 5%. Rogers Leads in Wireless Wireless carrier results show Rogers ahead both in total subscriber count and new additions. Bell says its results reflect the cancellation of 45,000 non-paying accounts. Wireless Subscriber Totals, 1Q05 Net AdditionsSubscribers (millions)Rogers89,2005.58 Bell Mobility37,0004.96Telus Mobility80,2004.02 Nortel Offers Small-Office SystemNortel Networks has launched Business Communications Manager 50, an IP-based phone system targeted at offices with fewer than 50 users. It can support up to 80 extensions. In other developments:Nortel Networks’ U.S. subsidiary has agreed to buy PEC Solutions Inc., a move that gives Nortel greater presence in the U.S. federal, state and local governments market. PEC has customers in homeland security, law enforcement, intelligence, defense and civilian agencies. Nortel expects to pay US$448 million. Nortel Networks and IBM have formed a joint venture to collaborate on the development of new products and services aimed at business transformation activities. The joint development centre, in Research Triangle Park, North Carolina, will start with 25 to 30 staff. U.S. VoIP Providers Must Offer E911 The U.S. Federal Communications Commission (FCC) has ordered Voice over IP providers to implement enhanced 911 (E911) by September. Under provisions set out in the FCC order, VoIP service providers must offer E911 as part of a standard feature that offers emergency service operators call-back numbers and location information where it is required by public safety officials. VoIP providers are also required to let their customers know of their E911 capabilities and limitations. Bell Back on Track with SuperNet Bell Canada is on track to have the majority of Alberta schools, libraries, and health facilities connected and running on the Alberta SuperNet by June 30 and to have all network construction completed by September 30. Despite recent tension between Bell and Axia, its project partner, the company hit its April 30 deadline of having 394 communities connected to the pan-provincial network. SuperNet has more than 1,000 paying customers, including the government of Alberta and municipal, educational, and medical facilities, and 150 new customers per week are being connected. SaskTel Upgrades Data Net, Call CentreSaskTel is upgrading customer service with a new contact centre platform from Knova Software Inc. SaskTel customer service agents will now have access to one interface allowing them to acquire information from anywhere in the enterprise. SaskTel has engaged Alcatel to upgrade the telco’s data network for delivery of multimedia broadband services to customers throughout the province. SaskTel will use Alcatel’s 7450 Ethernet Service Switch and 5620 Service Aware Manager to build a packet transport network with IP/MPLS as the core protocol. SaskTel already uses a wide array of Alcatel data products. Forum to Address Canada’s Internet SecurityBell Security Solutions Inc., Carleton University, the Canadian Advanced Technology Alliance, Communications and Information Technology Ontario and research network MITACS have joined to find ways to better secure the Internet. The newly formed group, the Forum for Information Security Innovation in Canada (FISIC), plans to fund research projects and develop commercial products in a bid to help the government protect the communications infrastructure from security attacks. The first goal of FISIC is to address the growing problem of phishing attacks on the Internet. (See Telemanagement #225) Consultants’ Reaction Mixed to CRTC RulingTwo consulting firms are divided on the impact of the CRTC’s May 12 VoIP ruling. Info-Tech Research Group believes there will be little impact, while Fox Group says the ruling "shows a clear lack of understanding" of VoIP technology and how it will be used by Canadian businesses in the future. Info-Tech says the ruling will handcuff the incumbents, but only to a certain degree. "It is hardly a fatal blow to their future prospects, as they possess the resources to creatively identify and pursue viable market opportunities in the wake of this regulatory decision." Fox Group states that "the decision to regulate only the incumbents for delivering VoIP-type services will actually have a reverse effect and discourage local competition over the long term within the Canadian telecom landscape." Telus Implements Lockout MeasuresTelus Corp. is turning up the heat in its longstanding labour fight with the Telecommunications Workers Union. Last month, the company decided to no longer collect union dues from unionized employees and won’t remit the dues to the TWU. These latest measures follow previously implemented lockout measures, including suspension of grievance and arbitration activities, freezing vacation entitlements at current levels, and suspension of personal and accumulated time off. Telus and the TWU have been trying to negotiate a new collective bargaining agreement for approximately four and a half years. Cisco Brings IT Education to First NationsCisco Systems Networking Academy and First Nations groups across Canada have partnered to launch a new initiative designed to bring IT education opportunities to remote First Nations communities. Courses are based on the Cisco Networking Academy HP IT Essentials curriculum. Ottawa Funds Northern BroadbandHigh-speed Internet will be deployed to some 51 municipalities in the areas of Abitibi, Abitibi-Ouest, Rouyn-Noranda, Témiscamingue and the Vallée-de-l’Or through a $6.9-million program of Industry Canada’s Broadband for Rural and Northern Development (BRAND) program, together with other federal agencies. The project includes seven First Nation communities. Global Phone Connectivity SoarsThe number of telephone subscribers internationally has quadrupled since 1990, from 10% to 40% of the world population. About 80% of the world’s inhabitants are now within reach of a mobile signal. The figures were announced by International Telecommunication Union Secretary-General Yoshio Utsumi on May 17, World Telecommunications Day. Wireless Fuels Rising Telecom Investment New StatsCan data shows that investment in the telecommunications services sector is up from previous years, buoyed by gains in both the wireless and wireline segments. Capital expenditures in the telecom services industry jumped 12.2% from 2003 to 2004, reaching $5.5 billion, of which $4.1 billion was wireline. This is the first annual gain in capex since the industry reached its peak of $7.7 billion in 2001. Overall revenue for telecom services in 2004 strode past the $34-million mark, an increase of 4.1% from 2003. The wireless sector accounted for the entire increase, revenue rising 17.5% to hit $9.5 billion. The number of subscribers rose 12.7%, and average revenue per user was up 3%. Wireline revenues fell 0.6%, the third consecutive yearly decline. The number of public-switched telephone network lines fell 1.2% between the fourth quarter of 2003 and the fourth quarter of 2004. Profits in the telecommunications services industry continued to increase in both the wireless and wireline segments. Overall, operating profits jumped to more than $7.2 billion in 2004, an increase of 17.1% from 2003. The wireless segment increased its share to 27.9% of overall operating revenue, and 34.7% of profits. The last two years represent a significant turnaround: as recently as 2000-2001 the wireless segment was in the red.

Independent VoIP Players Face Tough Market

News | 05/26/2005 4:00 am EDT

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