Bell Cuts Enterprise Staff

Necessary move or strategic blunder? Bell Canada’s enterprise-business workforce is down about 60 staffers after the carrier made some cuts to help corral costs. But the reduction has at least one industry observer scratching his head. "If you’re serious about the enterprise market, you don’t cut a third of your customer-contact people," said Ian Angus of Angus TeleManagement Group Inc. Bell chopped the positions – middle managers that generally provide customer support on key, big-company accounts – in December."It’s all part of the initiative to create the cost structure we need to survive and compete in the environment we’re in," said Mohammed Nakhooda, a Bell spokesperson. He pointed out that the telco is battling a number of competitors for large companies’ business, and sometimes reorganizing is the only way to keep ahead. The cuts come at a crucial time for the incumbent. Bell faces a new competitive landscape for the lucrative enterprise market. Large companies are increasingly turning to systems integration firms, including IBM Corp., for telecom equipment-management and servicing. The changing competitive situation spells new priorities at Bell. "We’re no longer just a connectivity company," Nakhooda said. "We’re ICT: information communications technology. The network is the lifeblood but the applications are what the customers are looking for. We’ve done things like Bell Security Solutions and put our resources there." But while Bell has created new businesses specific to network security, storage and other IT areas, questions remain about the carrier’s prospects in the enterprise field. In the third quarter of 2005, which Bell reported last November, the telco recorded a revenue increase of just 5.3% year-over-year in its business segment. Most of the revenue (2.8%) came from the small- to mid-sized business (SMB) market. The enterprise business market contributed just 1.7%, and the remaining 0.8% came from other Bell endeavours. The firm’s legacy wireline revenues eroded in part because of increased competition. "It’s going to be an operational problem for them over time," Angus said of Bell’s enterprise struggles. "They are doing well in the small-to-medium market. Of course, those customers are less likely to call up IBM to take care of the phones. But in the large, national accounts, they’re hurting badly. And they don’t seem to have a way to deal with it other than laying people off." Nakhooda said the picture isn’t as bleak as Angus claims. "You’ve seen some of the big customer wins we’ve had: Aéroports de Montréal, Kingston General Hospital, Manulife….As part of the ICT play, we have the building blocks through Elix, our contact centre arm, Infostream, our storage arm, and Bell Security Solutions….You will see in the coming months strong progress within enterprise." Bell announced last month a deal to provide IP telephony services and gear to RBC Financial Group. The telco planned to work with Cisco Systems Canada Co. and IBM Canada Ltd. to implement the managed system, converting approximately 8,400 phone lines to VoIP."The agreement once again demonstrated that Bell’s strategy to become the...ICT leader in Canada is working," enterprise group president Isabelle Courville said in a news release. But is Bell taking the smartest steps? The company certainly faces some heavy-hitting systems integrators these days. One of its investments, Montreal-based IT management outfit CGI Group Inc., seemed to be the service provider’s best bet for that battle. But in December Bell sold its share in CGI for $859 million. "It was no longer strategically essential for to hold an investment in CGI, given that Bell Canada’s focus is on providing network centric managed services and applications," reads a press release. "BCE and CGI agreed that their ongoing relationship — and the significant mutual benefit it represents — could be secured through commercial agreements." Angus said the enterprise market is challenging for service providers. Large companies command a lot of clout at the bargaining table, and sometimes the result is thin margins for the carrier. Still, the analyst isn’t convinced the latest headcount reduction makes sense. "I don’t think Bell is a stupid company. I think this latest move isn’t smart." Employment RumblesRecent reports suggest Canadian technology workers face a tumultuous hiring environment, whether they’re looking for employment or seeking employees. Late last year Robert Half Technology said 9% of the 270 CIOs it surveyed planned to hire full-time IT staff in the first quarter of 2006. That’s down significantly from the HR research firm’s Q4 2005 forecast, in which 18% of CIOs planned to hire. Microsoft Windows and Cisco product expertise are among the most sought-after skills, Robert Half said in its latest assessment. Meanwhile, an Accenture analysis last October said the ability to retain talent can make or break a business. Forty percent of the 250 senior executives Accenture interviewed said the inability to retain workers represents the greatest threat to profitability. The Canadian Advanced Technology Alliance’s (CATA) report on small- and mid-sized businesses in Ottawa provides good news for job seekers: more than 75% of the companies surveyed said they’re boosting their knowledge-worker ranks these days. And the non-profit Software Human Resources Council (SHRC) is offering to pay up to $10,000 of a recent college or university graduate’s first-year salary to assist IT hiring. Avaya Warns of Windows CrackAvaya Inc. is warning customers that the Windows Metafile (WMF) vulnerability could affect some Avaya products. The network equipment manufacturer last month urged users to apply Microsoft Corp.’s patch for the vulnerability. Avaya said the vulnerability could harm two classes of Avaya products: those that are "software-only," which users might install atop a potentially affected operating system, and those that are "systems" that incorporate the potentially vulnerable OS. Avaya included its Computer Telephony, IP Softphone and Unified Communications Center products in the list of possible targets. The WMF vulnerability resides in the graphics rendering engine of Microsoft operating systems. A specially crafted WMF image could give an intruder access to a computer if the PC’s owner visits a particular website or opens a specific email attachment. Open ‘Net Access UrgedPeople concerned about keeping the Internet a forum for free exchange of ideas have a new weapon in their corner: the International Open Internet Coalition (IOIC). Created last month, the group hopes to quell recent attacks on the ‘Net’s inherently transparent nature. "An Internet that is increasingly biased away from being a neutral and open resource is at risk for serious degradation of its commercial and social values and usefulness," the IOIC wrote in a letter to the Internet community. Learn more at www.ioic.net. The IOIC’s advent comes as various entities attempt to place controls on the world’s communication backbone. Last month Microsoft Corp. shut down a blog from a Chinese researcher at the request of China’s government. The blog in question discussed political issues. The IOIC also comes on the heels of news that some US phone companies plan to levy fees from content providers to transmit movies, music and other premium services over telco networks. And there is some concern that Internet advancements from the likes of the ITU could result in "walled garden" access, with certain content accessible only by extra payment. A list of Internet bigwigs created the IOIC: David Farber, computer science professor at Carnegie Mellon University; Peter Neumann, a chairman of the Association of Computing Machinery; and Lauren Weinstein, co-founder of People For Internet Responsibility. To participate, send a message to info@ioic.net. Nortel Loses, Gains ExecsThe revolving door in front of Nortel’s C-suites has spit out another head honcho. Clent Richardson, chief marketing officer, is gone as of March 1. According to a Nortel press release, Richardson is leaving for personal reasons, and he plans to relocate his family from Toronto to the US west coast. Richardson is the fifth Nortel officer to leave the company since last September, when the firm announced its third internal restructuring in as many years. But as one goes, another comes in: Nortel announced that David Drinkwater would be Nortel’s new chief legal officer. Speaking of doors, Nortel owns a new set of them. In December the firm said it would take up residence in an 11-storey, 160,000 square-foot building in Toronto’s west end. Nortel sold its former 1 million square-foot head office to Rogers Communications Inc. in October for $100 million. Biz VidVidéotron ltée has transformed its subsidiary Videotron Telecom Ltd. into a new business solutions unit to provide business-class phone, data and hosting services for Quebec companies of all sizes, the firm announced. Vidéotron had already absorbed the telecom subsidiary, which focused on big customers. The business solutions department will continue that tradition, and provide services for small and mid-sized clients as well, the company said. New Cisco CertificationCisco Systems Inc. has designed a new certification to address the need for rich-media specialists. The Rich Media Communications Specialist certification trains people to develop, install and manage advanced connective apps like integrated video conferencing over converged voice-data networks, the company said last month. Prospective rich media certificate holders must have active CCNA certifications and must pass two additional exams concerning video conferencing and VoIP. Flat-rate CDMA-GSM RoamingBell Canada says it has the cure for high cross-network roaming charges. Late last year the telco unveiled flat-rate per-minute billing for users crossing from CDMA onto GSM networks. The price: $2.49 per minute across the globe for all in-country and country-to-country calls, including all long-distance charges. The carrier announced the pricing structure alongside the Motorola A840 handset, which provides both CDMA and GSM connectivity. Bell is selling the A840 for $249 on a three-year service contract.Incumbents Lose GroundIncumbent Local Exchange Carriers (ILECs) like Bell Canada and Telus Corp. used to own the local telecom market. But due to competition, the stalwart service providers have started to lose ground, and that trend will speed up this year, say the industry analysts at NBI/Michael Sone Associates Inc. in Toronto. In an analysis of the competitive landscape, the firm says the ILECs are set to give up market share faster than they ever have before. In the business arena, the incumbents will fall to 75.5% of the local market by 2008 — down from 87.2% in 2003. In the residential sector, ILECs will fall to 73.1% by 2008 — down from 97.8% in 2003. The winners: cable companies, which are set to increase their local share now that they’ve entered the voice market. Connected KidsYoung Canadians find their way onto the Internet at a surprisingly early age, according to a report from the Media Awareness Network. The service-provider-supported organization, with a mission to boost Internet education, says 94% of youngsters access the Internet from home, and students as young as 10 years old rely on the Internet to stay connected with friends. Almost 90% of Grade 11 students use Instant Messaging (IM) daily, 31% have a Web cam, and 28% of students download TV shows and movies from the Internet. Wiretap Protections QuestionedA group of researchers at the University of Pennsylvania proved it’s possible to trick some wiretap systems into thinking a call between monitored correspondents is complete, thus allowing the talkers to continue their conversation without scrutiny. The researchers published their findings in the November-December issue of IEEE Security & Privacy (www.computer.org/security). The worst case: a monitored correspondent could send a low-amplitude "C" tone over the monitored line. Thinking the C tone is an "on hook" signal, the wiretap system would cease recording. Hear an example with the ubiquitous Alice and Bob at www.crypto.com/papers/wiretapping/unobserved.mp3. The researchers said the problems apply to analog systems and wiretap technologies that meet the US Communications Assistance for Law Enforcement Act (CALEA) standard. "The problems arise from inherent properties of their architecture and design." But the vulnerability exists in just 10% of US wiretaps, according to an FBI spokesperson. "It’s not considered an issue," Catherine Milhoan told the New York Times. It isn’t clear just how the vulnerabilities affect Canadian wiretap systems. Barbara Campion of the Canadian Security Intelligence Service (CSIS) wasn’t forthcoming. "Identifying wiretapping vulnerabilities would be like telling our targets what to do to evade CSIS investigation," she said. VoIP and Cable Phones Gain GroundA recent survey from Decima Research Inc. suggests Voice over IP (VoIP) and cable telephony are gaining traction in Canadian homes. In a survey of 1,040 people late last year, Decima found that 66% of respondents are aware of these alternative phone services, and 8% already use one or the other. The results also indicate a healthy appetite among non-users to subscribe to these alternative home phone technologies. Of those aware of the new services but not already using them, 9% are actively considering using VoIP or cable telephony and another 40% might do so in the future. Those living in Quebec and Alberta are most likely to be either using or actively considering an alternative home phone service, at 20% and 18% respectively. Atlantic Canadians (10%) are the least likely to be considering an alternative to their traditional telephone service. Younger Canadians — those under 35 years of age (18%) — and higher-income households — those earning $80,000+ (18%) — are also most likely to be users or actively contemplating becoming users of VoIP or cable telephony. To determine households’ preferred choice of alternative home phone technology, Decima asked respondents to choose between a service that delivered voice over the Internet or over cable TV lines. On a national basis, each option garnered about 35% of Canadian households’ interest. Those living in Atlantic Canada, Ontario, Manitoba/Saskatchewan and British Columbia are more likely to choose an Internet-based alternative. Quebec households prefer voice over cable. Decima conducted the survey between November 17 and 20, 2005 on its national weekly omnibus teleVox. Survey results are accurate to within +/- 3.1%, 19 times out of 20. For more information on the survey results, or to inquire about the price of the report and data tables, contact Ryan O’Neill at (613) 230-1984 or roneill@decima.com.

Bell Cuts Enterprise Staff

News | 02/01/2006 5:00 am EST

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