Toronto’s One Zone to have limited impact on big players: UBS Canada

A recently released report from UBS Securities Canada Inc. suggests that Toronto Hydro Telecom’s (THT) citywide Wi-Fi network, One Zone, won’t have too much impact on the businesses of the large Internet and cell phone companies. The report, Q-Series: Canadian Wireless, Wireless disruptive forces – noise or reality?, argues that THT will have a minimal impact on the high-speed Internet and mobile wireless markets in the Greater Toronto Area (GTA). The document notes that while the utility telco might be able to steal lower-speed DSL/cable customers from Bell Canada and Rogers Communications, the newcomer won’t put a major dent in the established players’ businesses. "We estimate that target residential market represents only 4% of Rogers and Bell Canada’s combined Internet subscriber base. In the long term, we believe enhancements to Inukshuk (ie, with mobile WiMAX services) and the adoption of 3G services with roaming capabilities will likely limit One Zone’s impact," reads the report. THT, under the leadership of Dave Dobbin, decided to undertake the massive network deployment. Announced March 7, 2006, the first phase of the project to cover the financial district is now complete and the plan is to blanket the entire 622 square kilometres of the city by 2009 at a cost of $48 million. Dobbin touted the ability of the network and its users to save substantial amounts of money on wireless airtime by using mobile wireless VoIP phones. Once operational, he said, "you will never have to pay another minute of cellular airtime. I think that’s a selling proposition. I see users there." UBS Canada concludes, however, when THT introduces voice services over the Wi-Fi network in 2009, the Big Three wireless operators – Bell Mobility, Rogers Wireless and Telus Mobility – won’t suffer significantly. The THT network is simply too small and too late in the game to make a big difference, writes the investment bank. Despite UBS Canada’s conclusions, the company believes that the project will be a success and both residential users and business customers will find it compelling. The investment banking house predicts that THT will capture 5% market share in both the residential and business markets. THT’s citywide Wi-Fi network does have advantages in that it will appeal to certain segments of the residential and small business markets, and despite technology deficiencies, the service is priced competitively. Nomadic users represent a significant opportunity for THT as the city receives a large number of visitors and business travelers. UBS Canada suggests this user base could be upwards of one million. According to the investment bank, this represents one in every 20 visitors or one in every four business travelers to Toronto. "For nomadic users, we believe One Zone will provide better value than hotspots, Inukshuk/WiMAX and 3G services (EvDO and HSDPA) given that it offers some mobility at substantially lower prices," writes UBS Canada. "We believe One Zone could be an attractive alternative for small-medium enterprises (SMEs) given its price, but will be unlikely to meet the security requirements to win significant share with larger enterprises."

Toronto’s One Zone to have limited impact on big players: UBS Canada

News | December 14, 2006

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