Rogers ad goes after fibre-to-the-node, draws predictions of new marketing war

A Rogers Communications Inc. television ad intended to challenge competing services on fibre-to-the-node networks may be the first shot across the bow in a new ad war between Rogers and Bell Canada Enterprises Inc., analysts say. Running in Ontario from Oct. 3 through Nov. 7 and airing during popular programming such as Hockey Night in Canada, the Rogers ad depicts a young boy arriving at an uncle’s house where he will be babysat. “Online game?” asks the uncle, holding a gaming paddle. “Your Internet’s too slow,” the nephew complains. “Not this time, slugger. I just got their fibre Internet. They say it’s their fastest,” the uncle responds as the screen loading on his computer starts to slow down. “Fibre? It still connects to your old phone line,” the boy replies. Moments later, the boy leaves the apartment while the uncle stares at his stalled video game. The ad closes with a narrator’s voice stating: “Their fibre Internet still connects to your old phone line. Switch to Rogers cable and get double the download speed.” After viewing the ad, Greg MacDonald, an analyst with Macquarie Capital Markets, said he sees it as a direct shot at Bell. Bell is currently expanding its fibre-to-the-node services, branded Bell Fibe, and has made considerable inroads in upgrading its new network infrastructure this year in the major markets of Toronto and Montreal, MacDonald noted. The company has been promoting the Bell Fibe service in ads. MacDonald suggested the telco is probably close to starting a new ad campaign to promote the network—which Rogers wanted to get in front of. “It looks like this is a pre-emptive ad to me,” he said. “I’d expect a lot more advertising out of Bell .” Alan Breznick, a telecom analyst with research group Heavy Reading, agreed that the market conditions are right for a reinvigorated marketing war between the two companies. He said that Bell’s promotions for Fibe TV “make it seem like everything runs over fibre.” “This ad says, ‘Well maybe there’s fibre in the network, but in the end it’s still running over the copper network to your home,’” he said. Unlike more costly fibre-to-the-home networks, telcos' fibre-to-the-node services often utilize DSL to transmit data between a home and a nearby hub. Through new technologies, coaxial cable networks can offer faster Internet speeds than fibre-to-the-node networks. Bandwidth capacity is normally shared among users on fibre-to-the-node network, which can be slowed down if many connection points exist between a user and the node. Bell’s Fibe service is likely aiming to ensure every home sees speeds of around 30 Mbps, MacDonald said, which would be shared by whatever devices and applications may be running at the same time. Most consumer homes typically require speeds of only about 10 Mbps, he said. Fibre-to-the-node networks hold an advantage in their ability to offer IPTV solutions like whole-home digital television services and remote access to home television systems, MacDonald said. That’s one area where telcos building out fibre could stand to gain some ground in a brewing marketing war, he said. “The telcos have a new competitive advantage in terms of the functionality of their product, and they’re going to try to leverage that angle,” he said. “Unlike in the 1990s, the debate isn’t just about bandwidth anymore.” Breznick said the Rogers ad is likely also indicative of Rogers’ concerns that Bell’s new network could lure away the cable company’s customers. He pointed to similar fibre-to-the-node and fibre-to-the-home networks now offered by Verizon Communications Inc. and AT&T Inc. in the United States, which have received favourable reviews. “If Rogers looks out over the border and sees what's happening, they have reasons to be concerned,” Breznick said. “This is a big push by Bell, and Rogers clearly has their eye on it and will push back.” Breznick predicts Bell will release a counter ad to highlight the fact that Rogers’ network also doesn’t take fibre straight to consumer homes. It could spark a round of retaliatory ads, he noted, as was the case in a similar round of ads two years ago. Rogers and Bell made headlines in June 2009 when they released a series of competing ads that featured similar blue and red couches to symbolize each side of the rivalry. The so-called “couch wars” saw the competitors name each other directly in marketing campaigns that compared home phone service and television rates and packages. MacDonald noted that the new Rogers ad does not name Bell directly, which may be a result of legal concerns that arose from the couch wars. “We saw some advertising wars over the last two years and we saw some legal challenges, which I believe allow the companies to know what their limits are,” he said. Leigh-Ann Popek, a spokeswoman for Rogers, said via email that the ad is “designed to educate customers about the benefits of choosing Rogers internet. Our cable internet is a superior service, based on a leading technology, offering posted speeds that are two times faster than other technologies such as DSL.” Bell declined to comment. Breznick said some consumers will be influenced by the ads, particularly those who don’t have the technical expertise necessary to compare the competing networks and their unique advantages. If the Rogers’ ad is any indication, he said, video game players may also curry attention from providers as they battle over market positions. “They’re the ones who would be most likely to make a switch to a faster transmission network,” Breznick said. MacDonald agreed, noting: “ are the ones who know, if you ask them, what kind of bandwidth they get from their provider,” he said. MacDonald said the ads will be ratcheted up, but it's too early to say that another round of ad wars has dawned, noting that “it depends on what your definition of war is.” Breznick was less cautious. “The fibre wars are going to be very interesting and we’re going to see a lot of battling back and forth over this,” he said. “It’s going to be fun to watch.” nkyonka@thewirereport.ca

Rogers ad goes after fibre-to-the-node, draws predictions of new marketing war

News | 10/17/2011 10:28 pm EDT

To keep reading, get a free trial.

Already a Subscriber?

Reuse & Permissions

Inside The Wire Report

Information

Hill Times Publishing

Get in Touch With Us