Pricing, data caps, to determine edge in Quebec Internet wars

Pricing and monthly data cap sizes will determine the success of new, competing Internet services from BCE Inc. and Quebecor Media Inc. in the Quebec City market, analysts say. “That’s going to be the deal maker, or the deal breaker,” Amit Kaminer, a research analyst with the Seaboard Group, said in an interview. Quebecor subsidiary Videotron Ltd. announced this month that it is launching a new hybrid fibre coax Internet plan in the Quebec City region. In a release, Videotron said the new service would be made available to Quebec City consumers by mid-May and feature download speeds of up to 200 Mbps and uploads of up to 30 Mbps. Videotron’s move follows that of Bell, which said this month that it has rolled out fibre-to-the-home TV and Internet service to 10 boroughs of Quebec City. In a release, Bell said its fibre-to-the-home network provides maximum Internet download speeds of 175 Mbps and uploads of 30 Mbps. Kaminer said average residential Internet customers will not notice a difference between the services in download speeds. “The caps and the prices are something that you should look at as a consumer,” he said. Kaminer said Videotron is a “very eager challenger” to Bell in the Quebec market. In the last few years, Videotron has provided “blazing fast” Internet service and managed to take nearly one million telephone customers from Bell in the province of Quebec, Kaminer said. “They drive Bell in Quebec to introduce these speeds,” he said. Videotron said in its release that it has been the only Internet service provider to offer service of more than 50 Mbps in its service areas in Quebec since 2009. The Wire Report reported last week that competition in Quebec's Internet service market has picked up since the release of the CRTC's new wholesale Internet access regime, which is likely impacting pricing and monthly data caps. Small Internet service providers such as Distributel Communications Inc. and Electronic Box Inc. are now offering competitive, unlimited usage Internet packages in the province. Kaminer said intense competition in the province between Bell and Videotron is pushing the province's Internet speeds to be faster than in other provinces. “If you compare Quebec to Toronto, there’s a world of difference,” he said. “In Toronto, the upload max would be 25 Mbps, and if you’re looking at download speeds, Toronto is lower.” Bell and Videotron also compete in the TV distribution, broadcasting and wireless service sectors in the province. The companies' competition for TV viewers and advertising dollars in Quebec is expected to increase following Bell's announcement this month of an agreement to purchase Astral Media Inc. Kaminer said Bell and Rogers Communications Inc. tend to enjoy a “more comfortable” relationship with each other with a focus on media “rather than investing more money into the pipes.” Richard Paradis, president of media and telecom consulting firm Groupe CIC in Montreal, said in an interview that Videotron’s new Internet services will increase competition, which will benefit consumers. Paradis said Bell has picked up a significant amount of subscribers in Quebec and has been doing “fairly well” since it launched its Fibe Internet protocol TV service. “The thing about Bell is that it’s been very aggressive going into markets with its Fibe television, and it’s been offering rates for the first year that are extremely competitive,” Paradis said. He said the company has been offering first-year Fibe service rates at more than a 50 per cent discount. Bell’s Fibe Internet offers a lower-tier Fibe 6 service, which provides a user with download speeds of 6 Mbps, upload speeds of 1 Mbps and a 25 GB bandwidth cap per month. According to Bell’s website, Fibe 6 costs $24.50 per month for six months and $43.95 after that. The company’s Fibe 50 service features download speeds of 50 Mbps, uploads of 10 Mbps and a 100 GB monthly bandwidth cap. Fibe 50 costs $101.95 per month as part of a bundle. Paradis said that, to remain competitive, Videotron will have to do the same as Bell and offer low entry fees and discounts for new customers, “at least for an initial phase.” Videotron has yet to release any price details for its upcomming service. Serge Sasseville, vice-president of corporate and institutional affairs at Quebecor, told The Wire Report in an emailed statement that the information in the company's release is “all the information we can make public at the moment.” Roberta Fox, head of Fox Group Consulting, said in an interview that she expects Videotron’s prices to be similar or slightly higher than Bell’s. She estimated that prices for Videotron’s service could be 20 per cent higher. “I’m thinking it could maybe be 20 per cent more, or they’ll probably bundle it in with some other services,” Fox said. According to Videotron’s website, current high-speed Internet services range in price from $45.95 per month for download speeds of 8 Mbps and uploads of 1 Mbps to $149.95 per month for downloads of 120 Mbps and uploads of 20 Mbps. Videotron’s high-speed 8 Mbps Internet service offers a 50 GB usage cap per month. The company’s 120 Mbps service offers a 170 GB monthly download cap and 30 GB limit for uploading. Fox said Videotron could also offer a cheaper, first year rate, or bundled services. Videtron offers wireless, TV distribution, and voice-over IP telephone services. “They could add this new service into a bundle,” she said. “So you could replace your DSL with the Videotron Internet service.” Fox said hybrid fibre coax network technologies like that of Videotron's are “inherently faster” than the small-business grade fibre networks offered by other telcos. “The hybrid technology will always, generally, give you more bandwidth for the same or slightly less cost,” she said. Fox said Canada’s cablecos planned long-term for their network capacity when they invested into hybrid fibre coax networks 10-to-15 years ago. “It’s like they can pick up their lanes and their highways easier because some of it they built for the future, originally,” she said. “They just turn on the lanes.” dgrenier@thewirereport.ca --- CORRECTION: An earlier version of this story incorrectly stated the number of customers who moved from Bell to Videotron.

Pricing, data caps, to determine edge in Quebec Internet wars

News | March 26, 2012

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Pricing, data caps, to determine edge in Quebec Internet wars

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