December 05, 2007

Verizon Forbearance - Not This Time!

Been on the road since 8:30 this morning, and am way too tired to get into a long discussion. This news has been out for a while but this has been my first chance to respond, and I wanted to close the loop on my post from yesterday.

So... Verizon lost - that's about all I'm going to say. Newfound pal Ike Elliott was kind enough to leave a comment on yesterday's post with the news, so he gets the big hat tip. Have a look at his post for the details.

Am sure the legal teams at all the CLECs who have been stating their cases so well are breathing big sighs of relief today. It's got to feel good. Competition lives another day!


Technorati tags: , , ,


Posted by jonarnold at 10:05 PM | Comments (0)

December 04, 2007

Verizon Forbearance - More Bad News for Telecom Competition?

Tomorrow - Dec. 5 - the FCC will announce its decision on Verizon's forbearance petition. I'm not a regulatory expert, but have learned enough that this could have serious implications for the state of telecom competition in the U.S.

Blog posts from Om Malik and Alec Saunders from earlier this week tell the story quite well, and those are good reads to get the basic storyline. If you're a supporter of free markets and open competition, you may want to explore things a bit further. A good starting point is Comptel's Free to Compete website, which states their position pretty clearly.

To really get into detail, you can review the report prepared by QSI Consulting that attempts to quantify the economic impact if Verizon got all of its petitions upheld. They make the case that this would lead to a $2.4 billion increase in subscriber costs across the 6 markets covered by Verizon's petitions. This translates to an annual increase of $114 per household.

There are several competitive operators who stand to lose from this petition, and you can view their submissions as well - Covad and XO, Earthlink,and PAETEC.

All told, there's a lot at stake here, and Verizon has been getting its way lately, most recently with their patent litigation against Vonage. If all or part of their petitions are granted tomorrow, life simply gets harder for any CLEC or over-the-top operator who relies on Verizon's last mile copper to access subscribers. If they really want to drive out competition, they'll simply raise wholesale prices to the point where others cannot make money and will need to find other routes to market.

I've always contended that whoever owns the last mile wins, but in today's market, it's not realistic to expect non-facilities based operators to build their own networks. That may have been the spirit of the 1996 deregulation, but it's a different world now. Actually, this may just drive competitors to jump on the WiFi bandwagon and create an end-to-end alternative that bypasses Verizon altogether. Wouldn't that be interesting?

Anyhow, it's the precedent that would be of most concern. If Verizon is even partially successful, it will embolden the other incumbents to follow suit. It's my understanding that Qwest wants to follow suit, but lacks Verizon's clout. And the other major - AT&T - has to sit on the sidelines until 2010, which was a provision for getting the SBC merger done late last year. That's only a few years away, and you can be sure they'll be doing as much groundwork as possible now should Verizon come out on top tomorrow.

It all adds up to an environment that is rapidly reversing the course of telecom deregulation. With the pureplay VoIP providers pretty much out of the way now, the telcos can now move on to the CLECs, and this petition could lay the foundation for raising the barriers to entry so high that only the incumbents can stay in the game.

If this is the world you want to see, then you'll be rooting for Verizon and a friendly FCC tomorrow. I'm in the other camp, however, and feel that this is another example of anti-competitive behavior that is ultimately not serving the best interests of consumers. For anyone else who feels the same, please have a look at these links, and pass them along.


Technorati tags: , , ,

Posted by jonarnold at 04:52 PM | Comments (1)

November 29, 2007

Canada's Mobile Markets Are Opening Up Too!

I've been offsite all day at a Telus symposium - post about that coming tomorrow - and wanted to get this post out now for two reasons.

First, this news broke late yesterday, and I haven't had a chance to comment about it at all. It's a huge breakthrough for Canada's wireless market, and needs some blog attention.

Second, this news comes fresh on the heels of Verizon's ground-breaking news earlier this week about opening up their wireless networks. These two developments are quite different and certainly unrelated, but together, show that the stars are aligning for an even brighter future for mobility. I think it's pretty incredible that both items are occurring so close in time together.

The Verizon news is really out there and has been blogged everywhere, and I'm not about to add my two cents. It's late, I'm tired, and I'd rather draw attention to the Canadian story, against which Verizon forms a great backdrop.

In fact, I'm not going to tell you anything about the Canadian story. It's been covered quite well already, and I'll lead you first to colleague Mark Goldberg, who I saw briefly this morning at the Telus event. His post from yesterday is a great place to start. I'd also suggest Mark Evans' post.

The main idea is that Canada's mobile market is dominated by three carriers - Bell, Telus and Rogers - and with our small population, it's tough to see how we can support more operators. With a wireless spectrum auction coming next year, yesterday's news set the ground rules to ensure that enough spectrum will be made available for new entries.

There are many issues around this, but it's definitely a pro-competition development. While it does sow the seeds for new players, the likely reality is that only major operators will be able to get in the game, namely Videotron, Shaw and maybe MTS/Allstream. Foreign ownership restrictions will likely remain in place, so this would rule out some tiny carrier coming to market with heavy foreign backing.

Bottom line - the government may be doing the right thing to ensure opportunities for more players, but it's hard to create a more competitive market via regulation.

Videotron wasted no time announcing bold plans to invest $500 million in wireless broadband infrastructure once they acquire spectrum. It's going to take a lot of money to keep up with the big 3, and as with VoIP, it sure looks like the wireless market will quickly be come reduced to a battle between the telcos and the cablecos.

So, the gloves are off, and it's safe to say that the U.S. won't be the only market where wireless is about to undergo a radical shift. Never a dull moment....


Technorati tags: , , ,


Posted by jonarnold at 10:14 PM | Comments (0)

June 21, 2007

Bell/Telus Merger - See Me on CBC News Tonight - Twice!

The latest wrinkle for the fate of Bell Canada is a possible - and much anticipated - merger with rival Telus. It's front page news in Canada right now, and there's a lot at stake on many levels. Not a lot of technology to talk about, but it's a story that will alter the course of Canadian telecom like nothing before - once it unfolds. Right now, there's a lot of talk and speculation, and it's being widely covered in the media and the blogs.

I haven't been commenting so far, but today I got my chance. I just finished shooting two video segments for CBC television about this story. One runs on the local CBC news at 6pm, and the second segment runs on the 6:30 broadcast right after, but on the national CBC network. So, regardless of where you live in Canada, if you're watching TV during dinner tonight, I'll be in your living room, at least for a couple of minutes! Hope you tune in.

We filmed the segments outside, which was very fitting, since it's the first day of Summer - much nicer outside than at my desk, that's for sure. My son Max just finished his last exam, and was home in time to join me, so he took a photo during our shoot. So, here's a glimpse of how TV actually gets done.....

Image1159.jpg


Technorati tags: , , ,

Posted by jonarnold at 02:14 PM | Comments (1)

March 12, 2007

Wireless Number Portability - the Pursuit of Happyness

In Canada, the big day for wireless watchers is Wed this week. That's the day WNP - Wireless Number Portability - takes effect. This topic is getting almost as much attention right now as the shift to Daylight Savings Time this weekend! It sure is great to look out the window at 7pm and still see daylight. Plus, the weather has really warmed up, and hey, it's just starting to feel good all over. Our winters are long here, so forgive me for rambling....

Not surprisingly, WNP is getting heavy play in the media, and this weekend, the Globe & Mail kicked off the first of a series of features on what the fuss is all about. As the title of my post implies, the name of the game is customer satisfaction.

We have just a handful of wireless carriers here, so it's all about keeping the customer happy and not giving him/her a reason to switch. This article focuses on how Telus claims to have the highest satisfaction among its subscribers, and is being challenged by Virgin Mobile for this distinction. Since all the wireless operators are offering similar services, there isn't much differentiation happening. Also, since the market is basically an oligopoly, you're not going to see the carriers get into a price war. So, they're going to compete on customer service and satisfaction, which are good things to be doing, but I'm not sure it's going make much difference.

Frankly, I think this is largely a zero sum game where the deck just gets shuffled a bit, but at the end of the game, there are still 52 cards. WNP might help nudge overall adoption of wireless up a bit, as there will be some who are ready to cut their landline. But for the majority, it's about switching from one wireless carrier to another, and I don't think there will be any huge swings once it's all said and done. Win one, lose one....

The Globe article presented some very interesting data about how the market shares vary wildly from province to province. Their data is from 2005, so it's not entirely accurate, but I don't think the overall picture has changed that dramatically. Basically, Telus leads in the 2 main Western provinces (their home base) - B.C. and Alberta. Bell owns the Atlantic region and has a strong hold on Quebec. Rogers is the leader in Ontario, but Bell is not far behind. And then there's Saskatchewan and Manitoba, both of which are practically monopolies, where the provincial wireless operators hold most of the subscribers. Very interesting mix, especially considering that while Rogers may be the #1 wireless operator in Canada, in 2005, they were the market leader in only one province - Ontario. I'll stop there, as I get a bit nervous reading much more into data from 2005.

Numbers aside, I think we can expect to see Bell aggressively go after Telus's stronghold out West. After all, wireless is the reason why Telus has been such a stock market darling, and the inverse has largely been true for Bell. Telus, of course, will try to do the same out East, as this is has been by far the market they've had the most success penetrating. They aren't in the residential landline business here, and they've had limited success in the business market. So, they have a lot riding on wireless for their growth plans out East.

And then there's Rogers. They've had the hot hand lately, adding more subs than anyone, and have the most interesting mix of services that can be bundled. I know first hand, since I'm a Rogers customer. I've been getting constant calls and mailers from them about how I can upgrade my wireless plan. So, Rogers will be a target for both Bell and Telus, making this a three-way race. It will be fascinating to watch how this plays out, especially by region, and when the scorecard comes my way, I'll be posting.

UPDATE - I held off posting so I could read today's WNP feature in the Globe & Mail, and that's a good thing. Today's story raised some very interesting points that only reinforce my view that WNP may not be that big a deal in the end.

1. When you port your number, guess what? You have to get a new phone. Ughh. In the voice-only days, that wasn't such a big deal. But with today's Swiss Army Knife phones, people's whole lives are stored on their mobile phones, so now there's more work involved to transfer all your directories, MP3s, videos, photos, etc. to another phone. Presuming you can find a phone that you like. To me, that can be a significant switching cost in terms the effort involved.

On that count, WNP may well favor those who have the coolest phones. In my books, that's gotta be Rogers, mainly because they're on GSM. That means the Blackbery Pearl. And... big drum roll...if you can wait until summer... the iPhone. The jury is still out - at least for me - as to whether the iPhone will re-invent mobility, but I'd much rather have that product in my stable than in someone else's.

For those of you who have read this far along, you may notice that there's no mention of this point in the article I just referred to. Correct. It was mentioned in a sidebar that ran the print edition, but not online. So, you don't get all the good stuff online - but you do the reader comments, which I just love.

2. Contracts. Unlike the VoIP world, wireless is all about the contracts. It's not always so easy to just up and go to another carrier. I know I'm in the middle of 3 year terms for both my cell phone and my Blackberry, and it's going to be expensive if I decide to switch carriers. I think it's a pretty safe bet that our wireless carriers won't be waving these penalties come Wednesday. So, another switching factor to consider.

3. Did you know...."When a customer moves their number to another carrier, for example, that data will be transferred via a hub in Tampa operated by Syniverse Technologies Inc." ???

I had no idea, and this point is kind of buried in the article. Syniverse Technologies may be well known in the wireless community, but they're hardly a household world among consumers. I don't think it's a stretch to say that some Canadians would be uncomfortable if they knew that their efforts to port over to a new carrier would entail sending personal data down to the U.S.

This subtlety was not lost on readers of this article, and a quick scan of the comments confirms my suspicions - at least from a few readers. This may well be one of those things that's no big deal, but the fact that WNP is not a complete made-in-Canada handoff, will not sit well with everyone. In my books, that's going to be another reason for some people to just stay put.

Technorati tags: , , , ,

Posted by jonarnold at 10:55 AM | Comments (0)

December 12, 2006

Canadian Telecom Market Becoming More Competitive

Always seems to be local news of note when I go away.

So, two quick items to mention in absentia. Yesterday, Canada's Minister of Industry, Maxime Bernier, announced the latest decision on competition, and basically the news is that the incumbents will be better able now to compete on a level playing field with the competition. This is certainly good news for Bell and Telus, and consumers should start to see more aggressive marketing and pricing from them for VoIP plans in the near term. There's more to the story than this, and will steer you to Mark Goldberg's blog, where he has a couple of posts on this.

For a synopsis of the news, the Globe & Mail had their writeup yesterday. I'm posting it not so much for the article, which is ok, but all the reader comments, which I really enjoy. The overall sentiment is definitely pro-competition, and a few of them point out what I've long been saying - the "competition" the CRTC is protecting aren't little startups - it's the big cablecos, who are in no danger of going broke if the telcos dropped their prices tomorrow. There's a fair bit of cycnicism in the reader comments as well, that the telcos will never lower their prices, so there are a few layers of emotion to this issue.

Secondly, Bell Canada had their annual Business Review Conference today. I attended last year, and quite enjoyed it. Unfortunately, it comes during the Cisco conference, and many Canadian analysts are down here! Mark was there, and filed a short, but punchy post about it, and I suspect the analyst ranks were a bit thin there today. Sorry I missed it - thanks for being there, Mark!


Technorati tags: ,

Posted by jonarnold at 07:57 PM | Comments (0)

November 17, 2006

Canadian Telco Deregulation Update - Getting There...

I'm in Boston at the Avaya analyst conference, and have missed all the news about the Federal government's latest ruling on VoIP in Canada. Basically, the Cabinet has come out in favor of deregulating VoIP - finally - but only for access-independent services. Essentially, this means that the Canadian ILECs are freer now - not completely - to compete head on with the broadband offerings like Vonage and Primus, and of course with the cablecos like Videotron, Rogers and Shaw - neither of whom have been subject to regulation.

As a result, VoIP pricing has been all over the map in Canada, with Videotron clobbering Bell in Montreal with a discounted service, while Shaw has gone the other way with a premium priced service in Alberta. Shaw has also had success, just not as much due to the pricing. However, they've had a good run picking up any unhappy Telus customers, and to date, Telus doesn't have a residential VoIP offering, so there isn't as much pricing pressure on Shaw in the first place.

There's a lot more to this story, espcially understanding what access independent means. More importantly, I have to get going on my day here! I had this post ready to go yesterday, in fact, but PC problems got in the way big time.

So, I'm going to stop know, and direct you to Mark Goldberg, who has been posting about this steadily the past few days, and has a very good handle on the decision. Please review his recent blog posting, which includes his own white paper written last year, which proposes a lot about what has since transpired. Mark also comments on why the decision hasn't gone far enough.

Another fellow CDN blogger, Mark Evans, has also provided some commentary. For what it's worth, Mark E was my podcast guest last week, and Mark G was my guest the week before. Thanks guys!

Technorati tags: , ,


Posted by jonarnold at 07:18 AM | Comments (9)

October 31, 2006

Canada's Telecom Income Trusts Derailed

I haven't been commenting much recently on the chess game going on between Telus and Bell about converting themselves into income trusts. This is a sexy investment vehicle, and to many, it just looks like a tax scheme designed to pass the burden from the carriers on to investors. That may be oversimplifying things, but there's a lot of truth to that. There's more going on of course, and I'm going to point you to two posts that have reported that latest news, and it's pretty significant.

In short, both Telus and Bell looked to be well on their way to making this happen, when late today, our Finance Minister issued a statement outlining a "Tax Fairness Plan" for Canada. In short, it looks like the federal government is going to overturn this process, meaning that Bell and Telus will not become income trusts and the status quo will remain.

This is a very interesting turn of events, and will undoubtedly drive our stock markets here in the morning. With this looking like a done deal for so long, the markets have already factored this into share prices, especially Telus. So, expect a bumpy ride for these two tomorrow. Trick or treat!

It's also very interesting to note that the strongest competitor after Bell and Telus is Rogers. Well, guess what? They're not talking about income trusts, and they just announced street-beating Q3 results today. Not only are their metrics great, but they've announced a 2:1 split and a 113% increase in their dividend. How's that for giving back? With performance like this, the Federal government has a pretty good precedent for saying that Bell and Telus are fine just the way they are. Talk about letting the air out of a balloon. This one isn't over, but it's a potent reminder that as powerful as Bell and Telus are, there are higher forces at work to keep them in check - rightly or wrongly.

Fellow bloggers Mark Evans and Mark Goldberg both have strong insights about these developments and I urge you to follow them for more detailed coverage. Great posts, guys.


Technorati tags: , , ,

Posted by jonarnold at 11:08 PM | Comments (3)

August 30, 2006

Canada's Telecom "Bill of Rights"

Only in Canada, eh.

I just wanted to note that our telecom regulator, the CRTC, has issued a "bill of rights" for consumers regarding telephone service.

The intentions seem consistent with the spirit of Internet Freedoms which proclaim our rights to choose our providers, access applications, have clear access to content, etc. It's a nice message, and am sure will assure consumers that the CRTC is acting in their best interests to ensure they can make fair, informed decisions about telecom services. Certainly for the mass market this is a good thing, as we now have so many ways of getting phone service, and most people don't live in VoIP-land.

How this plays out with the carriers remains to be seen, as clarity and fairness is not always their top priority, especially as the market becomes increasingly crowded with new offerings and bundles.

Fellow blogger Mark Goldberg is much more attuned to our regulatory issues, and I recommend reading his post for further analysis and context. In short, I agree with Mark - "set minimum standards, and let the marketplace decide".

Technorati tags: , ,

Posted by jonarnold at 11:49 AM | Comments (0)

August 23, 2006

The Dark Side of Net Neutrality

I'm not following Net Neutrality that closely right now, but I'm interested enough to draw attention to a very interesting initiative local colleague Mark Goldberg is part of.

He posted about this earlier today, and it's worth sharing in terms of where an unbridled Internet can readily go in places that can't possibly be good. This is a story in progress, and Mark has noted that it's already been picked up in the Canadian press, so this is far from just being a blogosphere issue.

In short, Mark is part of a group that has filed an application to the CRTC, requesting they give carriers the power to block access to websites that are clearly not in the interest of the public good. As it stands, carriers need to get permission from the CRTC to do so, and as such, a mechanism does exist, but one that is not very efficient or practical for the Internet.

The article and Mark's blog go into greater detail about the specific issues, but it's basically about hate groups and how they use websites to spread their message, and in this case, to incite others to undertake acts of violence against people they do not care for.

Ugly stuff for sure, and I'd call it the dark side of Net Neutrality. With freedom come obligations and responsibilities, and someone has to draw the line between the right to individual expression and what is in the best interest of the public good in a free society. The Internet cuts both ways as a communications channel, and has always been rife with excess and abuse. While the basic principles of Net Neturality are worth fighting for, I think it's perfectly reasonable to empower carriers with the right to block content for things that are so clearly on the wrong side of the law.

Sure, this could also make it easier for carriers to block content that is not in their own economic interest, but that's not the issue here. To some extent they have to be expected to demonstrate good corporate citizenship, especially when there are no economic issues involved. Perhaps this is just the Canadian way, but I don't think so. I just see it as doing the right thing. To that end, I wish Mark and his colleagues good luck in their application.


Technorati tags: , ,

Posted by jonarnold at 11:09 PM | Comments (1)

May 18, 2006

Today's Concall from Save the Internet and Moby

Yesterday I posted about this concall, which took place earlier today. I listened in, and just wanted to share some thoughts.

The concall was a well orchestrated effort to keep pace with the telco lobby in their efforts to influence the Net Neutrality debate. On the call was Tim Carr, who coordinates the STI coalition, recording artist Moby, and Congressman Ed Markey (D, MA), who has been championing this issue.

I'm not a regulatory expert, so I won't go too deep here. The speakers on the call all took turns to state their case, which is basically that the Internet should remain free and open, and we should not let big business take ownership and become the gatekeepers. It's a familiar story for those following Net Neutrality, and there are plenty of blogs that get into this in great detail.

Tim set the stage, talking about the importance of preserving Net Freedoms, and how over 700,000 Americans have signed the petition (myself included), making this a bona fide grass roots effort to get our voices heard. He explained this is a necessary response to counter the "disinformation" being put forward by the big telcos to strengthen their case to defend a dual-tiered Internet. As such, he's urging Americans to "learn the facts" and don't let big biz hijack the Internet. Setting up for Moby, he added that the Internet has become the "medium of choice" for independent artists, and they risk losing this if the telcos get their way.

Moby added his piece, saying that "Internet freedom is under attack", and named some recording artists who have just joined this coalition, such as Trent Reznor, and yes, the Dixie Chicks! He noted the importance of mobilizing citizen support since midterm elections are coming, and this is worth making an issue over. Moby also pointed out this is not just an issue for artists - it was mentioned that both the Christian Coalition and gun owners were onside here as well. When you can get all these people to agree on something, there must be something to it! He ended by making an appeal to support Representative's Markey's proposed Net Neutrality amendment and keep the Internet free.

Representative Markey was the last speaker, and he talked about the issues and challenges around getting his amendment heard. Interestingly, he dropped off the call just when we needed him most! Bizarre. The cynics out there have to wonder if the concall was being hosted by a big telco, and someone decided to mess with the call just to make it interesting. Who knows???

As mentioned, this was a well-orchestrated event, and you can pick up all the pieces from the various posts that followed the call:

Press release about today's call

Text of Moby's statement


Text of Representative Markey's statement


I just wanted to add my overall take on this call. I'm all for Net Neutrality, and nobody really wants to see an "Internet tax" that would ulitmately stifle innovation, creativity and choice (well, hopefully nobody!). And Congressman Markey's efforts need to be supported. I should also add you won't find a more fervant advocate from the IP world than Jeff Pulver, and he's as active in this space as anyone.

My concern is the black and white, good guy/bad guy scenario this call was painting. It's very easy to make the honest efforts of artists and creative people looked oppressed by big business. To some extent that's true, but the scenario being painted is just as fear mongering and self-serving as the telcos. The telcos are entitled to make a fair return on their investment, so there is some basis to their take on Net Neutrality. The bleak world portrayed on this call is not good for anybody, and I don't think the public will tolerate paying twice for Internet access - once to get the basic broadband we get today, then the second charge to ensure QoS for high bandwidth content. I guess I'm not convinced the telcos are that evil and will go so far as to make life impossible for artists who depend on the Internet for their livelihood.

I guess what I'm getting at is a need for clarity and a framing of the issue in a context that is not about winners and losers. We should - and can - all come out winners if this is done right. As Moby noted, the Internet today works pretty well, and as it continues to get better, and as more people continue to use it and benefit from it. it's really our game to lose and screw up.

The tenor of the call suggested an all or nothing outcome, and I'm just not so sure that's what will happen. I tried really hard to ask a question on the call, but couldn't get through. They also didn't leave much time for Q&A, and seemed in a hurry to end the call. Basically I wanted to ask if they could see a middle ground, where there's a distinction made between charging a premium to ensure premium quality access, and the telcos hijacking the Internet to suit their own ends. Or, as Tim Carr called it "economic censorship".

I'd like to think a middle ground can be struck. It's fair to say that nobody should "own" the Internet, but I also think it's a bit idealistic to expect it to be totally open and free to the point where those who have invested in the networks are reduced to being providers of fat, dumb pipes. I didn't get a sense there was much distinction made here on the call about this, and I came a way with the feeling that this call was every bit as orchestrated as anything the telcos would do. I guess that's just the way it is on Capitol Hill, but it didn't leave me with the impression that this coalition has all the answers either.

Posted by jonarnold at 05:02 PM | Comments (2)

May 08, 2006

CRTC Told to Re-Think Their VoIP Decision

I hate to sound like a broken record, but here we go again! In the never-ending yo-yo of Canadian regulatory rulings, the CRTC is now being told by the Federal Cabinet to go back and re-think their VoIP decision from last May. In short, it sounds like they are taking to heart the recommendations of the Telecom Policy Review that came out in March, which any fan of IP would have been happy with.

Needless to say, the incumbents like Bell and Telus were happy. It’s interesting to note that just like the RBOCs are largely getting their way with the FCC in the US, it’s looking more like that’s the case in Canada as well. This is exactly what the ILECs want to hear, as they can now watch the CRTC squirm and possibly – likely – go back on their word and let market forces rule.

If this does, in fact, come to pass, I know Jeff Pulver will be smiling. He was the lone American invited to come up and make a submission during the CRTC’s VoIP public hearings back in September 2004. His message was not well received, but for IP advocates such as myself, it was a message they needed to hear. For those of you who want to step into the time machine, you can review his submission here.

In short, Jeff's position was that the U.S. experiment of letting market forces rule was creating a highly competitive, innovative market, that in turn was driving rapid adoption of VoIP. I would argue that neither has really been the case in Canada. Sure, it’s different up here, but I think the playing field should be level, and we just might see that now.

And we just might see the kind of changes for the CRTC that the TPR has been advocating. Don’t get me wrong, the CRTC has a very hard job, and on the whole, they strike a good balance among the competing interests of free enterprise, good government, and well-served consumers. But their mandate and purpose needs re-thinking, at least as it pertains to the Internet world, which is quickly becoming about everything.

Posted by jonarnold at 08:54 AM | Comments (0)

April 19, 2006

Save the Internet - and Win Fabulous Prizes!

Sounds corny, but it's true!

Jeff Pulver is driving another initiative to convince regulators and policymakers that keeping the Internet open and free is in the best interests of consumers. If not, the RBOCs and MSOs will carry the day, which will ultimately lead to a corporate controlled Internet and throw a damper on the kind of innovation that has made the Internet what is today. That's downright scary stuff.

This message may be preaching to the converted, but the appeal from Jeff and Jonathan Askin is to put our creative minds and spirits together to come up with some compelling messaging that Washington will pay attention to. That's where the fabulous prizes come in.

The best way to learn more, or even better - get involved - is to review Jeff's posting from earlier today. All the details are there.

And for all the bloggers out there - think of this as a chain letter. The more viral the message, the better. Please spread the word.


Posted by jonarnold at 10:34 PM | Comments (1)

April 07, 2006

CRTC Forbearance Decision - Here We Go Again

Yesterday's CRTC decision on telecom forbearance and competition stands in stark contrast to the recommendations put forth by the Telecom Review Panel late last month.

I'm not a regulatory expert, but here are the main points and takeaways I see here...

The threshold for forbearance has been set at 25%. This means that an incumbent telco cannot compete on the same playing field as the competition (cable included)for VoIP until they have lost 25% market share. Well, that's one way to tie their hands, and the ILECs are predictably not happy about this. As per Bell's press release today, they are "profoundly disappointed". That's easy to understand from their point of view, especially since the forbearance threshold for competing in the cable market is much lower at 5%. On the other hand, virtually everyone has a phone, whereas when the cable regulations were crafted, market penetration was considerably below 100%. As such, there was still a lot of virgin territory to fill there, so there was less concern about monopoly control.

So, if I'm going after the incumbents, I know I'm pretty safe poaching their customers up to 25%. If I feel I can compete with them, then I continue to aggressively go after new business. But if I think it's futile to compete, and if I can make money with a small slice of the market, I'll just cherry pick around the edges up to 25%

The CRTC did make a concession to the incumbents by paring back the winback period from 12 to 3 months. So now the ILECs only have to wait 3 months before they can contact lost customers and try to woo them back. That said, the red tape is pretty onerous, it still looks like the deck is stacked in favor of the competition to keep these customers.

I'm not anti-competition, don't get me wrong. The CRTC has, at its core, a mandate to encourage competition, but their model just doesn't work very well given the nature of Canada's competitive landscape. It really is impossible for them to please everybody, and the overall impression is that they have too strong a role to effectively let VoIP take root in Canada.

Since this decision is what sticks, and the Telecom Review Panel is just a report, you'd have to say the forbearance is a win for the competition, and another setback for the ILECs. So, it's good news for cable, good news for ISPs, and good news for VoIP pureplays.

Is it good news for consumers? I'm not so sure. Maybe so in the short term, as competitors don't have to worry about being quashed, so they have more of a free hand to do their thing. However, longer term, we're just seeing a continuation of the regulatory regime that most people view as being out of step with reality. I think the TRP has a better sense of vision for Canada, but the reality there is that their recommendations may not get acted upon for quite some time given we have a different government in power than when the report was put together. What's next? Your guess is as good as mine.


Posted by jonarnold at 10:01 AM | Comments (1)

December 14, 2005

Canadian Podcast Series - a Legal Perspective on Lawful Intercept

This week's Canadian IP Thought Leaders segment introduces a relatively new voice to this space - Rob Hyndman. Rob runs his law practice here in Toronto, and focuses on the tech sector. He's got a great blog, and like me, didn't make it to Round 2 of the Canadian Blog Awards. IP cohort Alec Saunders did make the cut, so congrats to him! Maybe it will be our turn next year...

On the podcast, Rob and I spoke about issues around legal intercept and privacy for IP communications, and how they are treated in both Canada and the U.S. Rob explained the history leading up to the current state of regulations as well as where things seem to be going. He also talked some of the grass-roots efforts underway in both countries that are trying to get the voice of citizens heard in the process as government bodies learn to navigate the choppy waters of regulating the Internet.

VON Radio turned this one around real fast, and you can get the link and learn more about Rob here, where the podcasts are archived on the new VON Radio website. Please check it out. If you just want the podcast link, here it is.


Posted by jonarnold at 09:42 AM | Comments (0) | TrackBack

November 10, 2005

PhoneGnome - Phone Home....

I've posted a couple of times about the PhoneGnome from Televolution.

I'm not much of a gadget guy, but I got my PhoneGnome today, and am looking forward to using it. The concept is great - only problem is I need to find other PhoneGnomers out there to take advantage of free on-net calling. Andy and Alec - I think I'll be calling you soon!

Of course, you can also take advantage of very low LD rates for PSTN calls if you buy minutes from one of the plans offered by PhoneGnome. This is really neat, since you just dial LD numbers like you normally would, and the minutes go against your plan. If you're making a local call or calling another PhoneGnome user, PhoneGnome knows the difference, so you only use LD minutes when making off-net LD calls. Since there's no monthly commitment, you essentially get the main benefit of a VoIP subscriber service for a lot less money, plus you're still on PSTN - so you get the best of both worlds.

Of course, things get more interesting once you add SoftGnome into the mix, since that gives you portability. Now you can take the benefit of cheap off-net LD with you on the road - and have call display still show your POTS number at the other end.

So, two calls to action out there in blogosphere...

1. If you're a PhoneGnome user, I'd be happy to connect with you to test out the quality and help spread the word.

2. If you're not a PhoneGnome user, check it out - and tell 'em I sent ya.

Posted by jonarnold at 09:23 PM | Comments (2) | TrackBack

November 09, 2005

Mr. Pulver goes to Washington

Jeff Pulver and his regulatory guru, Jonathan Askin are closely monitoring the hearings going on in Washington DC right now to develop an effective policy framework for VoIP.

Jeff has been taking good notes via his blog, and I urge you to follow his postings if you want to keep on top of the situation.

I'm not a regulatory expert, but Jeff raises some troubling issues about how fragile Net Freedoms really are, and the seemingly arbitrary approach the FCC is taking to regulating the Internet, especially over the E911 issue - but not doing the same for other communications technologies like wireless or satellite.

As usual, Jeff's timing is right on. Tomorrow is his Peripheral Visionaries Summit, which has a heavy focus on the regulatory issues. He's right in the thick of it during these days before the event, and I expect his next few blog postings will give us a pretty good window on how the FCC is looking at VoIP now, as well as the positions being taken by all the key stakeholders - RBOCs, MSOs, software companies and IM players.

Also of note - uber blogger Andy Abramson will be attending the summit, so look to his postings for a more detached perspective on how things turn out.

Posted by jonarnold at 10:47 PM | Comments (0) | TrackBack

October 14, 2005

Internet Regulation/Lawful Intercept - Canada and US Parallels

This morning Jeff Pulver made an impassioned plea to take notice of how the FCC is looking to exend CALEA's reach into the area of Internet-based communications. As he notes, it's very disturbing to see how the FCC wants to see the regs encompass all forms of Internet-based voice communication - whether or not it touches the PSTN. In their language, this would include services that are "CAPABLE" of receiving or terminating calls on the PSTN. I'm not a lawyer, but this is certainly not in the spirit of Net Freedoms.

On Wednesday, I posted about how the Canadian government wants carriers to support an extensive regime of wiretapping capability. This was front page news here, and it's now a hot topic. There are a lot of parallels here, and it's interesting to see attention drawn to both countries in the same week.

Both stories are a call to action, as Jeff has noted in his posting. As mentioned, I'm not a lawyer, and can't comment on the finer points of the issue. But clearly, there is cause for concern in the IP community. If the FBI and/or CSIS (Canada's equivalent)succeed in getting legal intercept for all Internet-based calls, will email or web surfing be far behind? These are huge issues around privacy, freedom of expression, etc., and they seek to threaten the freedoms that make the Internet so appealing and empowering in the first place.

At this point, I'm an early messenger, trying to spread the word. I'd also like to pass on some valuable links for anyone interested in learning more about the Canadian situation. Rob Hyndman is tech lawyer based here in Toronto, and he sent me these links after reading my Wednesday posting. His input is much appreciated, and I just wanted to share it for anyone wanting to follow this more closely. Rob also has a nice blog, which I will add to my blog roll as soon as I can add that feature to my blog page. I don't think Rob will mind the plug!

First is Michael Geist, who's with the Faculty of Law at Ottawa University. His commentary poses some key questions for Ottawa to consider in terms of what they are really trying to accomplish.

Second is CIPPIC - the Canadian Internet Policy and Public Interest Clinic. This is a good resource for the more technical aspects of Internet policy and privacy issues.

Posted by jonarnold at 11:08 AM | Comments (1) | TrackBack

October 12, 2005

Wiretapping Coming to Canada? Another Fine Mess...

Yesterday, the Globe & Mail ran a front page story about the federal government pushing for telcos to bring wiretap capabilities to all forms of networked communications, whether it be voice, Internet or email. Whoa! This is so.... un-Canadian. This is the land of legalized pot and gay marriage - huh?

In spirit, sure, I can see wanting something comparable to CALEA in this post-9/11 era. After all, Canada has been accused - rightly or wrongly - of being a safe haven for terrorists, among other things. And we're one of the few Western countries not yet touched by any ugly terrorist incidents, so Ottawa wants to be proactive. OK - better safe than sorry - now THAT'S Canadian.

The fact that this made front page news should say a lot about how extreme this notion is. Looks like the feds really want to make a statement here, and go for everything. Looks draconian to me, and I suspect their motives have more to do with desperation in an election year (where the Liberals chances of re-election are not great) than serving the public good.

As the article points out, Canada certainly lags other countries in terms of wiretap capability, but the blanket coverage proposed is a real incursion on privacy, bordering on Big Brother. It's not surprising, then that this will become hotly debated.

One of the nice things about the Globe's online versions of their articles is the reader comments that follow it. One of them correctly noted that applications like Skype will be very difficult - if not impossible - to monitor, and there are so many ways to work around wiretap with today's mushrooming communications technologies. They'd have to invest an awful lot to come up with leading edge solutions to really cover all the angles, and at that point, I can't imagine how you'd justify the expense. Are we in that much danger???

What I find most interesting is the government's out-of-the-blue strong position on this issue - trying to look like they're embracing new technology and taking a leading edge approach to the situation. It's so contrary to their views on other telecom issues, which are doing nothing to make Canada look world class, namely VoIP regulation, lack of wireless number portability, and waffling over satellite radio. To me, the brashness of their thinking on wiretap just adds to the list - another fine mess they've gotten us into...

Posted by jonarnold at 11:11 PM | Comments (3) | TrackBack

September 26, 2005

Telecom Competition in Canada - How Much is Enough?

We are a land of compromise, that's for sure. This is one of my pet peeves about Canada - it works for some things, and not for others.

Our telecom regulator is the CRTC - Canadian Radio Television and Telecommunications Commission. The Globe & Mail reports that today they are about to embark on the latest set of public hearings to define the competitive landscape for VoIP. Apologies - I don't have a direct link to the article yet.

One of the key issues is to determine the level of competition from which incumbent telcos can be deregulated so they can compete on a level playing field with everyone else for VoIP.

In the telco corner we have the facilities-based incumbents - Bell, Telus, Aliant, etc. They say the level should be 5%. So, once competitiors reach 5% market share for local access service, their view is that they get to play by the same rules as everyone else.

Not surprisingly, the cablecos see things differently - Rogers, Shaw, Videotron, Cogeco, etc. They say the level should be 30% - once competitors take this much away from the ILECs, then deregulation kicks in.

Most sources peg the ILEC market share in Canada to be 97% or 98%. If that's not a monopoly in this day and age, I don't know what is. That's the position the cablecos argue from. Telcos just have too much market dominance, and the CRTC's position is that they have to let competitors have a fair shot. That's not unreasonable. So, for cablecos, having competition rise in share from 2 points to 5 points is hardly going to give them a foothold - which may well be true.

On the other hand, waiting until it hits 30% is quite a stretch. What if it never gets that high? What if VoIP just gets so-so market traction - which is my view for Canada - and competitors only take 20% away? Does that mean telcos never get a chance to play fair in the VoIP game?

The hearings should be interesting for sure, and I suspect they will reach a compromise. Both sides know how to play the CRTC game very well. The recent launches of cable VoIP have been successful - by Canadian standards - and will probably help the telco's cause in terms of getting things to go their way. On the other hand, the incumbents have done very little so far with consumer VoIP - aside from Bell's very recent launch - and the cablecos would argue that their dominance for local access is still basically intact, and this will only change if they get a fair chance.

Stay tuned!


Posted by jonarnold at 09:54 AM | Comments (0) | TrackBack

August 16, 2005

Canadian Telecom Policy Review - For Whom The Bell Tolls

Yesterday, Bell Canada issued its press release on their view of how telecom policy should unfold going forward.

Only in Canada can an incumbent put forward such a detailed, comprehensive proposal about how things should be done to modernize telecom rules and regs! The full submission weighs in at an astounding 1000 pages, and the summary alone is 64 pages. I don't know about you, but that's not a document I'm in any hurry to get into. That's what the lawyers are paid for, right?

To be fair, Telus - our other major incumbent - is of the same view, but they're not making nearly as much noise about it. This is understandable given that Telus is embroiled in a messy headline-grabbing labor dispute - mainly in its home turf in Western Canada - and can't devote as much bandwidth to matters in far-away Ottawa. So, this isn't entirely a Bell undertaking - but it sure looks that way.

True to form, Bell made sure the word was heard today during a 2 hour presentation here in Toronto, led by their uber regulatory advocate, Lawson Hunter. You have to give credit where credit is due - Bell does a great job of creating an accessible forum to hear their story, and engage the analyst community in dialog.


I'll leave it to the regulatory experts to dive deep into what this all means, but here are the key takeaways for me.


First, as per an earlier posting, this initiative strikes me as an end run around the CRTC. Bell is masterful at this, and is proactively trying to change the frame of reference by making telecom an issue about policy rather than the regs to enforce it. So, they're taking it to a higher plane of being strategic instead of tactical. To impart some local flavor, this is akin to the gay marriage debate. I believe the main reason why Canada now supports gay marriage is that those on the pro side were able to re-frame the issue from one of morality to one of legality. You can't legislate morality, but once gay marriage fell into the legal realm, the battle was over. In this context, the issue was reduced to a simple matter of human rights, something which Canada enshrines to an absurd degree. Game, set, match. Enough on that - back to Bell...


1. To make telecom a strategic issue, Bell has based their submission on the "productivity gap" argument, maintaining that we're falling further behind our G7 colleagues because we don't invest enough in information and communications technologies (ICT). There's definitely some credence to this, and they've backed it up with references to all kinds of studies quantifying our shortcomings. So, once you get the Federal government to buy into this, the scope broadens well beyond telecom and it then becomes an issue of economic policy. In Bell's view, ICT would become nothing less than a "national priority", under the direct leadership of the Prime Minister. The CRTC might as well pack up and go home.

2. Not only should ICT become a "national priority", but the government - oops, taxpayers - would be leading the charge to invest in ICT. Government, health care and education - all with but a few exceptions are 100% publicly-funded - are among our largest employers. What better place to start to whittle down the "productivity gap"? No doubt, the spirit of the message is noble - stimulate R&D in ICT, and putting our public institutions at the leading edge of efficiency. What forward-thinking government wouldn't want that?

Not only that, but they'll also be handing out generous tax credits and write-offs to suppport private sector ICT investment.

Don't get me wrong - it would be great to see all this happen. Just strikes me that our government is doing all the heavy lifting here. And Bell leads the way with all the wonderful technology and solutions to restore us to our rightful place as high tech world beaters. After all, it's their vision. And a good one at that - so long as there's room for everyone.

3. A regulatory framework driven by the magic of "market forces" instead of the need to ensure competition and choice for consumers. In this world, regulators would be reduced to policemen, merely monitoring and adjudicating misuses of market power. The CRTC would no longer make the rules - they'd just enforce them. And of course, looking after those lofty social issues like ensuring access of services to the disabled. Or taking care of messy things like interconnection. Bell is advocating that the big picture stuff be handled where it belongs - authorities like the Commissioner of Competition, and the Competition Tribunal, according to the Backgrounder brief they prepared.

4. These issues are simply too big for the CRTC now. Bell wants an "integrated" approach to telecom, with "consistent" rules for all the players. In principal, they are totally correct. We do need an overhaul of things here. Bell has carefully outlined its 7 "guidelines" for achieving this - all we have to do is sign on the dotted line and our troubles will be over. These guidelines all merit discussion, but not here. I just wanted to say they address the various shortcomings that all the incumbents saw in the May 12 ruling, and it's perfectly understandable from their point of view. The cablecos, of course, won't agree, and that's another conversation. Something tells me this story still has a few chapters to be written.

5. Finally, for the coup de grace, Bell has to show that the world is on their side. They went to great lengths to cite findings from a recent study showing that most consumers believe they have "adequate choice" for local phone service. Bell's argument for most of these issues is based on the premise that their market power is not absolute, and does not by default transfer to the VoIP world. So, research like this is a key benchmark to validate their position.

Not only that, but they also pointed out that consumer perceptions about choice are far more favorable for local phone service - 66% - than for cable service - 38%. Did I hear Ted Rogers say ouch? If I was Bell and had this data, I'd be using it this way too. After all, fair is fair, and we have to compete with whatever tools are available.

The saga no doubt will continue...

Posted by jonarnold at 02:23 PM | Comments (0) | TrackBack

July 29, 2005

Canadian VoIP - CRTC End Run

For those of you following the Canadian telecom market, you'd know that on May 12, the CRTC issued its VoIP ruling. In essence it was pro-competition - nothing wrong with that. But it effectively maintained a separate set of rules for incumbents, whereby VoIP offerings in their home markets had to comply with the same set of rules as POTS service - more or less. With all the other VoIP players being left unregulated, this makes it almost impossible for incumbents to be competitive with VoIP. With no economic incentive to do so, the incumbents have essentially stayed out of the residential VoIP market so far.

After the CRTC ruling, the incumbents said they would appeal the decision, and they have taken several opportunities in public forums to air their disappointment in the ruling. For the record, there are two large incumbents in Canada - Bell, which serves Ontario and Quebec, and Telus, which serves BC and Alberta. Together, they control about 80% of the market here. The other provinces are served by the other incumbents - Manitoba Telecom, Saskatchewan Telecom, and Aliant for the Maritime provinces.

Yesterday, the incumbents announced an end run plan to bypass the CRTC. They've decided to take a political route by making an appeal to the Federal cabinet which oversees the CRTC. It appears this is driven by their belief that the public supports their position, so they're gambling that 30+ million people can't be wrong, and this should carry more weight than the handful of CRTC regulators who ruled against them.

We are a peaceful and reasonable people, and I guess the incumbents think they can use moral suasion to get their way. Well, it's worth a try since so much is at stake. And on some levels it certainly seems ridiculous that the cablecos should have a free hand in this market, while nobody is challenging their near monopoly status in the cable market.

Also, I have no doubt that part of their argument will be that by keeping them out of this market, the regulations simply make it that much more likely that Canadians will start getting their phone service from American-based providers. That kind of rattling plays well to Canadian insecurities, and I'm sure the incumbents will play that card at the right moment. Stay tuned.


Posted by jonarnold at 09:59 AM | Comments (3) | TrackBack

June 28, 2005

Brand X Decision in Forbes

I spoke to Dave Ewalt of Forbes yesterday about this story, and today's updated version of the article includes a quote by me. Thanks Dave!

Jeff Pulver gets some nice linage too, and his take is the same as mine - cablecos will act in their best interests, especially if they can, without fear of regulatory reprisals. Hopefully, this won't be the case, but the VoBB operators really don't have a lot of leverage here.

Posted by jonarnold at 11:23 PM | Comments (0)

June 27, 2005

Musings on the news - past, present and future

Apologies for this extended absence from blogging. I've been sick the past week and am catching up from a long stretch of being on the road at conferences.

That said, I wanted to comment briefly on 3 things - past, present and future.

Past - last week, the embattled CRTC provided a pro-competition ruling on satellite radio, which is now coming to Canada. While not IP, it's interesting to see how the CRTC has taken such an open position on satellite radio, but has remained rather closed when it comes to VoIP.

There are inherent dangers to their satellite radio decision in the sense that it opens up to Canadian market to a whole new deluge of US stations. Lip service is paid to ensure Canadian content, but even the main beneficiaries of the ruling - Sirius and XM - were surprised at how light the Canadian content quotas were.

Canada is very sensitive about protecting it cultural sovereignty, but it's becoming harder and harder to do with all these borderless technologies - satellite radio, satellite TV, and of course, IP. In that regard, one could view their ruling as progressive, and actually acknowledging the fact this is a battle they cannot win. I don't give them that much credit, but it's probably closer to reality. If they could only do the same for VoIP...

Present - today's Brand X ruling by the FCC. This has been commented on extensively already, and it's another indication of how the wind is blowing in the post-Powell FCC. Along with the recent 911 compliance decree, this ruling makes life harder for non-facilities based operators, namely ISPs, to stay in the VoIP game. I think it's pretty late in the day to do this on the premise that MSOs need to protect their broadband investment. Broadband is tomorrow's PSTN, and they will continue investing in it with or without the ISPs.

The real test now comes when the RBOCs push for equal treatment. If the FCC supports that effort, then it's hard to see how ISPs can remain viable. Then the consumer will truly be faced with less choice, higher prices (inevitably), and little support for Net Freedoms, as the last mile carriers will not really be accountable to anyone other than their shareholders. In this scenario, I'd think the focus would shift to wireless - or maybe even powerline - to develop other last mile access channels to keep this market competitive.

Future - Wednesday is Nortel's AGM, and will be the first for Bill Owens. He's not John Chambers on the podium, but he'll have to be in good form to keep this crowd in check. The meeting will be here in Toronto, and they are making allowances for up to 2500 people to attend. There are probably a few good movie scripts worth of events over the past year, and for the sake of Canada's pride, let's hope that Bill is up for a busy day.


Posted by jonarnold at 10:52 PM | Comments (0)

May 20, 2005

FCC's 911 Decision - Putting Their Foot Down - or Somewhere

Yesterday's FCC decision has attracted a lot of media attention. It strikes me as a knee jerk reaction to the 911 failures that recently happened in places like Texas and Connecticut with VoIP subscribers.

I'm not going to editorialize much here - I'll let the press coverage do the talking. In the past couple of days I've done 5 stories on this topic with the print media, and one this morning with CBS Radio. This amount of coverage in itself is noteworthy. It's great for my profile, of course, but I think it also speaks to the fear factor that's driving a lot of this.

Clearly, the FCC can't be seen as idle when fatal events occur and are being blamed on 911 letdowns. I don't know how many times 911 mishaps have resulted in fatalities with subscribers to incumbent carriers, but the nature of the FCC's decision seems heavy handed in the context of its potential impact on the emerging VoIP sector.

No doubt, the public good must remain paramount, but do the means justify the ends? We all know that the VoIP providers need a solution, and this has been coming for a while, but the realities of complying within 120 days are daunting. It's taken wireless over 15 years to get to this point with 911 - consumer VoIP is barely two years old - it just doesn't add up.

The implication here is that the Kevin Martin administration may end up being less friendly to VoIP, and more friendly to the RBOCs, who would not mind seeing a few roadblocks out there for VoIP. They have enough to worry about with the MSOs and wireless substitution, and this would be one less thing on their list - at least for now.

It's hard not to feel this way when you consider the FCC's rather tepid response so far to port blocking, which is hardly fostering a level playing field.

Enough of that. Here are some of the stories I was cited in on this topic...

Today's Wall Street Journal - FCC Wants 911 On Web Phones Within 4 Months (link may only be good for today - unless you're a subscriber - I can send you a soft copy - just let me know)

Forbes.com - Cost of Net Phone Calls May Rise

Light Reading - FCC Will Force VoIP E911

Also discussed this story with...

- CBS Radio - this morning - may have run already at 10am - no archive

- Dow Jones Newswire

- Total Telecom Magazine


For further insight, especially on more constructive solutions to the problem, please see Jeff Pulver's blog. Yesterday Jeff also issued his own statement which I think captures how a lot of us feel about the decision and what it means for VoIP.


Posted by jonarnold at 12:32 PM | Comments (0)

May 14, 2005

More Thoughts on the CRTC VoIP Ruling

To keep the ball rolling, I just wanted to share some keen insights from the blogs of Mark Evans and Alec Saunders about the ruling. Both are based here in Ontario, and have a local perspective. I haven't heard much stateside from bloggers, and would love to hear their take - and would gladly share it here.

That said, Jeff Pulver noted that in the long run, the CRTC may have made the right call. Maybe - just way too early to tell. Also, our market really is different from the US, so it's hard to make fair comparisons.


Sounds like Mark and I are on the same page. We both agree Canadians have been spoiled by affordable, reliable service, and the incumbent brand power is very strong. It's still their market to lose, and they have so many table stakes on their side that will be expensive for any competitor to match, let alone take away. However... there's nothing like a good shoot-out, and that's what we're going to get now.

For a year now, my mantra to the major US service providers is this: WATCH ONTARIO. We have the ultimate test lab for VoIP. Bell Canada is by far the most sophisticated ILEC in North America, and the same holds for Rogers in the cable space. And both can offer the quad play - voice, data, video and wireless. The US majors are a long way from doing this, let alone go head to head like this. Also, Ontario is on par with almost any US state in terms of being a great market. The critical mass is here - 11 million people, and it's the economic engine of Canada - it's by far the most affluent market here.


Posted by jonarnold at 10:36 PM | Comments (2)

May 12, 2005

Canada's VoIP Decision - Competition Rules

The news came as expected this afternoon - the CRTC will uphold its position, and competitors do not have to fear being squeezed out of the market by the incumbents - at least for now.

So, short term, competitors are the winners - cablecos, ISPs and virtual operators. The incumbents will have to watch the first wave come as competitors rush in and take what they can before incumbents can counter. It will be fascinating to watch, but in the end the consumer should come out ahead with more choice than they've ever had before. I supsect the early going will be about price and cheap telephony, which of course undermines the real value of IP. Once we get past this, things will get interesting, and hopefully more compelling in terms of cools features and apps.

Going to the source, here's the press release issued by the CRTC on the ruling after the lockup this afternoon in Gatineau, which is near Ottawa.

More on this tomorrow. I'll be commenting about the ruling at 8:15 in the morning on ROB TV, our major financial news channel.

Posted by jonarnold at 06:55 PM | Comments (0)

Big Day for VoIP in Canada

Today will likely be marked as the inflection point for VoIP's arrival in Canada, and perhaps more importantly, the end of the ILEC's monopoly hold on local service.

Later this afternoon, the CRTC will announce their long awaited decision on VoIP, and it's widely expected to favor the competitors, and not the incumbents. I've commented on this already in last week's postings, and won't rehash the basic issues here.

Presuming it goes that way, the public hearings from last September will have been for naught, and effectively delayed the market by about a year. In hindsight, I'm sure the competitors don't really mind, as they needed that time anyway to get their offerings right, and to properly complete their trials. And it seems to be paying off.

Not surprisingly, there has been lots of news leading up to today's decision. Two in particular....

First is the Rogers acquisition of Call Net for $330 million. Ted Rogers has always been his own man, and he continues to confound Bell Canada, his main rival here in Ontario.

Call Net is a mixed bag, and in Canada, they carry the Sprint name. Financially they're not in great shape, and about 40% of their revenues come from the declining long distance market. So, why buy, and why now?

Well, the timing lines up nicely with the CRTC date. Presuming it goes as expected, this will be good news for Rogers, and what better way to announce "I'm ready to go" than with this acquisition? Call Net has about 500,000 subscribers, so that puts them into the telecom business right away. Furthermore, they have a good presence in the business market, where Rogers does not yet play. So, this opens up another market, where they'll be going up against Bell again, as well as the likes of Telus and Allstream.

Another interesting twist is that Call Net gives them customers in markets they don't serve with cable. So, now they can be an irritant to cable competitors like Shaw or Videotron - or possibly make a deal with them.

And one cannot overlook the simple fact that acquiring Call Net further consolidates the market, and keeps it out of competitor hands. And really, in the telecom market, a $330 million buyout is not that big of a deal. So, Rogers may be acquiring a good business in decline, but at a manageable cost, and probably little downside risk.

For those not familiar with Rogers, this just adds one more piece to their growing presence in telecom. With their recent Microcell acquisition, they became the number 1 wireless provider in Canada. And with VoIP coming, Call Net will help jump start them on the wireline path. I can't think of any cableco that has this kind of reach, and you have to admire what they're doing. No doubt, Bell is not happy, especially since they could have locked up market leadership in wireless if they had taken Microcell. And here comes Rogers, again, putting another stake in Bell's sandbox.


Second is the Videotron's growing VoIP traction. Today they are reporting about 23,000 subscribers, again, timed nicely for the CRTC ruling. Considering their service is only available in parts of Montreal, and it's only been on the market a few months, their numbers look very positive. In fact, as they report, demand is so strong they can't keep up in terms of providing the hardware and getting technicians onsite to cutover the phone lines from Bell to Videotron.

I still find their pricing plans complicated, and once you add up all the costs, I'm not so sure the savings are that great. However, they clearly seemed to have struck a chord, although it's hard to tell if people are buying on price or they just want an alternative to Bell. I doubt Videotron is making money with VoIP, but they certainly seem to be taking away access lines from Bell, which is a new thing. Bell has experienced a minor loss in access lines - about 150,000 - which is really nothing compared to what the RBOCs are experiencing. To date, Bell's line losses have been to wireless, but I'd say the Videotron numbers are the first notable dent to their wireline numbers from another wireline source. Of course, Vonage and Primus are eating into this as well, but their numbers are not public, so it's harder to say how much pain they really are causing Bell.

So, on this day in particular, Bell no doubt has a lot of cable on its mind. Between Rogers in Ontario and Videotron in Quebec, the future looks anything but simple for Bell. I couldn't resist saying that! Bell has a nice ad campaign running now celeberating 125 years in Canada, and "simplicity" is their key theme.


Posted by jonarnold at 09:40 AM | Comments (1)

May 06, 2005

CRTC VoIP Decision Attracting More Attention

Just a quick post. Spoke to Ben Charny of CNET News this afternoon about the upcoming CRTC ruling on VoIP. He ran a story today about it, and cited my May 4 blog posting as an indication that the ruling will favor the competition over the incumbents.

It's great to see such an important ruling getting this kind of attention from south of the border. No doubt there will be more to come, especially after the ruling, which is slated for May 12.

Timing is everything. Turns out I'm meeting Vonage Canada that day for lunch, and I suspect they'll be in a good mood. I'll let you know if we have steak or hamburger.

Posted by jonarnold at 10:47 PM | Comments (2)

May 04, 2005

Canada's VoIP Regulations Update - Calling Michael Powell....

May 12 is the magic date for the CRTC's ruling on the status of VoIP, and the telecom and cable operators are all waiting anxiously. The ruling could come any time before the 12th - or maybe not until after. Regardless, the consensus is that this has gone on too long, and these delays have no doubt held back the progress of VoIP for Canadian consumers.

There are a variety of reasons as to why VoIP in Canada lags the US, and this is certainly one of them. This scenario may seem odd to Americans - and most other countries for that matter - as the trend just about everywhere has been to not regulate, and just use a "light touch" as the FCC would say.

I don't pretend to have all the answers, and no one knows for sure how the rulings will go. Over the past few days, I've been talking to others about it - analysts, carriers, vendors - and am seeing a fairly consistent picture. Unfortunately, it's not one that Michael Powell would have drawn.

My sense is that the status quo will prevail from the CRTC, and that's the story I'm hearing from others as well. Essentially, this means that the Canadian ILECs will be held to a different set of rules and regs than everyone else, which ultimately makes it impossible for them to be competitive in offering VoIP to consumers.

So while everyone else can offer unregulated VoIP - cablecos, virtual operators, ISPs - the incumbents will have to offer VoIP on the same basis they offer POTS to consumers. This means they have to file tariffs in advance to make pricing changes, they have to provide carrier grade QoS, they have to provide 911, and they would be regulated on winback promotions to re-capture subscribers recently lost to competitors.

Because the ILECs are so dominant in Canada, regulatory policy here is largely driven by the need to support competition and choice for the consumer. Like the US, Canada has a handful of big ILECs, with Bell, Telus and Aliant accounting for most of the market. Competition has existed here for some time, but the impact has been negligible as the incumbents still control something like 98% of access lines. In that context, it's understandable why the CRTC wants to support competition.

The incumbents would argue that their market power in POTS does not necessarily translate to VoIP, and it's unfair to give everyone else an advantage - especially when most of them are large cablecos, ISPs or carriers, namely Rogers, Shaw, Videotron, AOL Canada and Call Net (Sprint Canada). And among the pure play virtual operators, Vonage and Primus are the leading players, and are not fledgling startups. All of these operators can market VoIP any way they choose, and they all have the capability to take a piece of the incumbent's market.

If the regulations stand, it would appear that the cablecos stand to gain the most, and the incumbents stand to lose the most. Rogers will probably emerge as the strongest competitor, simply because they play in the largest, richest market, and they're the only cableco I know who can truly offer the Quad Play. In fact, Rogers is the largest wireless operator in Canada. I don't think any US MSO can compete as well as Rogers in this regard. Of course, execution is another story, and it remains to be seen who has the best game plan and value proposition.

So, what's a Bell or a Telus to do in this scenario? On paper, they could just go out of region and offer unregulated VoIP in each other's markets. That's not likely to happen, and it would never be economical. More likely, they will focus on the brand and reinforce that consumers know what they're getting with them. And of course, they'll tinker with the bundles, and try make LD as inexpensive as possible to offset VoIP's natural price advantage. But will they offer VoIP as a POTS replacement? The economics wouldn't be there, but maybe they could offer it as a cheap second line that's really feature rich, with cool applications that are ahead of what everyone else has. Of course, we don't know what those cool apps will be, but if anyone has the resources to find out, it's the incumbents. Maybe they should also see what advice Michael Powell might have for them - I think they're going to need it.

Stay tuned.


Posted by jonarnold at 11:06 PM | Comments (1)