Telecom

Canada will ease restrictions on telecom foreign ownership

In yesterday’s pre-budget Throne Speech, the government announced that it will allow greater foreign investment into Canada’s regulated telecom sector.

The Harper Government had already signaled its intentions when it allowed Globalive to launch its WIND wireless service despite the fact that most of the investment behind the product came from an Israeli company.

The move will likely increase competition and may result in mergers and acquisitions. Perhaps we’ll even see another attempt to merge Telus and Bell.

Personally, I think its positive new for the industry and Canadian consumers.

Telus and GSM – Context is key

Last week, Light Reading quoted Ibrahim Gedeon the Telus CTO as saying that Telus would not entertain the idea of converting its wireless network to GSM and would instead wait for LTE. Well context is everything and Ibrahim sent the following note to Light Reading to clarify his comments:

Our discussion was of a technical nature,
including my references to 2G GSM. Unfortunately, your summary of my
comments has led to some confusion for those that tend to commonly
associate legacy 2G GSM and 3G HSPA as one and the same.

When we spoke, I did indicate that TELUS would not implement 2G GSM
as we are not giving serious consideration to alternative legacy
wireless technologies. The TELUS network already covers approximately
80% of the Canadian population with high speed wireless on our 3G EVDO
Rev A technology platform. To be clear, we continue to evaluate the
complex issues of alternate 4G wireless technology evolution paths.

Also, as mentioned, scale is important to a Canadian wireless
operator such as TELUS within the greater North American or global
context. Given this, we are of course watching moves by our large U.S.
peers in terms of their 4G technology paths. However, this does not
necessarily preclude TELUS from the option of pursuing a particular
technology evolution path at any point in time regardless of the timing
of technology decisions of any U.S. peer.

So who knows, perhaps GSM will play a role at Telus at some point.

Toronto Hydro Telecom on the Auction Block

The Toronto Globe and Mail is reporting that Toronto Hydro Telecom has hired CIBC World Markets as adviser and is canvassing possible suitors.

The Globe reports that analysts said big telecom companies in Toronto, which include Rogers
Communications Inc. and Bell Canada, could be among those who might be
interested. Telecom consultant SeaBoard Group also hinted in a report
last month that telecom company Atria Networks, which is owned in part
by private equity firm Birch Hill Equity Partners, could come knocking.

The article doesn’t mention TELUS as a potential buyer but I think it would be a good bet that they’re looking. The purchase would allow them to bring many of their off-net clients onto their own infrastructure and eliminate many of the circuits that they currently lease from their competitors.

With the pending purchase completion of Bell Canada by the Ontario Teachers Pension Plan I seriously doubt that Bell will be making any significant purchases anytime soon.

Telus Mobility Switching to GSM?

The Toronto Star is reporting that TELUS is considering switching their mobility network from CDMA to GSM.

I don’t know about the ROI of such a change, the cost of which is speculated to be in the area of $500 million, but the motivation makes sense. TELUS’ ability to lead innovation (a critical requirement with the trend towards openness and increasing competition) is likely to be limited by its existing CDMA network.

I don’t have any inside information but I think there is a high probability that they will make the technology switch.

Rick McCharles
Telecommunications Consultant
Toronto, Canada

Unified Communications – Presence, Mobility and CEBP

I came across a thoughtful article this morning by Art Rosenberg, The Unified-View. In a post named  Rosenberg’s “Third Law” To Impact UC, Art suggests that the most significant change in business communications is a shift towards Unified Communications over mobility, enabled by device and media independence. Art suggests that this change is being driven by innovative devices and the trend towards open systems.

UC and Mobility

I agree, and I have posted previously on how innovation and the move towards openness, exemplified by Apple’s iPhone, Google’s Android, Verizon’s intention to open their network to non-Verizon devices, and new spectrum allocation, are key indicators of a trend towards a richer communications experience. Unified Communications technology is poised to exploit these changes and its effect will be significant to the mobility industry and to employee productivity.

Telecommunications Service Providers will have no alternative but to embrace the change and to develop innovative new business models and technology. It’s not an easy transition for them to make. However, I’m convinced that defensive strategies designed to protect traditional high-margin revenue sources and legacy investments are doomed to failure.

Intelligent Presence Services and associated functional attributes such as, filtering, availability, accessibility, willingness, capabilities, directory services, federation and awareness, are all critical elements to maximizing the benefits of Unified Communications. Persistence and message acknowledgment are also necessary elements of a UC system to effectively address communications between business applications / processes  and humans.

By leveraging capabilities enabled by, IP Multimedia Subsystem (IMS) for example, a carrier could offer a Federated Presence and Directory service that would enhance enterprise UC applications. As an example, a service provider’s Presence service could be leveraged to compliment a city’s Crisis Management Plan.

Upon declaration of the crisis event, the service is invoked. Based on presence status and availability, the system locates and sends real-time notifications to City officials. Notification is expedited since notifications are only sent to officials based on known availability and capability status. If an official is not available on any device during the initial notification, the service continually monitors the person’s status and sends the notification the moment that the availability of the individual has been detected. The service persists until all officials have been notified and all critical notifications have been acknowledged and recorded.

Communications Enabled Business Processes (CEBP)

Art also discusses the UC aspects of integrating business applications and processes with human communications. This is an area of UC that Avaya began promoting heavily in 2007. We are in the very early stages of CEBP, but many are predicting that it is the area from which business will gain the most benefit from Unified Communications. As Art mentions, “business process analysis and consulting are key to using such technologies”.

Understanding a company’s business processes and identifying areas in the business flows that can benefit from the integration of UC applications is not trivial. For the past year, I have dedicated a large proportion of my time and effort in acquiring a better understanding of the value chain elements and business process flows and how UC should be integrated. As I have stated previously, the CEBP element of Unified Communications presents a tremendous challenge to industry vendors, consultants and analysts who have to date, been focused on the infrastructure elements of UC. Those who are not able to adapt will be relegated to the commoditized and low-margin plumbing aspects of UC.

Rick McCharles
Unified Communications Consultant
RIC Services

IP Communications & Telecommunications – 2008 Outlook

As we transition into the New
Year, it is interesting to read about all of the predictions related to
technology. As a consultant in the communications industry, it is vital that I
recognize the trends and events that will shape the industry and potentially affect my customers. Here are a few
of my thoughts on what we can expect in IP Communications during 2008.

TelePresence / Video
Conferencing

Expect to see a decrease in
the capital expense required to implement TelePresence systems. Operational
expenses will however, remain a significant factor in the TelePresence business
justification. For many organizations, the high cost of the high-bandwidth and
the predictable / low-delay characteristics of the network circuits required to
support TelePresence will continue to negate the business justification. A
service provider, focused on providing the appropriate network connectivity with
a pay-per-use / on-demand business model, could accelerate the adoption of TelePresence
in some smaller enterprise but I don’t expect to see that in 2008.

Net Neutrality

Expect to see more
controversy related to Net Neutrality as service providers continue to test the
waters with respect to public opinion and the scrutiny of regulators. My
expectation is that Canadian providers are more likely to experiment with
various control mechanisms than their US
counterparts.

Margin pressures, increased
competition and accelerating bandwidth demands by competing applications and services
will motivate providers to find ways of tipping the scales in their favour. It
will be interesting to see how it all plays out. Public opinion and potential
apathy are likely to be the most significant influencer’s.

Mobility Industry

I expect many changes in the
mobility market in 2008. Canadian mobility rates have had a reputation for
being among the highest in the world and in the last several years, mobility
has been very profitable for Canadian service providers. The downward trend in
both service pricing and associated profits will accelerate in 2008. Contributors
to the trend include:

• Innovative and new devices
  like the iPhone
• New spectrum allocation and
  associated competitors both in the US
  and Canada
• The trend towards openness
  will result in the Incumbents’ infrastructure being leveraged by competing
  applications and services with no associated increased revenue
• Increased competition among
  existing providers as they compete for a larger piece of the shrinking revenue
  pie
• New competitors unencumbered
  by existing technology and supporting systems or the need to defend existing
  revenue models
  

Hosted Voice Services

With very few exceptions the
availability and the adoption of Hosted IP Telephony services in Canada has been
dismal. I have witnessed overly optimistic and incredibly inaccurate
projections for the growth of this market since the year 2000. In 2008, I
expect the most (albeit still modest)growth for hosted voice services to date. New entrants will appear in both the SMB and large
enterprise markets. So, why should 2008 be different from what we have seen so
far? Several factors will influence the change:

• A general trend by
  enterprise towards acceptance of outsourced and hosted services.
• General market acceptance
  that IP Telephony is ready for prime time and that the transition from TDM to
  IP-based communications in inevitable.
• Service providers will
  consider the errors of previous service launches. Expect services that are
  targeted at very specific verticals and horizontals.
• Service offerings, where
  voice is simply one component of a rich service that will include
  other services such as a-la-carte on-demand software products.
• Services that hold
  the promise of reducing the complexity of Unified Communication services, and include integration services.
• Increased focused by Cisco
  and Microsoft on the hosted space.
  

IP Trunking

By the end of 2008, everyone
in the industry will acknowledge the unstoppable trend towards IP Trunking and
away from analogue and ISDN circuits. As I mentioned in one of my previous
posts, there are huge advantages to IP Trunks relative to PRI. Expect new IP
Trunking services with aggressive marketing and national service delivery
capabilities.

Residential Voice Services

The Canadian Incumbents will
see continued erosion of their share of residential voice services. Led
primarily by the cable companies and to some extent other providers such as
Vonage, the impact to Bell and Telus’ revenue streams is significant with the
loss of over 1,000,000 subscribers and growing. I doubt that anything will
emerge in 2008 to slow or reverse this trend. In my view, the Incumbents have
been slow in acknowledging the threat and have been conflicted in
how to address it effectively.

Vonage will likely
experience a significant reorganization, buyout or will simply go out of
business. I’m convinced that the standalone, best-effort voice delivery
business model is not sustainable. Couple that with the seemingly never-ending
lawsuits brought on mostly by their large competitors, and something has to
give! Vonage can probably be transformed by enhancing the existing voice
service with other innovative and complementary services. However, as it is, it
cannot survive.

Unified Communications

Expect continued hype and an
intensification and a more public battle between Cisco and Microsoft. Business awareness
of the benefits and strategic importance of UC will grow and we are likely to see some
large organizations invest significantly.

In addition, we will see related acquisitions
and investments by service providers and system integrators as they ramp up
their capabilities to address the increased complexity of communication
services as they strive to move up the value chain. Credible and quantifiable
benefits necessary for a compelling business justification of the
required investment for UC will continue to be a challenge.

Commoditization
and reduced margins will continue to challenge the operations of IP Telephony
product resellers and implementers. Those who don’t make the complex transition
up the value chain and acquire the skills necessary to assist their customers with integrating UC into
their operations, business processes and applications will be relegated to the
very thin margins of the UC plumbing.

Rick McCharles
IP Communications and Telecom Consultant
Toronto, Ontario, Canada

Google Telecom – It’s Just a Matter of When

Later today, Google will likely announce its intention to bid on the US 700Mhz wireless spectrum auction which is set to begin on January 29th. If successful, Google’s acquisition of this portion of the spectrum would allow them to enter the US wireless market with an innovative and disruptive business model.

The ability for the incumbents to truly innovate, is in many cases, hindered by legacy business models and investments, and current revenue streams. There is a natural resistance to offering services that would cannibalize existing revenue sources.

Google will have the freedom to offer completely new service offerings free of any internal business-model conflicts. For example, Google could offer very low cost, and perhaps ultimately free wireless service, by shifting the source of revenue from subscription and air time, to ad based services; you get the service for free in return for viewing ads. Additionaly, Google’s propensity for open systems is well known. By the way, it will be interesting to see if the openness philosophy perseveres when Google itself begins to feel threatened by future competitors.

Also, the portion of the spectrum up for auction has different propagation charateristics than the frequencies currently used my the mobile operators. 700 Mhz  is better able to penetrate the walls of buildings which could make  devices operating  at that frequency more attractive to consumers.

There’s a lot happening in the  North American wireless industry. I’m convinced that theses changes will lead to lower prices, wider adoption and new applications.

Rick McCharles
Telecom Consultant, Toronto
RIC Services

Verizon Says Come and Play

Yesterday, Verizon announced that it will be opening up its network to non-Verizon supplied devices. I believe the decision is of great significance and marks the beginning of a shift towards openness that will ultimately spread to all major wireless providers in North America.

“This is a transformation point in the 20-year history of mass market wireless devices – one which we believe will set the table for the next level of innovation and growth,” said Lowell McAdam, Verizon Wireless president and chief executive officer. “Verizon Wireless is not changing our successful retail model, but rather adding an additional retail option for customers looking for a different wireless experience.”

In my view, the trend towards toward openness is unstoppable. Verizon realizes that, if it does meet consumer demand, someone else will. As I mentioned in my TiVo post on Monday, consumer demand will prevail and defensive strategies are doomed to failure. The entrenched incumbents affected by the latest wave of technology-enabled innovation must embrace the change with new business models. Apparently, Verizon has seen the light.  Hello MPAA and RIAA, are you paying attention?

Ultimately the move to open systems will lead to lower prices, innovative products and services, productivity improvements and improved competition for North American business in the global economy.

The next few years will be very interesting, bring it on!

Rick McCharles
Telecom Consultant, Toronto
RIC Services

Canadian Wireless Data Rates Headed Downward!

It appears that the battle has begun. Last week CrackBerry.com revealed some details on Rogers’ new Personal E-mail on BlackBerry plan that includes unlimited BlackBerry email and BlackBerry messenger for $15.00 per month. The offer is restricted to BlackBerry Pearl customers.

Now, it is rumoured that Telus is about to up the anti by offering the same unlimited $15.00 per month rate but will also include unlimited web browsing. Unlike the Pearl-only restriction at Rogers, the plan will be available for the 8130.

Combine these events with last week’s Bell announcement of the HTC Touch $7.00 per month unlimited data plan and it is clear that the downward trend has begun.

The next few months will be very interesting.

Rick McCharles
Telecom Consultant, Toronto
RIC Services

iPhone’s Influence

By now, (well actually several months ago) most of us are sick of all the iPhone hype. And while I have no intention of getting an iPhone once it’s introduced in Canada, I am convinced that’s its influence will be of benefit to consumers.

Apple has raised the bar with respect to mobile phone design and has raised consumer expectations. As a result, we will benefit from the wave of innovation as manufacturer’s compete for their share.

This week, many analysts have speculated on the recent downturn in Bell Canada, Rogers and Telus stocks. The declines have been attributed in part to a general market correction, the 2008 spectrum auction and increased competition.

I am of the opinion, that the iPhone, and its anticipated introduction in Canada by Rogers, is also a contributor to the recent valuation decline. The demand for the iPhone is likely to be robust and Bell and Telus will respond. Additionally, I expect that Rogers will be reducing their data rates since the current rates would likely inhibit iPhone sales.

Last week’s announcement of the HTC Touch with a $7.00 flat-rate data plan by Bell Canada is likely just the beginning of a trend that will see lower data rates and more sophisticated mobile devices by all Canadian mobility providers.

Rick McCharles
Telecom Consultant, Toronto
RIC Services