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Canada - Market Intelligence Report
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Market Intelligence Reports provide an invaluable mix of vital market data and background information, including telecoms regulation. As in the United States and the larger European markets, Canada's telecommunications sector has been rocked by the volatile economic and business climate of the past few years and is only now beginning to see signs of recovery. The incumbent carriers, including the Bell Canada group and its affiliates, have been forced to substantially restructure their operations in order to become more financially stable and less risk-worthy from the creditors' and shareholders points of view; this has included the divestiture of non-core assets, such as Bell Canada's interest in international carrier Teleglobe (purchased by India's VSNL in 2006), the consolidation or full integration of continuing businesses, employee downsizing, and the slashing of capital expenditure budgets which has had a knock-on effect on the deployment of broadband network capacity. There have been a number of casualties, most markedly in the Internet service provider (ISP) and value-added services provider sector, leaving the incumbents and surviving competitor carriers to pick up network assets and customers at relatively low cost. Some companies which had been facing bankruptcy have been able to survive only by negotiating tough restructuring plans and the abandonment of ambitious network deployment programmes. In this way, both 360networks and AT&T Canada (the latter renamed Allstream Corp and acquired by Manitoba Telecom Services in 2004) managed to remain in the market, but were unable to grow substantially except by selling out to more financially-secure rivals. 360networks had flexed its muscles for an early expansion effort through its acquisition of Canadian competitive local exchange carrier (CLEC) Group Telecom and certain assets of US/north American service providers Dynegy and Touch America, but the Canadian arm of the business was ultimately sold to Bell Canada (which, in turn, has sold-on duplicated assets to Call-Net Enterprises (now part of the Rogers Communications empire)). The incumbents were under even greater pressure in 2005/06. For many years they had ignored their core voice telephony customers as they pursued their broadband dreams. Now, they have had to wake up to the reality that the number of telephone customers is dwindling and the attractiveness of personalised call service packages is waning as mobile phone services become cheaper, more accessible, and more compelling. The launch of data-centric next-generation wireless services in many Canadian markets is leading an increasing number of Canadian customers to abandon their traditional fixed-line connection in favour of a wireless handset. The mobile phone companies, on the other hand, are having to cut off their non-profitable pre-paid customers and attempt to grow their contract subscriber base through the provision of specialised services. There is strong demand for attractively-priced broadband connectivity, both at the residential and corporate customer levels. The key offering is asymmetric digital subscriber line (ADSL), which effectively upgrades a standard telephone connection into a broadband pipe through the use of a cable modem. Whilst this may be a cheap way of stimulating demand for broadband, this does mean that Canadian carriers are in danger of ignoring their commitments to building out fixed-line next-generation networks. It is only in the last two years that carriers such as Bell Canada/Aliant and TELUS have committed to ambitious plans to build out next-generation platforms.
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