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Who's afraid of the big, bad telcos?

Tue, 06/30/1998 - 8:00pm
James Careless
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Canada's telephone companies have long been demanding access to cable's traditional turf. But some of these companies have been doing much more than just talk: they've been ploughing ahead with leading-edge network trials, testing not just video signal distribution, but much, much more.

NBTel: Lobbying openly

When it comes to telcos attacking cable's traditional monopoly, New Brunswick Telephone — or "NBTel," as it's called — is unquestionably the most aggressive. In fact, NBTel has even applied for its own cable license: an action that has sent shivers down the spines of Canadian cable operators. At the time of this writing, the license application is being considered by the Canadian Radio-television and Telecommunications Commission, the industry's regulator.

In the meantime, the New Brunswick-based telco has already built a province-wide multimedia-capable broadband network called "VideoActive." As well, NBTel has started using it to provide high-speed Internet access — 150 times faster than a conventional 28.8 kbps modem — to customers across the province.

"We're building a multimedia network, and we will use whatever architecture makes the most sense," explains Joe Mosher, NBTel's director of marketing. "We started off with a hybrid fiber/coax network in Saint John. We deployed that to 13,000 homes. Now, we're expanding that same service — which is called 'Vibe' — to homes in Moncton and Fredericton . . . by the third quarter of this year, we'll have 80,000 homes passed."

Asked for more details about Vibe's network architecture, Mosher answers, "We would expect at some point to be building hybrid fiber/coax again, and we'd expect to build hybrid fiber/coax right to the home. But, as we go through that evolution, we don't want our customers or our employees to be focused on technology: we want them to be focused on 'what do you do with a multimedia network'?"

What, indeed? To date, Vibe customers can get high-speed Internet access via the bidirectional network, numerous on-line games, financial services, education-focused content, music videos and interactive home management services, along with a range of Internet applications. According to Mosher, all these options reflect NBTel's emphasis on "e-living and e-commerce."

So where does distributing good, old-fashioned cable service come in? Essentially, NBTel wants to be able to sell this old technology, in order to hawk its new. "It's certainly not a big part of our revenue stream; it's a way to get the network into the home," says Mosher. "And it's a service customers want. They want choice in that, but (still) we wouldn't be doing this for cable television. There's no money in New Brunswick for a phone company being in the cable business."

Bell Canada: Pushing the limits

Bell Canada has always been a leader in the development of new services, and broadband networks are no exception. In Ottawa/Hull, for instance, Bell parent company BCE has just announced plans to turn Canada's National Capital Region into "the world's most well-connected community," says BCE President/CEO Jean Monty. Aimed at 25,000 homes, the company will offer advanced Internet services, "next-generation" telephony services such as voice/fax over IP, video services from BCE direct-to-home subsidiary ExpressVu, and home management options such as security and on-line lighting control.

"We're going to be using a combination of the ATM network that we've got in place today, as well as the Nortel megabit modem," explains Glenn Ward, Bell Canada's vice president of broadband development. It's a plug-and-play device that offers "bandwidth about 20 times (that of) what you can get on a traditional analog modem." In terms of actual performance, Ward says that a customer located more than two miles from the central office can expect data to move at 640 kbps; those closer in will do even better.

This is just the latest Bell Canada broadband initiative, and not even the most ambitious mounted by the telco to date. Instead, that honor goes to "TotalVision," an experimental multimedia trial currently being tested in London, Ontario — the birthplace of Canadian cable TV — and Repontigny, Quebec.

"We've created a 'living lab environment' — an experimental environment — where we're providing a peek at the future, in terms of the types of services consumers will enjoy," says Ward. "The primary emphasis of those trials is, in fact, to experiment with content and technology and systems integration, all of the learnings of which will be ported over to our commercial endeavors, which we're finalizing as the trial proceeds."

The "peek" itself is made up of three core services. The first is digital television, accompanied by an interactive program guide, and 20 pay-per-view channels with movies starting at 15-minute intervals. The second is very high-speed PC Internet access, at data rates reaching 10 Mbps. "That's complemented by some special content we've got on the network right now," Ward notes. Meanwhile, the third core service is a high-speed Internet access system using a Web TV device, which allows consumers to surf the 'Net on their home TVs.

Launched in September 1997, the trial has so far been "very successful," says Ward. "We've got about 2,000 homes connected, evenly split between London and Repontigny."

So how is TotalVision doing? "There's been an overwhelming response to the service in terms of consumer interest," he says. "That's in the face of a very aggressive competitive response from both Rogers and Vidéotron."

This response includes specially discounted price offers only aimed at the test territories, he says. As well, Ward accuses the cablecos of trying "to lock customers into 12-month agreements with significant discounting as well, to coincide with the trial period that we've been licensed for." Apparently, this effort isn't working: "We're still ahead of where we thought we'd be in terms of penetration," despite Rogers' and Vidéotron's efforts, he says.

So does TotalVision represent Bell Canada's declaration of war on the Canadian cable TV industry? No . . . and yes, says Glenn Ward. "We didn't launch them so that we could make any kind of a statement to challenge the cable operators, as it was as much a desire for ourselves to satisfy our vision of being a full-service provider," he explains.

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NBTel has aggressively offered a range of multimedia services, including Internet access.

"We're committed to getting into the high-speed Internet business. We're committed to getting into the broadcast television business. So it was an opportunity for us to go ahead and do some experimentation; do a lot of market research in terms of what consumers want, and build our commercial plans based on that." When those commercial plans will actually be implemented is still in question.

TELUS: Mirroring TotalVision

The broadband efforts of TELUS, the local phone company in the province of Alberta, are virtually identical to those of Bell Canada's TotalVision. Marketed under the name "TELUS Multimedia," the experimental fiber-to-the-curb network is "built past 3,400 homes evenly split between Edmonton and Calgary," says Jim Harvey, vice president of the service. Like TotalVision, it offers conventional cable services, high-speed Internet access, and Internet access via a Web TV set-top device. This last feature is "probably the most exciting piece, because apart from just being able to do Web-TV Internet surfing from your television, it's also possible to have a fairly seamless transition from watching a broadcast channel to getting information about that channel via a Web site."

All told, the top speed of TELUS' multimedia network is a whopping 52 megabytes per second, a rate that drops to 10 Mbps at the consumer's desktop. (This speed drop is caused by TELUS' reliance on Ethernet modems; however, new direct plug-in cards will soon make it possible for subscribers to access the network's top speed, by tapping directly into the fiber.)

To showcase its capabilities, TELUS has established a special high-speed Web site on its network, because the standard Internet just doesn't operate at this level of efficiency.

Currently, the telco is using developmental set-top boxes while it researches a production model with Samsung Electronics. When ready, this set-top will handle both digital and analog TV signals, as well as Internet traffic.

So why has TELUS chosen fiber-to-the-curb, when so many engineers have rejected it as being too expensive?

"We've chosen the particular architecture that we did for the trial because we felt it presented the broadest suite (of) capabilities that we could put together at this moment in time," says Harvey. "We've tried to build this little pocket of the future in the present, and fiber-to-the-curb was about state-of-the art when we undertook that, and still is."

Like Bell Canada, TELUS is using this trial to gauge consumer preferences — rather than as a technology testing ground — so that it knows what to roll out when broadband goes commercial.

All these research efforts beg a very big question for Canadian cable, namely, "have the telco guys come up with something that can defeat the speed of cable modems, and the sheer carriage capacity of today's cable networks?"

No, says Nick Hamilton-Piercy, chief technology officer at Rogers Cablesystems in Toronto. When it comes to catching up with cable, "I don't think they can move fast enough because we're there already. Rogers already has half of its plant communications-ready (and) bi-directional — the fiber's out there — so it's going to be very hard for them to jump and get ahead of it. They can jump and try and catch up, but that's about the best they can do."

Slowing the telcos down — despite their huge resources — is the fact that "they have a huge embedded copper plant," notes Hamilton-Piercy, some of which is anywhere from 25 to 50 years old.

Still, NBTel's willingness to build its own HFC networks — and the determination of Bell and TELUS to test broadband services whatever the obstacles — says a lot for the telcos' determination. What's driving them — and what will see them eventually surmount the limits of twisted pair networks — is the awareness that, in order to survive, they must change. That's why cable can't afford to rest on its laurels in the broadband race, because the telcos are determined to overtake the cable industry — whatever the cost.

e-mail: careless@magi.com


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About the author
James Careless is a freelance communications writer.

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