By Ahmad Hathout
TORONTO – Executives from the largest telecoms said Wednesday that they are seeing more bundled services as the current and future competitive play in a post Rogers-Shaw merger market.
Doug French, Telus executive vice president and chief financial officer told TD Securities telecom analyst Vince Valentini that the Vancouver-based telecom’s strategy of driving more fibre in its footprint has enhanced the quality of its bundling strategy – the practice of reducing prices by selling more than one service, such as mobile wireless and internet.
French said that the company hasn’t seen a change in Rogers’s networks in western Canada yet.
Outside of its home territory, French said bundling is currently a defensive play.
“It’s a test for defense at the moment,” French said. “Right now, it is more a defensive play than an offensive play and it’s definitely bundling that would be our key objective on that front.”
Earlier this month, Rogers announced a price reduction on data and bundled services. In response, Bell CEO Mirko Bibic said Canada is advantaged relative to the rest of the world in that there is great overlap of wireless and wireline facilities, allowing for a greater exercise of the bundled strategy. He argued that these kinds of price reductions are what Canadians already pay during the intense promotional back end of the year.
“[It] shows the bundling value proposition really does matter in the marketplace to consumers and will continue to be an important differentiator,” Bibic said during the company’s first quarter earnings call. “And the players with the largest wireline basis, in my view, will do very well, and on that we cover 75 per cent of the country with wireline infrastructure and increasingly fibre.”
On Wednesday, Bibic told Valentini the bundling strategy is more important now than it was five years ago and that Bell has a significant opportunity to capitalize on it. He said the company still has five million households to which it needs to drive fibre, which gives it some room to work.
Rogers CEO Tony Staffieri similarly said the company is seeing good demand for the bundle, with customers still latching onto the Shaw brand. In other words, customers will order Rogers wireless and Shaw internet. He said that the company will have fully integrated services under Rogers by Canada Day.
Staffieri said while the company drives fibre to households, it is also looking forward to a roadmap with the next generation DOCSIS 4 cable modems, which will allow for faster speeds over the hybrid coaxial-fibre network.
The strategy outside of the bundle, according to Bibic, is to prove the superiority of the product. Bibic said out west, where it doesn’t have the same bundling prowess, the telecom will need to convince those customers that it has the best network.
Bibic also said the CRTC’s move to prioritize its proceeding to provide third party access to last mile fibre assumes the large telecoms don’t have much room to invest in driving more fibre connections. It pointed to the aforementioned five million households it still needs to reach.
Quebecor CEO Pierre Karl Peladeau said this mandated last mile fibre access is essential for the company’s telecom arm, Videotron, to be a national fourth player.
The Bell CEO reiterated that regulators have accomplished their goal of having four rich competitors in the market and they should let the companies “go at it” unencumbered.
Earlier this month, the CRTC launched a trio of consultations on the implementation of the Online Streaming Act, which will create a new framework by which online broadcasters will need to contribute to the Canadian content ecosystem.
Bibic said the regulator is already behind on the process.
“You are looking at three consultations on C-11 and at least 18 months before there is any outcome and then I don’t know what the outcome is going to be – is it going to be a material shift or an immaterial shift?” Bibic said.
“The media sector in Canada doesn’t have time. Bell has reasonable scale in the Canadian context, no scale in the global context; Bell is one thing, but what about everybody else? That framework needs to change much faster. And if in 18 months, we come out with C-11 rules that are as immaterial as the radio review, then it would have been a big waste of time – and it won’t help.”
In another one-on-one interview, Cogeco’s Philippe Jette said the company is “making progress” on launching its mobile wireless business, which will be based on a “capital light” mobile virtual network operator model.
The CRTC approved the final terms and conditions of the regime earlier this month, while also setting a deadline of August 7 for the incumbents to strike deals with the regional providers.
Jette said he is confident Cogeco can strike a deal with the incumbents before the deadline and avoid arbitration with the regulator.
The head of the regional telecom also had some words on the wholesale internet access regime, on which the CRTC is currently consulting. He said it doesn’t make sense that the MVNO regime requires investments in facilities but the wholesale internet regime does not.
“There needs to be more symmetry between wireline and wireless,” he said. “In wireless, you need to invest to be part of the framework; in wireline, there is absolutely no minimum investment required – you can adopt the TPIA framework, get in, never invest. I think we first need to fix that symmetry.”
He also said it is “totally upside down” that the wholesale internet regime allows the incumbents to use the little network capacity of the smaller providers. Bell and Telus, who’ve acquired smaller internet service providers, ride on the Cogeco network.
“The larger players not only have built infrastructure; they have also built market positions through brands and awareness in the markets,” Jette said. “That needs to be taken into account, where when you compare with very small players that have little technology and no brands. So the pricing or the leasing needs to take this into consideration so you can be a national player with a very well-known brand, you can be a regional player with a brand known in your region but not outside, or you can be a very local player with no brand on the regional or national level – all of this has to play in the rates.”
Screenshot of Doug French, Telus executive vice president
