The battle for the $20B Canadian voice market has opened another front. We have
had long distance competition for a decade and a half; we have had various
sorts of local services competition for six years. But the battle has taken
a turn. The intensity has increased. Alternative voice services providers
have expanded in number, and now include some formidable challengers; Rogers,
Shaw and Videoton, join Vonage and Primus and others. This market is going
to be reshaped. This report calls the state of play at the mid-point of the
first game of the regular season – what has gone before was merely
a warm-up, an exhibition – and this will be an exciting game.
- The cable company threat is the telco’s biggest challenge – the
access-independent challengers haven’t the reach and muscle to
accomplish the same degree of customer inroad. Videotron has shown
the way. By December 2005, in less than a year in the voice business,
it will have signed up more than 125,000 customers. We expect Shaw,
Rogers and Cogeco to show similar results (but of smaller magnitude,
given their higher price points).
- Telecom companies need to continue to innovate: they need to be able
to fight IP service fire, with IP service fire. They need to move beyond
mere replication of exising telephony feature sets – they need
to show the market what else IP can do. Of course, they need to wait
till regulatory are removed – but that time will come. Be Prepared.
- The Telcos might want to take gloves off in extra-territorial gambits
too – there are no restrictions on Telus in Ontario; and with
the saturation coverage of the Bell Olympics there may be some opportunity
for Bell in the West, why leave all the running to cable?
Phone companies are hard pressed to respond to the challenges. Regulatory
restrictions limit their options. We offer some council:
1. Market the legacy of good service. Whisper disquiet and uncertainty
of competitive offerings.
2. Use wireless aggressively to win back customers. And rethink number
portability; the time for it may be now.
3. Understand that customer-losses are required. Political will demands
it. Accept the inevitable, but try to manage it – some customers
you don’t need. Urge them to try something/someone else. Cull
your own herd. Careful though – in a competitive market you can’t
just turn off the tap. Beware the stampede.