CANADA’S ILEC’s SURE hope so. They need it to be.
Every quarter, when telco CEOs face industry analysts, one or more of them invariably ask whether the telcos’ rebuild strategy of only bringing fibre to a neighbourhood node, within a kilometre or so of a group of homes, will provide enough bandwidth to make them competitive in the broadband video world.
They also invariably point to U.S. telco Verizon, which is building fibre to the home (or curb or the premises, whatever you’d like to call it) so that it can deliver on its aggressive rollout plans for its Fios IPTV service, local telephony and high speed Internet on one much fatter, harder, pipe.
Invariably (there’s that word again), the Canadian telco execs then point out that Verizon is spending a whopping US$23 billion to drive fibre that deep. Even scaled down so it’s Canada-sized, that’s not affordable here, say the CEOs.
At an RBC conference Wednesday in Toronto, Bell Canada Enterprises chief Michael Sabia reiterated the company’s thoughts on FTTH to deliver IPTV. "Today we don’t see it," he said, saying it would wipe out shareholder returns. "When we look at it on a per-home basis, it is eight to ten times on a cost basis what FTTN is… it’s not an option we would be thinking about."
Executives from MTS Allstream and Telus said the same thing when they, too, were asked at that conference whether FTTN is good enough for what they want to do and are doing.
And those two words: "good enough", are the key. We all know that fibre to the home is the best option in terms of performance because it allows 100 Mbps-plus whereas a FTTN network can range anywhere up to a maximum of about 25 Mbps right now under optimal conditions. Fibre has the highest bandwidth and is most secure and has the best new-service-delivering potential, but tearing out the last mile of network for multiple millions of customers in Canada – most of whom wouldn’t bother taking the telco’s IPTV service – would cost billions even here. Return on investment would be ages down the road.
From a financial point of view, FTTH just not on for the moment. Same goes for any more cable rebuilds, too for that matter. While technical suppliers talk wistfully of 1GHz network rebuilds, Rogers Cable president Edward Rogers poured cold water on any such notion saying that cheaper options like switched video, channel bonding or MPEG-4 will suffice just fine and that Rogers’ 860 MHz network will be able handle anything web surfers or TV watchers want to get.
"We look at our spectrum plan and we’re pretty pleased and don’t see a 1 GHz rebuild," he said.
Part of the hope of the Canadian telcos which offer a terrestrial digital TV service (Telus, Aliant, MTS, SaskTel) or will soon offer one (Bell) is that high definition TV doesn’t accelerate too quickly in Canada – because that’s the real bandwidth hog – and that development in compression technologies gains speed so that a bunch of HD channels along with all the fun stuff customers can do with high speed Internet will fit into 25 Mbps.
Those hopes, along with the fact it has a very successful DTH division in ExpressVu, will give Bell Canada time to continue working on an IPTV product with Microsoft that is truly different from cable because while everyone knows cable has the bandwidth lead now, the telcos also know the MSOs are burdened with legacy technology that is often less than optimal when it comes to consumer friendliness.
Bell, on the other hand, can start with a clean slate, with consumer facing services that far outstrip cable in terms of ease of use and flexibility.
As long as its FTTN hopes come true, that is.
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