Sees no way to add video to Unlimited offer
TORONTO – Despite having spent $2 billion so far on spectrum, plus a network build, then an upgrade to LTE all between 2010 and now, Vidéotron sees more spending on the horizon as 5G approaches. So today its CEO called on the federal government to maintain “spectral balance” when formulating the rules around the next auction of low frequency spectrum in the 600 MHz range.
In a keynote speech to the Canadian Telecom Summit on Wednesday morning, Manon Brouillette noted the sheer pace of technological change in our industry, remembering she spoke to the summit 10 years ago to tout the launch of Vidéotron’s wired IP home phone service and now, thanks to the rapid growth of mobile and accelerating cord-cutting, “I wonder how many (home phone) customers I will still have at the end of my speech,” she said.
When asked later in an interview with Cartt.ca what she meant by spectrum balance, and if that meant a set aside for the newest players still operating (herself, EastLink and Shaw-owned Wind) or some sort of cap on the amount of new low frequency spectrum the big three can purchase, Brouillette said her company has yet to make up its mind.
“I think we have to look at what will happen in the States (which is in the midst of auctioning off 600 MHz spectrum, a process complicated on both sides of the border by the fact that conventional TV stations are still using it). We don’t even know the bunch of spectrum that will be transferred,” said Brouillette.
“We’ll figure it out after that… There’s a lot of sub one-gig with the incumbents already and we need to make sure that in the next auction, we can access a portion of (600 MHz)… Is it a cap, is it a set aside? I don’t know. I can not tell you.” Low frequency spectrum is the best kind to have because is travels a lot farther and penetrates buildings and such far better than higher frequency spectrum such as the AWS spectrum which Vidéotron, Wind and EastLink used to launch.
Brouillette’s presentation featured a slide showing how little low frequency spectrum Videotron has, compared to 
Rogers, Bell and Telus.
However, having the wherewithal to spend $2 billion to build a wireless network which now has over 800,000 subscribers in Quebec – and the fact the Quebecor-owned carrier is a broadband leader and the number one cable TV player in the province – the big three would certainly argue that Vidéotron is no puny newbie which needs special rules from the federal government in order to give it a leg up in the next spectrum auction.
Brouillette countered that. “It’s easy for them to say that. But when you look at Bell or Rogers or Telus, they all have subs in the millions… a big bunch of subscribers that sustain them. We’re not even at a million subs today… so we’re not an incumbent. We’re still a new entrant… We are an incumbent in landline, but mobile is totally a different business, so we still need help.”
Those incumbents take direct aim at Vidéotron when trying to win customers away, added the CEO. “It’s very hard – we see in some areas in the Quebec market where the incumbent will directly target our subs saying ‘hey if you are a subscriber of Vidéotron, we have an additional rebate for you’ and when you call and say ‘I have one Vidéotron smart phone and I have one Fido, they’ll say ‘I can give you the rebate only for your Vidéotron phone’.”
“So, they want to kill us, that’s the way it is… that’s what we’re facing every day in Quebec.”
Brouillette also doesn’t envision the company moving to expand outside of its home territory anymore, even though it does have spectrum licenses in Ontario, Alberta and B.C. “It’s unlikely for us to move at this point… We have always been vocal saying we want to be there, but we would not build from scratch a fifth network. Our assumption was maybe a transaction with Wind but it didn’t happen, so we are in the process of re-thinking what we are going to do with that,” she said. “We have plenty of time ahead of us to decide if we want to put that (spectrum) to use, so we’ll figure it out.”
In her speech, she also stood fast in her belief that there must continue to be four wireless players in each market. 
However, the proposed purchase of MTS by BCE would take Manitoba down to three. While the former Conservative government constantly said there should be four competitors across the country, the new Liberal government has not yet articulated a policy, which means the deal is surely a policy test for the feds.
While she did not want to comment on that specific purchase in our interview, Brouillette referenced her speech in which she showed how Quebec, with four strong wireless players, has lower retail wireless rates for consumers than Ontario, which is of course primarily served by the big three and a still relatively weak fourth in Wind. In Manitoba, prices are similarly lower than in other provinces. MTS is the market leader and has held its prices low.
“The only thing I can say is what I know in Quebec. We’ve seen very big change when we came into the market… very dynamic. We’re very motivated to win and we fight… and it drives the market… I don’t know what’s going to happen in Manitoba, but of course, I’m a fan of four players.”
Brouillette also referenced her Unlimited Music zero-rated service in her speech noting it has grown in popularity among wireless subscribers even though a few complain that because the data consumed when accessing Videotron’s chosen 14 music providers doesn’t count against wireless data caps, it violates principles of network neutrality. The CRTC has called a hearing into the matter of differential pricing like this for later this year, but in the meantime Videotron can continue to run Unlimited Music. Some Americans claim T-Mobile’s Stream On offering, which offers zero-rated video streaming, also violates their net neutrality definitions.
Brouillette doesn’t envision expanding Videotron Unlimited to video. “I can tell you that we won’t go there. Video means a lot of consumption and we have to be agile in bringing value to the consumer, but also making sure we don’t hurt the network and that we can offer good quality of service to everybody.”
Given all the complexities in networks and the exponentially increasing demand for data coming from customers (data usage has grown 4000% in the last 10 years and Cisco has estimated a compound annual growth rate of more than 50% over the next five years thanks it part to the growth of the Internet of Things, Brouillette said in her speech), would Videotron consider augmenting its network by deploying deep Wi-Fi in its footprint, connected to its wired net, as Shaw has done to considerable success out west?
“We’re looking at all options,” said Brouillette. “I think the benefit we have of having a fixed (line) network is to leverage technology so that the cost per bit and the cost for delivery to consumer is best – that the user experience is great and so of course, we are looking at all those ways to combine both networks to leverage all the infrastructure.”
Photo from Canadian Telecom Summit by Michal Tomaszewski / Pinpoint National
