Telecom: Mobile's big moment at Games

By J. Sturgeon | Vancouver Sun | Feb. 16 2010

Using a BlackBerry to snap Sidney Crosby on a breakaway or deliver a medal-clinching pass at GM Place in Vancouver will be a dream turned reality for thousands of flag-waving, smart-phone-toting Canadians over the next couple of weeks.

For the wireless carriers responsible for managing the networks all those digital images will be zipping over, that dream could easily become a nightmare if they are not prepared.

The 2010 Olympic Games offer a rare moment. The two-week burst of wireless activity as an estimated one million tourists converge on British Columbia's lower mainland is the first real test for how carriers like BCE Inc., Telus Corp. and Rogers Communications Inc. will cope with a torrent of demand for all that the mobile Web has to offer -- myriad multimedia applications, streaming video, updates, stories, texts.

"The Vancouver Olympics will be a good test bed for network capacity issues," says Michael Wade, a professor at the Schulich School of Business at York University and an expert on the Canadian telecommunications industry.

"At the Olympics, more so than normal life, it won't just be voice and texting," Prof. Wade says. "People will be taking pictures and even short videos, which they'll be sending out through their cellphones."

Prof. Wade says wireless carriers have roughly doubled network capacity at every Games for the last decade or so, or every two years. BCE's Bell Canada, the premier sponsor in Vancouver and official communications provider took that into account but went one step further, adding an additional 25% to the Vancouver region.

These Games are different in that the number of data-hungry smartphones in use between Vancouver and Whistler is expected to surge. At the Beijing Games in 2008 the iPhone was brand new. Waterloo, Ont.-based Research In Motion’s BlackBerry was still something used almost exclusively by corporate types.

Consumer sales for both have soared in the two years leading up to yesterday's opening ceremony. Both Apple and RIM are now flanked by competitors such as Google Inc.'s Android, which has partnered with handset makers such as Motorola and HTC Corp. to lure ever more consumers into the smartphone category. Figures from research firm Gartner Inc. suggest global penetration of smartphones reached 14% last year.

The fact that Olympic tourists are generally more affluent may also affect usage. "Bell has gone 225% above the capacity they had in Beijing, anticipating the extra load," Prof. Wade says.

"[We] did forecast what the traffic would be like and took into consideration that more people were doing more things with their phones now," said Bell spokesman Jeff Meerman.

Wireless expansion was one element of Bell's converged "all-IP" network, itself a first for the Games. It means every event broadcast, wireless email sent or call made -- in fact seemingly every form of communication short of smoke-signaling -- will run across a single Internet Protocolbased network and out to the world.

The network has been a massive, years-long undertaking, requiring literally thousands of kilometres in new fibre cabling buried in the ground, 42 new wireless cell sites, 7,000 IP phones, and 9,000 provisioned cellphones. The price tag -- more than $60-million.

But Bell is not the only one braced for the mobile onslaught. Rival carrier Telus has also been busy building additional cell sites and expanding capacity on its core network with more fibre. All in, the Vancouver carrier invested $51-million to install its new high-speed packet access (HSPA) network in Vancouver, Burnaby, Richmond, the North Shore, and Sea-to-Sky corridor, doubling capacity in those areas, according to spokesman Shawn Hall.

"They have invested quite a bit making sure that everything goes well," says Nizar Assanie, principal analyst at IE Market Research in Vancouver of both companies.

How these beefed up networks respond to the influx of traffic during the Games will be closely monitored. The event will serve as a litmus test for what will be required in the not-so-distant future when smartphones have replaced cellphones as the dominant personal device and other wireless products like Apple's new iPad encourage users to seek out bandwidth-hogging multimedia content.

Both Bell and Telus have special engineering teams assigned to compile every last bit of datum that will be used to determine how to meet demand when it arrives and avoid network overload.

And some important groups have raised red flags about a looming crisis. In the United States, Julius Genachowski, head of the Federal Communications Commission, the regulatory body for the U.S. telecom industry, raised the issue at an industry summit in San Diego last fall: "What happens when every wireless user has an iPhone, a Palm Pre or BlackBerry Tour?" he asked.

But the carriers are convinced that wireless networks will remain ahead of the rising tide of demand. Globally, the large majority of them are migrating, or at least making plans to, toward an ultra-fast technological standard called Long-Term Evolution.

In Canada, no major carrier has plans of rolling out LTE technology for at least the next few years. However, all are now armed with HSPA-based systems designed to move to the new standard when the market is ready.

"Carriers are investing a lot of money to ensure that the capacity is there," says Mr. Assanie of IE Research, a company that analyzes global trends. "It is their business to make sure."

Media: Great on paper, iPad not ready to save printed word yet

By J. Sturgeon | Financial Post | 01. 30. 2009

They stole headlines last year and were championed as the saviours of the newspaper, magazine -- in fact, all print media. This year, industry observers say e-readers like the Kindle made by Amazon.com will take off with consumers as we continue to shift reading habits from paper to screens.

Steve Jobs brought things to a fever pitch this week when his Apple Inc. introduced the iPad, a device many said would accelerate and revolutionize that trend. With it would be the return of paid content.

"We're going to stand on [Amazon's] shoulders and go a bit further," the celebrated chief executive said during the introduction of the product: an oversized touchscreen device with the dimensions of a large hardcover book.

Integral to Apple's e-book approach is the creation of iBooks, an application that serves as a storefront for the Cupertino, Calif. firm's new online e-bookstore. It will sit on the iPad's main screen, allowing readers to purchase major titles from the world's biggest publishers, including Penguin and Harper Collins.

Still, if the iPad is to convince readers to pay for digital print products, it struggled to impress veteran media observers.

"It checked off on its to-do list everything that was obvious. Make an e-reader application. Make sure you have a bookstore integrated into it. Use the elegance of the device to create a reading experience and be able to pull books off bookshelves. All of that," said James McQuivey, media technology analyst at Forrester, a U.S. researcher.

"But there is an opportunity missed here to take it to the next level."

In general, the iPad is simply an enlarged version of the iPod Touch with the addition of an e-book application, many analysts said.

For instance, the New York Times, which plans to begin charging for its Web content next year in another attempt to stem falling ad revenues, unveiled a new app for the iPad at the presentation. Yet there is no indication it differs to any great degree from the free one now offered on the iPod Touch through Apple's App Store.

As important, innovation on the social media front -- which could provide a value-added service and thus, be worth paying for -- is lacking from the iPad's e-reader experience. There is no way for users to tell their friends or Twitter followers automatically what they are reading (or buying).

"[Apple] could have demonstrated a much more integrated reading experience," Mr. McQuivey said.

It does not mean it cannot be done later on. But the iPad's saviour status took a tumble in the wake of Mr. Jobs' presentation on Wednesday.

That may not be lost on Apple, which priced the base model at a modest US$499 (16GB). The most expensive model is only US$849 (3G-capable, 64GB), perhaps in recognition that Apple has not reinvented the wheel with the iPad as it did with the iPod in 2001 and the iPhone in 2007, analysts say.

Canadians can get their hands on it in March. But it will be a version strictly made for local Wi-Fi networks. After that, a more expensive "3G" model that can access the Web through a cellphone carrier's wireless network will be introduced, possibly in late spring or early summer --it will be available first only in the U.S. through AT&T.

"Apple was in a position to say, 'Look, we're going to partner with publishers that create apps that are innovations in reading.'" Forrester's Mr. McQuivey said.

It may still be, but the iPad and its army of developers have more work to do yet.

jasturgeon@nationalpost.com

Telecom: Virgin Mobile boldy moving up market to ward off new threats

By J. Sturgeon | Financial Post | 12.21.2009

Competition will be the watchword for Canada's wireless industry next year, as established players face off against a cast of new entrants poised to steal market share.

While the current operators are talking tough, questioning whether any of the new startups have the right strategy or wherewithal to challenge meaningfully, a shakeup of the entire sector looms.

Nowhere are the crosshairs of the new players trained more closely than on the lower end of the market -- existing cellphone users who merely want inexpensive voice and text-messaging services or Canadians who own no mobile phone because they find current prices prohibitive.

It means the discount or "flanker" brands of Canada's big three wireless firms -- Fido, owned by Rogers Communications Inc., Koodo, owned by Telus Corp., as well as Solo and Virgin Mobile Canada, owned by BCE Inc. -- will face the fiercest competition.

For one of them, the threat is affecting a reinvention, says its president.

"Early next year, we'll be in the first phases of a very different Virgin," said Robert Blumenthal, the head of Virgin Mobile Canada.

What that means is unclear -- Mr. Blumenthal is mum on details. But he did reveal that Virgin will begin selling Apple Inc.'s iPhone.

It is a move, he says, that signifies a transition at Virgin from a discount sibling to BCE's Bell Canada, which fully acquired it this spring, to a full-weight partner, offering a complete suite of services for consumers who are increasingly demanding faster and more sophisticated devices.

"You'll see a great expansion in our portfolio and us being able to offer higher-value devices and services," he said in an interview last week. "Where we had been traditionally lower down in the marketplace, we'll be expanding to realize our true potential."

In the new year, Public Mobile Inc., DAVE Wireless Inc. and Videotron ltee will all launch, joining WIND Mobile, which began offering services last week in Toronto and Calgary. DAVE and Videotron have been quiet on their plans, but Public Mobile has stated repeatedly it will offer cheap, flat-rate voice and text services for perhaps $40 a month across its coverage areas between Windsor, Ont., and southern Quebec -- the most populous region in the country.

Mr. Blumenthal says the threat is overstated, but admits that pricing pressure will be a theme for next year and that Virgin is "considering everything."

One thing is for certain: He wants Virgin to get simple.

As it stands, Virgin offers dozens of prepaid and contract plans, not to mention several "add-on" options. "The easier you can make the decision, the easier to sell, the easier to buy. It helps sales and it helps the consumer make choice," he said.

Virgin Mobile, a subsidiary of the U.K. conglomerate, originally entered Canada four years ago with its celebrity CEO Sir Richard Branson partnering with Bell. The Montreal firm supported Virgin with its network in exchange for shared revenues.

In May, Bell acquired Mr. Branson's half for $143-million while agreeing to continue paying licensing fees. It was then that Mr. Blumenthal, a former Telus executive, joined Virgin.

The division has become a key driver of wireless growth for Bell. Analysts suggest Virgin now occupies as much as 15% of the telecommunication giant's wireless base.

However, if it is to maintain momentum, Mr. Blumenthal says Virgin must leverage Bell's new network upgrade to capture higher-margin smartphone users, which make up the fastest-growing market segment.

"Over time, I have a belief that as more people become wireless users and their wireless usage becomes more of a necessity than a luxury ... people tend to move up."

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Telecom: Wireless startup shut out by regulator

J. Sturgeon | Financial Post | Oct. 1, 2009

Globalive Wireless's bid to become the country's fourth major cellphone provider was stopped dead in its tracks on Thursday after the industry's regulator said the company was controlled by its foreign backer and offside with Canadian telecom law.

The fledging Toronto-based carrier has been preparing for months to shake up Canada's staid wireless market, and was to introduce services in Calgary and Toronto within weeks.

Those plans have been in limbo for the last month as the Canadian Radio-television and Telecommunications Commission has deliberated on whether or not Globalive -- which is almost totally reliant on a Egyptian carrier Orascom Telecom Holdings (OTH) for its financing, technical expertise, even branding -- was in fact Canadian. Domestic ownership is a requirement under the current regulatory framework.

"The Commission considered whether non-Canadians do not own or control Globalive as currently structured. The Commission determined that Globalive does not meet that test," the regulator said.

The decision will surely be seen as shocking to Globealive and its backers, but a relief to the country's big wireless carriers.

Earlier this year, critics led by Rogers Communications Inc., BCE Inc. (Bell Canada) and Telus Corp. attacked Globalive's partnership with Orascom -- a wireless behemoth and the largest provider in the Middle East. They charged that the US$700-million Orascom pledged to the startup combined with its operational involvement handed the foreigner de facto control.

A lot is at stake for the incumbents who pull in hundreds of millions in profits annually selling wireless plans to Canadians that rank among the most expensive in the world. Globalive has vowed to offer cheaper services, presenting itself as the alternative for Canadian subscribers fed up with the established players.

In rare public hearings held last month at the behest of the incumbent carriers, CRTC chairman Konrad von Finckenstein seemed inclined to side with the them, blasting Globalive for tabling a proposal on its ownership structure that virtually split decision-making powers with the Middle East operator. The chairman also criticized certain rights Orascom held in connection with the US$508-million in loans the firm has already extended to Globalive.

In response, the startup carrier agreed to reshuffle and enlarge its Canadian board representation and amend its agreements with Orascom to give Globalive clearer operational control.

The commission ruled on Thursday that the amendments did not go far enough to bring Globalive in line, in part because Orascom, which holds a 65% overall equity interest mostly through non-voting shares, still held too much economic control.

"In circumstances such as the present, where a company is heavily debt financed, this opportunity can translate into significant influence," the CRTC found.

During last month's proceedings, Globalive's chairman Anthony Lacavera (left, photo above) as well as the head of Orascom, Naguib Sawiris, said their original plan did not call for a massive injection of capital solely from the foreign carrier.

However, the financial crisis that turned capital markets into a desert last year -- after Globalive had already committed $442-million to acquire airwave licenses from Ottawa -- required Orascom to extend almost complete start-up financing.

Mr. Lacavera said Globalive planned to pay back the loans or have institutional investors take portions when the firm was beginning to generate cash and could demonstrate its viability.

Yet the commission rebuffed that promise on Thursday, stating it "has no authority to issue a conditional approval on the basis that the carrier undertakes to bring itself into compliance in the future."

In a recent interview with the Financial Post, Mr. Lacavera said he attempted to find other sources of money but was turned down by domestic and international financial institutions. "This was the only way to do it, I believe. We looked inside Canada," he said. "Banks don't lend money easily into companies like this."

Most observers agree that a decision in favour of the would-be cellphone startup would have established a new precedent that undermined Canada's foreign-ownership rules for the telecom sector, which are designed to prevent international giants from overrunning the domestic market.

"The CRTC really had no choice," said Ken Engelhart, senior vice-president of regulatory affairs for Rogers, the country's biggest cellphone provider. "The facts in this case were just so overwhelmingly pointing to control by Orascom. I don't think the commission could have done anything else."

Two other wireless startups, DAVE Wireless and Public Mobile plan to launch within months after acquiring licenses of their own, but both lack the backing of a global wireless heavyweight.

The CRTC ruling flies in the face of an approval from Industry Canada in March that determined Globalive was Canadian-owned and controlled.

For its part, Globalive, which has hired more than 500 employees since last year and is rolling out its network now, said on Thursday it was determining its course of action, which could include returning to the commission with another proposal.

The decision must also come as a personal shock to Mr. Lacavera.

"I'm very confident we'll get a favourable ruling. We've fully cooperated and fully complied with all their concerns and made all the changes they've raised," he said last week.

"For us, it's about getting into the market."

Financial Post

jasturgeon@nationalpost.com