Will Canada follow America’s telecom direction?

This past week, my wife and I had the opportunity to drive back from Florida allowing a substantial amount of time for reflection on some of the recent changes on the Telecom landscape across North America over the past few months.

During the past month, the most significant industry news in Canada was that the privatization of Bell Canada did not materialize. As a former employee, and in my role as an independent consultant, it has been a topic of conversation over the past year many times.

I can’t help comparing the Canadian and American industries since the Canadian environment has typically followed the trends south of the border.

The Re-Emergence of AT&T

Part of my reverie stemmed from the common sight of “AT&T” vehicles throughout Florida for most of our journey home, we were in AT&T country. This was a reminder that the Regional Bell Operating Companies (RBOC’s) in the United States have gone through an interesting transformation over the past 25 years.

As part of the industry evolution in the United States, in 1984 the original AT&T was broken up into seven “baby Bells’, and the long distance services business became a commodity. Over the years, Regional Bell Operating Companies (RBOC’s), cellular providers, internet providers, long distance providers and satellite services went through a series consolidations, mergers and reorganizations.

The American marketplace is now dominated by three significant players – AT&T, Verizon and Qwest with Sprint-Nextel and T-Mobile providing competitive wireless services.

What does this foretell for the Canadian marketplace?

Since 1984, the Canadian industry has closely followed the American model with the breakup of the Stentor Alliance in 1999 (formerly Telecom Canada and previously Trans-Canada Telephone System). With MTS-Allstream, TELUS and Bell becoming competitors as the larger geographically focused carriers.

The recent passing of Ted Rogers will undoubtedly have an impact on the Canadian telecom and cable industry. It was Ted’s entrepreneurial spirit that led to the strong Rogers brand in the publishing, Radio, cable TV, internet and wireless markets. He also challenged the other family owned cable companies across the country to be innovative with next generation VoIP and hosted non-cable type services.

Technology innovation continues to drive corporate re-structuring required to support next-generation products and services, compared to legacy voice and data offers.

The imminent emergence of new wireless providers has already caused changes in the pricing structure of the lower end mobility services. The ongoing evolution of 3G and 4G wireless services is going to continue to drive change in the telecom wireless industry.

The previously splintered American market has re-evolved into consolidated business through a series of mergers and business consolidations. If history repeats itself, then the Canadian environment may follow suit.

It will be interesting to watch the corporate chess game over the next couple of years as technology brings new players into the Canada marketplace.

Bill Elliott is the director the Fox Group and as always, welcomes your thoughts and feedback on these news items. Contact him at 905.473.3369.

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