Let’s continue with a theme I raised on Friday.

Last week, as Videotron expanded the reach of its DOCSIS 3.0 ultra-high speed broadband [ pdf, 32KB], it also increased the download caps for its users of 30 and 50 Mbps internet services. It adds pressure to Canadian telephone companies to consider the massive investments (such as a Verizon-like FTTH approach) to compete with cable internet speeds.

In the past, I have called for all levels of government to create more favourable environments for increased broadband investment by all service providers. The most basic incentives would be for the public sector to liberalize access to public rights of way, support structures and vertical real estate such as towers.

Last week, Portugal went even further, setting up an €800M line of credit for operators to roll-out next-generation broadband networks. Governments have many levers that can help stimulate investment in next generation network equipment, including accelerated depreciation for certain classes of capital and matching funds for rural service improvements. Telecom service providers have a track record of being to move quickly to implement their infrastructure projects – much faster than roads, public transit, sewers and bridges.

As governments look for ways to stimulate various sectors of the economy, incentives for investment in digital infrastructure may be among the lowest cost, while delivering the highest returns and most sustainable benefits.

Despite the dire economic conditions, the year 2009 could be a banner year for telecom industry investment. Regarding just the wireless sector, I wrote in the current issue of Foxgroup Media Telecom Journal:

It has been encouraging to see recent announcements from new entrants and incumbents that there are substantial investments in wireless over the next 12 months; so much investment that it will tax the ability of Canadian workers to install all of the equipment.

Between Bell, TELUS and Videotron, more than 4000 cell sites will be built or enhanced this year.

In an interview with the Globe and Mail on Monday, TELUS CFO Bob McFarlane observed that while other sectors of the industry are lining up for government handouts,

This summer we had $4.3-billion extracted from the Canadian wireless industry to purchase spectrum due to a unique set of rules that, in my view, were counterproductive.

Of course, this “extraction” was actually a voluntary purchase of public assets, spectrum, by industry players.

Still, we need to think back to the original wave of 3G auctions. In the year 2000, immediately preceding the collapse of the technology industry, world governments raised about $145B in those spectrum auctions. The amount of money raised at auction equaled the sum of the annual revenues of the major equipment vendors. By June of 2000, Ericsson was already warning about the potential backlash. The chart at right is from a presentation I delivered in May 2001.

We need to consider the extent that capital investment in spectrum auctions impacts the ability of operators to build out their networks.

AWS wireless new entrant BMV Holdings received a major boost with the announcement this morning that the Ontario municipal pension fund, OMERS, has agreed to invest up to $50M in the venture.

Paul Renaud, President and CEO of OMERS Private Equity is quoted saying:

BMV and its investors made an astute purchase in Industry Canada’s wireless spectrum auction last summer and we believe the company has great potential in the Canadian wireless market. In addition, we are impressed by the leadership and experience of their management team and investment partners.

BMV says that it plans to launch “value-priced” services in select markets in Ontario and Quebec during 3Q 2009.

Alek Krstajic, BMV’s Chief Executive Officer, will be a speaker on our special AWS New Entrant panel at The 2009 Canadian Telecom Summit, taking place in June in Toronto.

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BMV, OMERS, AWS

On Monday, Peter Nowak wrote a preview piece about the Consumer Electronics Show, which opens today in Las Vegas.

In the Monday article, Peter observed that last year’s show saw participation by a number of first time exhibitors, including General Motors and content producers NBC Universal and Sony Pictures.

Some of the industry observers questioned why the content companies are there:

They are awkward at this point. They think they need to be there because of multiplatform potential and it’s largely exploratory. But what can you really buy from NBC Universal except movies online?

I wrote yesterday about disintermediation, which helps to understand why content owners, developers and producers might want to establish direct consumer relationships.

Studios going directly with consumers can cut out two layers of intermediaries: broadcasters and broadcast distributors (cablecos, DBS, telcos).

In an ultra high speed world, electronic information distribution looks very different.

The 2009 Canadian Telecom Summit will be looking at these kinds of issues (among many more concerns). Our theme this year is Embracing Transformation: Communications industries in flux.

A couple months ago, I wrote about Voxox, an application to tie together various messaging applications.

A number of bloggers commented over the holidays on the shift in focus of their entrepreneurial friends to social media applications, especially because of difficulty making a living on pure play VoIP.

Isn’t there still a question of monetizing social networking businesses? In this economic climate, it isn’t clear to me that multi-zillion dollar cheques will be written without an understanding of the real revenues to be achieved, not just the popularity of an application.

It is one thing to attract customers; it is another to attract revenue.

RSS feeds enable a means for third party applications to disintermediate blog readers from the original publication site; aggregation tools can thereby capture the advertising revenues from the original content creator.

Will user fatigue set in as all of us continue to receive invitations to join all the networks to which our friends (our real friends) belong.

Will social media applications that tie together disparate networks result in the same revenue challenge?