Life is a cabaret for MTS and Shaw

CorusCorus Entertainment, controlled by the Shaw family, entered into an agreement with MTS to provide Movie Central on Demand to MTS TV customers.

Keep in mind that Shaw is the incumbent cable company in MTS territory – where MTS has been extraordinarily successful in its TV offering.

Cooperative competition or just plain pragmatism? Maximizing viewership for its property Movie Central? Is there a lesson to be learned for net neutrality about the effectiveness of the marketplace to do the right thing for consumers?

Profit has proven itself to be a good motivator for content owners and distribution channels to maximize the value of their products, even when the content owners compete with the distributor.

Money makes the world go around.

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Is the mobile marketplace working?

ol·i·gop·o·ly

Pronunciation: “ä-li-‘gä-p&-lE, “O-
a condition in which a few sellers dominate a particular market to the detriment of competition by others

You’ll find that a lot of people use the term oligopoly in reference to the Canadian mobile market. They point to wide price differentials between Canadian and US mobile calling plans; seeming indifference from the carriers; disciplined pricing; reduction in competition due to mergers; etc.

However, last week’s disappointing wireless results from Bell may be signalling that the unregulated, free marketplace is actually working, managed by the power of consumer choice.

A report last week from RBC Capital Markets includes a section called Bell Mobility Rate Increases Help Profitability But May Be Going Too Far. In it, RBC CM says:

Bell’s $2/month SAF increase to postpaid plans was frequently noted in our discussions with independent retailers and contributed to the slowdown in subscriber growth this quarter, in our view. …

While the rate increase should narrow the ARPU gap with its peers and improve EBITDA flow-through …, we nevertheless believe that Bell’s pricing increase by way of the SAF may be a hindrance to future growth as:

  1. neither Rogers nor TELUS plan to match the increase, which leaves Bell at a potential disadvantage as the SAF is one of the few billable items that is directly comparable across rate plans;
  2. with rising penetration we believe there is less scope for such obvious rate increases (Rogers and TELUS achieved higher ARPU through stimulating usage and data services – not by having premium prices); and
  3. with ongoing regulatory examination, frequent media reports comparing Canada’s higher prices vs. the U.S., and a potential spectrum auction approaching in the next 12 months, rate increases may help to skew public sentiment against the industry.

In other words, RBC CM and the financial community wasn’t any happier about the SAF increase than anybody buying mobile phone service.

Net adds were down because potential new customers shopped elsewhere – signs that the competitive marketplace may be able to discipline itself. While existing customers had little choice – for now – watch what happens at renewal time.

We’ll be looking at churn as contracts come due in the next quarter. Wireless number portability is coming in one month.

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Pravda: promoting net neutrality

It is fitting that Michael Geist’s column is published in The Toronto Star, which has a reputation as being the official news agency of Her Majesty’s Loyal Opposition. Yesterday’s column reflected the leftist bias that inspires many academics so thoroughly. It is a wonder that university graduates can become functional in the capitalist environment that greets them in the real world.

There are just too many critiques of Michael’s piece to address while keeping this posting manageable. I’ll touch on just a few.

Although he tries to find inspiration in the report of the TPR to support his populist campaign against a ‘two-tiered internet’, Michael continues to quote the text out of context – in exactly the same manner that he did last November. In the interest of space, I’ll advise you to simply look there. The TPR explicitly permits ISPs to “take into account any reasonable technical constraints and efficiency considerations related to providing such access,” no matter how much Professor Geist tries to ignore the plain text. If you repeat a half truth does it become whole?

He suggests that the FCC imposed net neutrality conditions on AT&T – when the reality was that these were AT&T;’s voluntary commitments in order to sway the minority Democrat commissioners. The FCC itself has consumer protection principles that are comparable in effect to what is set out in the TPR and are have been generally upheld by CRTC practice.

The article complains on one hand about “steady price increases” from DSL and cable providers, but on the other hand, net neutrality advocates don’t want these ISPs to develop alternate revenue sources in order to keep prices for internet access affordable. Indeed, most comments on his site argue that the carriers should just charge more to people who want faster downloads. Well, I’m confused. Which is it? Charge more or avoid price increases? Should the carriers lose money when they invest in your infrastructure?

The article charges that the Minister is “burying attempts to establish a national broadband infrastructure,” ignoring the fact that there are already numerous national broadband backbones owned, maintained and continually upgraded by a number of carriers operating in a competitive environment. The last thing we need is a government initiative competing against or replacing private sector corporations. It seems that we are seeing a call to nationalize the internet backbone – returning to central planning and control by government.

Life would be simpler that way – one benevolent crown corporation carrier with all of our best interests always in the forefront of their planning. Sorry to say that the era of PTTs has largely become a distant memory. I seem to recall that we found that those government monopoly phone companies ended up restraining innovation and charging way too much for lousy service.

Of course, the PTTs had decent wages and great pensions for employees. Those were the good ol’ days.

Rogers launches the RIM 8800

8800Rogers and RIM have launched the new model 8800 Blackberry, operating on the high-speed EDGE network. Despite being the thinnest Blackberry yet, it incorporates GPS, QWERTY keyboard, trackball navigation, a media player, and a microSD expandable memory slot.

The 8800 supports polyphonic and recorded music ring tunes, and includes a multimedia player with a stereo headset jack for music files as well as video.

Here is how RIM responds – in part – to the perceived threat from Apple’s iPhone. The BlackBerry Enterprise Server integrates with MS Exchange, Lotus Domino and Novell GroupWise environments. RIM has added a new set of IT policy controls for managing the BlackBerry 8800’s features and usage.

In other words, RIM understands the needs of the IT department to integrate email and networking functionality into the corporate environment. As I mentioned when the iPhone was launched, Apple will need to develop these skills and relationships if it wants to move iPhone beyond the consumer market.

Rogers wins either way: Blackberry for corporate users, iPhone for consumer. Will the device market push the other carriers in Canada to look at a GSM overlay?

Talk, talk, talk

One of the commenters on my posting last week about Parliament’s INDU Committee asked

Why were the Conservatives opposed to the Committee conducting an in-depth study of the issue of deregulating telecommunications and reporting back to the House of Commons? Do they have something to hide?

I can’t speak on behalf of the Conservatives. But I can speak as a taxpayer. I think we already paid for that ‘in-depth study’ – it was called the Telecom Policy Review – and it was a non-partisan project, launched by a Liberal government and delivered to this minority Conservative government.

Maybe the Conservatives opposed the Committee expending time and energy studying something that we collectively paid experts to study. Having members of the industry summoned to Ottawa to testify on matters that have already been extensively reviewed.

I would find it comforting to see leadership from our elected officials (from all parties) – leadership that drives the INDU Committee to focus on studying the legislative changes needed to implement the study that they already have in hand.

Enough talking about telecom reform. Anybody else ready for some action?

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