Rogers Communications plans to enter the Internet telephony business next July -- a move that should jump start the much-hyped but slow-growing market in Canada.
Ted Rogers, Rogers' president and CEO, told a CSFB conference yesterday a full suite of services will be rolled out.
"It will be a primary line service with complete back-up power and number portability," he said, adding Rogers will be able to capitalize on its "rich experience in deploying telephony" to start the new business.
Rogers has been talking about getting into Internet telephony next year but had never been specific about a launch date or the features of the service. Mr. Rogers said he expects Rogers will be able to link together its Internet telephony and wireless services by 2006.
Rogers is among a growing number of cable companies getting into the telephony business. Shaw Communications Inc., Cogeco Inc. and Videotron ltee will also offer service. This move is happening at a time when carriers such as Bell Canada are getting into the television market using high-speed Internet networks.
Despite the buzz surrounding Internet telephony, there are fewer than 30,000 residential subscribers in Canada. The market has not taken off because many consumers are still not sure about the technology and issues such as back-up power and 911 service. That said, NRI/Michael Sone Associates expects there will be 1.1 million residential customers by 2007.
The market's growth will be fuelled by cablecos such as Rogers, which will aggressively market the service and make it a feature of their popular bundle packages. This will likely help Internet telephony go from the fringe to the mainstream.
Another obstacle is the uncertain regulatory landscape. The Canadian Radio-television and Telecommunications Commission is expected to decide by early next year how and if Internet telephony should be regulated.
The CRTC's preliminary view is incumbent carriers such as Bell and Telus Corp. will be regulated while competitive carriers such as Call-Net Enterprises Inc. and Primus Canada Telecommunications Inc.; cable companies such as Rogers; and service providers such as Vonage Holdings Corp. will be unregulated and free to set their own prices.
Jon Arnold, an analyst with Frost & Sullivan, said the CRTC decision will have an impact on how the market evolves. If the regulator changes its mind and lets incumbent carriers compete on a level playing field, he said Rogers could be less aggressive.
Still, Mr. Arnold said cable companies have little choice but to dive into the telephony business because carriers are getting into television. Rogers, he said, must offer a high-quality primary line service if it wants to compete head-to-head against Bell.