BCE Inc., which owns Bell Canada, issued its fourth-quarter results yesterday. While there were no surprises in terms of profit and revenue, the most interesting news is the continued decline of its local, access and long-distance business, which lost another $246-million in sales in 2004. Clearly, cheaper LD prices and the growth of high-speed Internet and VOIP services are major factors.
The big question is when will the bleeding stop? Will emerging technology continue to eat away at businesses, which not that long ago were ILECs' bread and butter? It would be silly to suggest these businesses will disappear but you could make an argument that voice - at least the traditional type - is dying. This means ILECs must find new ways to bolster revenue, which explains why they are so keen about digital television (Look at how SBC and Verizon are enthusiastically getting into bed with Microsoft do to IP-TV.)
One of the things I wonder about is what ILECs will do with VOIP. They either ignore it and hope a big chunk of their customers stay with the tried and true circuit-switch service, perhaps at lower prices. Or do they join the VOIP party and, as a result, cannibalize their legacy voice business on the idea that if customers are going to use VOIP, they might as well stay with the ILEC rather than Vonage, AT&T/SBC, Primus, et al?
From what I've seen so far in Canada, Bell Canada and SaskTel realize they have to offer a service for consumers who can't live without an IP-based service. Manitoba Telecom, on the other hand, is not getting into the business while Telus has said it will not launch an out of territory VOIP service due to concerns about QoS. No doubt, to VOIP or not to VOIP is a big issue in the executive offices of many ILECs these days.