Bell Canada's decision to reluctantly offer naked DSL - high-speed broadband service without a local line - should give the Internet telephony market a huge boost in Canada. Many DSL users have shied away from Vonage and Primus because they would have to pay for high-speed access and two phones lines - the copper wire and the Internet telephony. Primus Canada president Ted Chislett believes he could have nearly doubled his subscriber base in 2004 if naked DSL had been available.
If you think about it, Bell should really enter into an alliance/joint venture with Vonage to get into the Internet telephony game. I mean, if Bell is willing to do a joint venture with Virgin in the fast-growing wireless market, why wouldn't it do something as creative in the emerging Internet telephony business?
Then again, I think Bell made a big strategic mistake by getting into bed with Richard Branson. Why let a arketing-savvy wolf like Virgin into the game when there was stlll plenty of easy pickings to be had. It would be quite another story if wireless penetration in Canada was 60%+, but we're talking about a market with 45% penetration. Maybe Bell believed if it didn't do a deal with Virgin, Microcell, Rogers or Telus would step up to the plate.

Although Vonage has shown no indication of doing an IPO, it provided some interesting financial highlights during an interview CEO Jeff Citron did recently with BusinessWeek. Citron said Vonage is adding 10,000 customers a week; generating US$30 in ARPU a month, spending US$150 to US$200 to acquire each customer, and has churn of less than 2%. The bottom line is Vonage is spending more money marketing than it earns in free cash flow from its existing customer. Of course, this economic model is possible if you have more than US$100-million of private equity in the bank.
Based on this data, Kona Shio, who runs an investment firm in Montreal, believes Canadian cablecos could do better than he had originally forecast. As a result, he remains bullish on Rogers Communications and Quebecor, which owns Videotron, as the main beneficiaries of VOIP growth.
For more thoughts about a Vonage IPO and Spring Von, which happened earlier this week in San Jose, check out Om Malik's posting.

Skype announced today more than 1M people have "enjoyed" its premium-based SkypeOut service, which lets its users connect to the PSTN network. "Our one million SkypeOut users prove that savvy consumers will pay for value - and we will continue to delight users by delivering the software and services they seek to realize the potential of modern communication," said Skype CEO and co-founder Niklas Zennström.
It appears Skype may be a disruptive technology with staying power. I've been a long-time Skype skeptic over concerns about its business model. In particular, I have not been convinced that enough people are willing to pay for its premium services. One should be careful about how Skype accounts for the 1M SkypeOut users. They may be people who have paid to use SkypeOut at some point, or people currently paying a monthly fee for SkypeOut. It's difficult to tell for sure.
Sure, Skype has more than 29 million users but until the company provides more financial data than registered users and number of minutes used, it's impossible to get a handle on whether this is just cool technology or a real business.