Videotron Ltee said yesterday it added 14,900 cable telephony customers in the first two months the service was available (Jan. 28 to March 31). What's more interesting is the story behind the numbers. Videotron's ability to build its subscriber base has been held back because it doesn't have enough technicians to meet demand. This is because the company rolls out the service by sending a crew to each household. These crews disconnect the Bell line, install Videotron's VOIP hardware and make sure all the phone jacks work. Another growth "factor" is the service has been limited to certain parts of Montreal. As the "footprint" expands, Videotron's telephony business could gain even more momentum. Bell Canada is already feeling the pain - having lost 60,000 local lines in the first quarter. It can only get worse now that Rogers plans to spend $330-million to acquire Call-Net Enterprises, which has nearly 500,000 local customers.

It sure didn't take long for Ted Rogers to open up his wallet again with the C$330 million purchase today of Call-Net Enterprises Inc. The all-stock deal will give Rogers Communications extensive network assets in Eastern Canada to go after business customers; 495,100 local residential and business telephone customers (using traditional circuit-switch technology) and a large, but slowly-declining LD business. Rogers' shopping trip in the past seven months has also included the C$1.4-billion purchase of Microcell Telecommunications Inc. and the C$1.8 billion purchase of AT&T Wireless' 34% stake in Rogers Wireless. You get the feeling Mr. Rogers has an ambitious agenda to complete before he retires in a few years. That is, if he ever retires.

Can you feel the excitement?! Only 32 hours before the CRTC decides whether it's going to regulate Internet telephony. Judging by recent analyst reports and news stories, regulating ILECs such as Bell and Telus could destroy their local phone businesses, while making them uncompetitive in the fast-emerging Internet telephony market. It's all a bit dramatic. It's not like Bell and Telus will be unable to offer Internet telephony. It's not like they won't be able to use their strong brands, customer relationships, and ability to offer multi-service bundles to attract deal-hungry customers. It's not like millions of consumers are going to suddenly jump on the Internet telephony bandwagon and jump on the cable/Vonage/Primus/AOL bandwagon. For all the hype about VOIP and Vonage's aggressive and enthusiastic marketing efforts, Internet telephony adoption is still fairly small. If the CRTC decides to regulate the Internet telephony market, it will hobble the ILECs, not kill them. That's a key difference many people have failed to grasp.

The amount of time it takes Cisco Systems to sell one million IP phones continues to shrink. The company said yesterday it only took five months to go from four million phone sales to five million sales - compared with seven months for the previous million sales. But let's put things in perspective: five million phones is a drop in the bucket when you consider there are likely two billion or three billion of phones in the corporate world. Still, VOIP is starting to take hold as carriers migrate their networks to IP, while an increasing number of consumers subscribe to Internet telephony service - albeit using traditional handsets. Should IP phone makers be discouraged the market is still so small? No. The reality is it's going to take time for VOIP to migrate from the network to the desktop. It would also help if prices for IP phones dropped (although I hear Cisco offers big discounts for companies who buy switches and routers) and if the market began to discover the power of IP features. A more significant development is that Cisco expects to have IP telephony equipment sales of more US$1-billion this year.