The packet prioritization bogeyman raised its ugly head again yesterday when Primus Telecommunications Canada lashed out at Shaw Communications for providing terrible broadband service to Primus' Internet telephony customers. This is not a new problem for Primus but one that doesn't seem to be going away despite attempts to raise it with Shaw. Primus V.P. Matt Stein said his company has been "suffering", and that he is particularly disturbed by Shaw's sale of a $10 a month "quality of service enhancement" product that improve the performance of third-party Internet telephony services such as Primus and Vonage. Stein derided it as a "VOIP Tax". Shaw, meanwhile, seems untroubled by Primus' complaints. CEO Jim Shaw said Primus is riding on the Internet for free so it shouldn't be complaining. For an extra fee, he said Shaw could offer better QoS. You pay for what you get is how it came across. While Bell and Telus have told the CRTC they will not fool around with the packets of rivals on their networks, Shaw has made no such claims. Can it only be a matter of time before Primus complains to the regulator?

When Vonage CEO Jeff Citron makes a speech, you know what you're getting - a smooth, marketing-heavy presentation focused on the company's "goal is to improve people's lives". He certainly didn't disappoint today at the Canadian Telecom Summit in Toronto during an early-morning keynote. Among the highlights were:
- Vonage added 114K subscribers in Q4 and 250K in Q1
- his approval of the Canadian telecom regulator's decision to regulate incumbent carriers offering VOIP service
- plans to work with the FCC to introduce 911 and e911 service
- the need for a broadband bill of rights to ensure that network operators don't de-prioritize third-party traffic
- another attack on bundles, which he says limit consumer choice and innovation
- plans to introduce a multi-handset broadband cordless phone system for the home.
Not surprisingly, there were some sexy numbers: Citron expects the number of broadband users in the U.S. is expected to increase to 68 million by 2008 from 33 million in 2004, while the number of VOIP subscribers will rise to 17.5 million by 2008 from 1.1 million in 2004. In Canada, broadband users will hit 8.6 million by 2008 from 6.8 million in 2005, while VOIP customers will hit 2.36 million by 2008 from 154,000 in 2005.

Maybe Nortel CEO Bill Owens reads my blog. I mean, a regular criticism of Nortel's new and improve senior management team is the fact it has very low Canadian content (CFO Peter Currie and CSO Brian MacFadden). In an IP/global world, Nortel management doesn't even work out of corporate headquarters in suburban Toronto. This might explain why he started a keynote speech today at the Canadian Telecom Summit with some fawning comments about this country. For example, here's a nice Canada-friendly quote:
"We are all great Canadians, and I say that proudly. I grew up North Dakota not far the Canadian border. I spoke Canadian, I felt Canadian, and we even have had resolutions in North Dakota in years past to secede from the U.S. and join Canada. I feel involved with this Canadian marketplace and this great Canadian company, Nortel."
Now, if Owens can sing all the lines to O Canada - something some Canadians have difficulty doing - I'll truly be impressed.

Answer: US$1-billion. Question: What does Vonage plan on spending on marketing before it finds a suitor, or the amount of revenue expected to be generated by U.S. service providers in the U.S. residential market this year? For now the right answer is the latter based on a new research done by TeleGeography. It forecasts the number of VOIP customers will rise to 4.1 million by the end of the year compared with 2 million in March 2005. TeleGeography also forecasts that Cablevision, Comcast and Time-Warner will have two million subscribers in 2005 and nearly 50% of the residential market.
One of the key questions is why the VOIP market has so much momentum. Clearly, an important factor is price as consumers look to pay less for telephony service while getting more features. It was interesting, however, to hear Steven Koles of AOL Canada in a presentation yesterday at the Canadian Telecom Summit talk about price inelasticity - meaning lower prices do not have much of an impact on demand. This stood in contrast to Primus Canada, which saw a huge bump in second-quarter subscriber growth after it dropped its prices to as low as $15.95 a month. Koles' view is not surprising given AOL has a track record in trying to position its services at premium prices. While AOL may not want to play the price game in Canada with its TotalTalk service, it may have little choice but to play this game to be competitive with Vonage and Primus.