It appears to be a mixed bag for Canadian ILECs when it comes to the erosion of their local telephone business in Q1. Bell Canada lost 172,000 lines due to wireless substitution, the surrender of second lines as customers moved to high-speed Internet service, and the competitive impact of CLECs. Videotron Ltee was a key factor after it launched cable telephony service in Montreal in February. Analysts believe Videotron has 15K to 20K customers. In Eastern Canada, Aliant Inc. lost less than 6K customers, which is not bad given it is competing against Eastlink Communications in Nova Scotia. In Western Canada, Telus Corp.'s local business dropped by 10K lines. CEO Darren Entwistle seemed blase - describing VOIP as a nascent service. We'll see how long he maintains this attitude as Shaw Communications moves into more large cities in Alberta and B.C.
For people looking for insight into how ILECs will be affected by cable telephony, Bell's experience could be the most telling. With Videotron offering telephony for as little as $15 a month, Bell is starting to suffer. Telus, however, has yet to see a big impact because Shaw is taking the high road with a $55 a month service - something that only appeals to the bleeding edge and people who really, really dislike Telus. The real test for Bell will be Rogers Communications' move into telephony this July. Depending on how Rogers decides to price the service, Bell could take a huge hit, particularly from the 250,000 Rogers' triple-play customers who may have a compelling economic incentive to sign up for the quadruple play.

Microsoft is looking for bloggers to spread the word about its much-anticipated Longhorn operating system. "Team 99" will have a chance to examine pre-release copies, and tell the world about its awesome features...or something like that. It unsettles me to see big corporations climb into the blogsphere but blogs have become another vehicle to spread your message - be it a personal view or corporate marketing campaign. When BusinessWeek did a cover story on blogs recently, our cover was finally blown. Maybe it's a good thing because it will force bloggers - at least the serious ones - to raise their benchmarks. To remain vibrant and viable, individual bloggers will need to write smart, write well and provide a distinct, opinionated voice that corporate blogs can't or won't do. Then, there is the whole credibility thing. Are you really going to trust what Microsoft or "Team 99" says? Or will you trust the truly independent bloggers with no corporate ties or allegiances?

Another day, another prediction about VOIP. Infonetics expects VOIP service revenue will surge to US$19.9 billion by 2009 from US$1.3 billion in 2004. The key drivers for the optimism: adoption by corporate and residential users, as well as incremental revenue from value-added services such as conferencing, collaboration and presence/location services. I wonder when the services beyond voice/value beyond price messages will start to resonate in the market. With capital markets tough and IPOs non-existent, maybe some of the discount VOIP players will begin to run out money and disappear. This should leave a healthier landscape for the survivors - much like the e-commerce market has come back to life after the dot-com riff raff disappeared.
As for the VOIP revenue forecast, Infonetics analyst Kevin Mitchell puts things in perspective when he notes that VOIP service revenue accounted for less than 1% of total wireline carrier revenue in North America last year. This means there is nowhere to get but up but it's anyone's guess about how fast and how high the market go.