Bell Canada Thursday said its recently launched Internet-based phone service complies with a 1998 Canadian Radio-television and Telecommunications Commission ruling that the CRTC would not regulate prices of retail Internet applications.


CRTC sets those rules and Bell certainly respects and will comply with them,” Ron Close, president of VoIP, Bell Canada said in an interview Thursday.

Called Bell Digital Voice, Bell Wednesday announced the commercial availability of the Internet-based voice over Internet Protocol (VoIP) voice service to consumers in Quebec City, Trois-Riviers and Sherbrooke. The announcement follows several months of technical trials of the service in Sherbrooke, which started in January and finish in May.

Mark Quigley, research director at the Yankee Group in Canada, was surprised that Bell launched the service without approval from the CRTC, which is expected to announce how it is going to regulate VoIP in the next couple of months.

“(Regulation) is the big bugaboo right now,” said Quigley. “The CRTC has not come out and said how they’re going to regulate voice over IP. From that respect, it is a little bit of a surprise that Bell has come out and launched already before that’s happened.

“The CRTC’s take initially in any case has been, ‘Well if it walks like a duck, talks like a duck, it must be a duck so we’re going to regulate it that way.’ They’re going to regulate the service and how it gets to the end user is absolutely irrelevant.”

Bell’s foray into the Internet-based phone market comes a few months after its Quebec competitor, Videotron Ltee, launched a similar phone service via cable to 300,000 South Shore residents in Quebec.

“Videotron is one of 30 or 40 VoIP competitors in Canada,” said Close. “This is a really active, dynamic, robust and competitive market right now.”

Rogers Communications Inc. is expected to announce a similar service to the Greater Toronto Area by mid-2005. Other cable-television companies like Shaw Communications Inc. and upstarts like Vonage Holdings Corp. have also recently entered the market.

Quigley said companies like Shaw and Videotron offer customers a similar service to Bell’s at a much lower cost.

“Right now it’s going to be the price point that’s going to cause consumers to move,” he said. “That’s certainly borne out of the pricing schemes that Videotron and Shaw have used where the discounts have been very significant over the incumbent carriers.”

Videotron’s phone service, for example, costs $15.95 per month for a basic residential line with additional services like call display, voice mail and call waiting available starting at $4 per month and unlimited long distance calls within Quebec starting at $4.95 per month. Bell’s Digital Voice, on the other hand, starts at $38 for province-wide unlimited long distance calls, $40 for Canada-wide and $45 for Canada-US calling.

Quigley, however, added that Bell can differentiate itself in the market by offering unique features.

“The key for Bell is going to be controlling that market share loss so they’re still maintaining a base of high value subscribers,” he said. “By adding some interesting functionality that perhaps some other providers don’t deliver it’s certainly going to help that.”

Digital Voice service features include voice mail to e-mail, which automatically routes messages to an e-mail account; enhanced call forwarding, which transfers all or select incoming calls to up to three phones; and choice of area codes from 23 cities across Canada regardless of home city.

These types of features in addition to traditional ones such as caller ID, call waiting and voice mail will help Bell maintain its market share going forward, Close said.

“It’s incumbent upon us to put the best product out there in front of the customer and to give our customers the choice,” he said. “That’s the way we’ll be able to win in the market is to give our customers what they want.”

Digital Voice also addresses ongoing concerns with VoIP service such as 911 and power outages.

“That is something the industry has been wrestling with,” said Close, adding that Digital Voice uses existing 911 network to route emergency calls and, during the promotional period, comes with a battery backup (retail value $99) free of charge.

The kit, which can be picked up at Bell World stores in these cities or ordered by residents over the phone by calling 1 866 864 7435, includes a manual, adapter and cabling for modem hook up.


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