Videotron takes aim at Bell with network upgrade

Cable television carrier Videotron Ltd. will spend $18 million over the next 15 months to upgrade its network in central Quebec. Increasing the network bandwidth – which Videotron is also doing in the Quebec City area – will help the company offer new services that it will need to compete more and more directly with Bell Canada, the incumbent telephone carrier.

Videotron, a subsidiary of Quebecor Media Inc., said the network modernization will increase bandwidth from 480 megahertz to 860 megahertz in Sherbrooke, Granby, Victoriaville, Trois-Rivières and neighbouring towns. The latest upgrades come on top of improvements that added fibre-optic capacity to Videotron’s coaxial cable infrastructure in the region and created a two-way network.

Videotron spokeswoman Isabelle Dessureault said the modernization will take network capacity in the region from lagging behind Videotron’s network in the Montreal area to exceeding the 750-MHz capacity of the Montreal-area network. The company announced a similar upgrade to its network in the Quebec City area last summer, she added.

Videotron said the upgrades will give it capacity for 800 digital television channels or 126 high-definition channels.

Jon Arnold, an independent telecommunications analyst in Toronto, said Videotron needs the increased capacity to offer new video services that will help it respond as Bell Canada launches Internet Protocol television (IPTV) and other video offerings in direct competition with the cable carrier.

Videotron already offers video on demand service, which in recent weeks included coverage of the 2006 Winter Olympics.

Videotron has been quite successful with voice over IP (VOIP) telephone service offerings in the Montreal and Quebec City areas, Arnold commented. Videotron says it now has more than 163,000 VOIP subscribers. But Arnold said Videotron is succeeding in the voice market by offering significantly lower prices than Bell, and “you have to wonder, can they possibly be making money with this.”

Meanwhile Bell has taken a low-key approach to offering VOIP services of its own, said Arnold. He argued that the real battleground between the companies will be video services, and that by improving its network Videotron is preparing for the inevitable day when Bell responds to its VOIP inroads by coming after Videotron on its home turf – the video market.

“Now it’s Bell’s turn,” he said, “and Bell is not going to come back at them with low-priced VOIP. They’re going to come at them with IPTV.”

Videotron has not yet launched VOIP services in the Eastern Townships area, and will wait to do so until the network upgrades are completed, Dessureault said. That is not because VOIP requires the added bandwidth, but because the upgrades will require a series of planned service interruptions, about one day in duration, and Videotron doesn’t want to interrupt phone service. “We think that people can tolerate having their cable TV or their Internet off for a day, but not their telephony,” said Dessureault.

Videotron also recently launched a new high-speed Internet access service called Extreme Plus, which provides a 16-megabit-per-second connection for $79.95 per month. Dessureault said it is the only Canadian cable carrier offering that fast a residential speed throughout its service area, though some other carriers offer comparable speeds in limited areas.


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