Last mile investments far from payoff, analyst says

TORONTO — If any telecom hardware vendors went to Jim Herbert’s “”last mile”” presentation on Wednesday looking for some good news they were sorely disappointed.

“”No one is spending a lot of money on equipment right now. I think anybody who is trying to sell equipment these days will tell you

it a very hard road to hoe out there,”” said E.J. Krause & Associates Inc.‘s vice-president of global business development at Expo Comm 2002 in Toronto.

The problem, Herbert said, is so much has been invested and built in the last 15 years, but little by way of revenue has been recouped. He said Canadian prices are far too low — probably the lowest of the G8 countries — for Bell operating companies, wireless carriers and Internet service providers “”to re-groom the edge.””

If you can’t offer “”bigger and better”” to generate revenue there is only one other option: content.

“”What we’re doing is shifting from a paradigm of technology-driven service provisioning to solutions-demanded service provisioning,”” Herbert said.

Entertainment, geographic information system (GIS) and integrated marketing could help with money problems. Herbert said online gaming and video feeds could be a good revenue driver, as could GIS apps for any business involved with fleet management. Integrated marketing could be combined with GIS for advertising purposes, he added.

Senior IDC Canada analyst Lawrence Surtees said while companies aren’t buying as much as vendors would like, $7.9 billion will be spent in Canada by telecom service providers this year. Two-thirds of this will be spent by the incumbent phone companies, he added.

“”And one of the areas that some of these guys are looking to spend,”” Surtees said, “”is in the WAN/MAN space.””

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