Rogers takes ‘leap of faith’ on voice-over-IP

Rogers Communications Inc. Thursday said it plans to offer voice over IP through its high-speed cable service by mid-2005.

The plan will initially be offered to approximately 1.8 million households in the Greater Toronto Area.

It will include basic voice service and subscribers will be able to keep their existing phone numbers. Voice mail, e-911, caller ID, directory assistance and other phone services will also be available.

President and CEO Ted Rogers said during a conference call that this was a “”defining project”” for the future of Rogers. “”It’s an investment whose time has finally come.””

The Rogers announcement follows a raft of industry participation in the burgeoning VoIP market. Rogers executives cited recent American ventures such as AOL-Time-Warner and Cox Communications as precedent. On the homefront, cable provider Shaw Communications said last week that it has applied for competitive local exchange carrier (CLEC) status, signaling its interest in voice markets.

Ted Rogers said his company was early to capitalize on other markets like cellular networks and high-speed Internet, but “”on this one, we’ve let others blaze the trail a little bit.””

The forthcoming Rogers VoIP service will use the company’s DOCSIS cable network combined with soft-switching technology based on industry standards. Rogers will form agreements with CLECs and inter-exchange carriers to ensure its VoIP service’s reach, said Alexander Brock, vice-president of business development.

The service, which will be available through existing home phone jacks, will be carrier grade, said Rogers, and competitive with the incumbents. “”After the first 100 days, we will be in the same league. Will we be equal to them? I don’t think so, but we’ll in the same league.””

Industry analyst Roberta Fox, principle at Toronto-based Fox Group Consulting, wasn’t sure that Rogers can meet those expectations — not based on current levels of broadband cable service.

“”It’s not reliable enough,”” she said. “”Unless they’re going to make some quality performance improvements in the network . . . and separate voice, they may make it into the marketplace, but they may lose a lot of customers.

“”Voice is god. Voice has to work. (But) if I can’t get enough upload capacity to do browsing, how am I going to make a phone call?””

Rogers has yet to announce how it will address pricing and marketing for the service, but “”we have no intention of deeply discounting on price,”” said Ted Rogers. “”We’re comfortable that we’ll create value for this product. And that’s without having to take great portions of market share to do it.””

There are plans to expand the service beyond the Toronto area in 2006, but they are contingent not only on customer adoption, but favourable regulatory conditions. “”Are we taking a leap of faith here? Yes, we are. If the environment is not supportive, we will not deploy this across our entire footprint,”” said Rogers.

However, early indications from the Canadian Radio-Television Telecommunications Commission (CRTC) are that service delivery, not the technology itself, will come under scrutiny. In the U.S., the Federal Communications Commission has already weighed in on the issue. FCC Chairman Michael Powell said Thursday that voice over IP would not be held to the same regulatory standards as conventional telephony.

Bell Canada, currently in trials with the technology, is working on its own VoIP service for home and small business customers. Bell would rely on the DSL networks currently being used to deliver its Sympatico high-speed service.

But while Rogers has placed a premium on voice delivery to the home, Bell is also touting video services over an IP network. Both companies are attempting to become a one-stop shop for consumer services, with Rogers migrating from video to voice and Bell doing the reverse.

“”I think we’ve been saying all along that the basket of services that providers are giving consumers in the home is going to have to include a variety,”” said BCE vice-president Lawson Hunter.

Telco provider Primus Communications has offered its own brand of VoIP, called TalkBroadband, since January. The service leverages existing networks and is available to customers over both cable and DSL.

Ted Chislett, president of Primus Canada, said that most customers are coming from the cable side so far. The probable reason for this, he said, is that the incumbents don’t sell DSL service independent of basic phone service, so you can’t keep DSL and cancel your phone line.

Primus has 900,000 customers across Canada, but hasn’t released subscriber numbers for its VoIP service yet. Chislett said the number of new entrants into the market “”just add to the awareness that (voice over IP) is a possibility and help educate the consumer.”” He added that the company will consider changes to its pricing structure as the market develops.

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