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Mobile & Wireless
Maximum Performance
Bell Canada Drives Consistent Broadband Experience over FTTN
by Sean Buckley
Kevin Crull, President of Residential Services for Bell Canada argues that
the broadband experience should be defined by consistent speed, not
just top speed. To maintain that consistent user experience, Bell
Canada, like many of the US-based Telcos, is charging ahead with its
own Fiber-to-the-Node rollout across its service territories. Crull recently
sat down with Editor Sean Buckley to talk about Bell Canada’s recently
introduced FTTN-based Sympatico Optimax broadband offering.
Q. To start, can you give me a brief overview of the FTTN-based
Sympatico Optimax broadband service?
A. Sure. There’s a lot of neat things going on in the market that come
together with the FTTN technology that we have been deploying for a
couple of years. The really compelling opportunity is that we’re seeing a
real mass market for broadband applications emerge. It used to be that
the real heavy users were 2 percent of our subscriber base, but now we
would consider heavy users to be 30-35 percent of our subscriber base.
Bandwidth intensive hungry applications are going mainstream. What this
means customers are getting more demanding on the performance and
the consistency of their broadband connection.
The really significant value of Optimax that’s soo exciting for a telco is
that’s it’s a dedicated pipe to the customer’s home and it does not slow
down during busy times. In fact, we send a technician out to the
customer’s home, and the technician does two things: First, they install
the service and make sure it’s up and running, but they also act as the
speed adviser for the customer. They optimize your home network, your
PC, and make sure you don’t have a bunch of things running in the
background that can slow the connection down. When they leave your
house, they certify that if you bought a 16 Mbps service, you will always
run at 16 Mbps. The reason that is so powerful is that the cable guys
advertise up to so many Mbps, but the actual throughput is way lower.
That’s the power and the benefit of our FTTN network and Optimax, and
we’re finding that the market is ready for that kind of a value
proposition.
Q. What is driving Bell to bring fiber closer to users? Do you see a
continued encroachment from cable operators in your service territories?
A. Certainly, there's no question that there is an increasing need and
demand for bandwidth. I'd say what's driving this value proposition
positioning is the benefit that we have with our network architecture
being a dedicated pipe to the customer's home-which is different than a
shared network. The build out is driven by the vision that we all know
that more bandwidth is better than less.
We have done a ton of focus groups with customers, and what came out
constantly during those discussions is that ‘boy the cable speeds are ok,
but they are not consistent.’ Customers are now seeing a difference in
speed. Back when browsing, e-mail and applications weren’t as
bandwidth intensive, so if you bought 5 Mbps service, and only got 1
Mbps, you could not tell. Nowadays, if you’re going to a web site with a
lot of streaming video and you’re downloading songs, and you buy a 5
Mbps service and you only get 1 Mbps you can tell.
Q. Are you finding a strong uptake of this service?
A. Well, we have only been out in the market in Montreal for a month so
it’s premature to indicate anything like that. I can tell you that the
marketplace reaction, the press reaction, and general interest reaction has been
very positive. I am finding that that our message is resonating. The thing
that we desire to do, and it would be great to see third-party market
assistance in this, is the broadband market has defined the product by
top speed. It’s getting to be silly. It’s like an advertising a car based on
how high the speedometer goes. The value proposition for an automobile
is not “our speedometer goes up to 160 Mph” because you don’t drive
160 very frequently. Broadband has been defined by speed: a 3 Mbps
service, or a 10 Mbps service, or a 15 Mbps service. We want to change
that message from top speed to consistent speed. We want customers
to ask cable companies when they come out with a 16 Mbps service,
what is the real or consistent speed? That’s the message that’s
resonating. Currently, we are in the process of doing two studies. One
study has revealed that customers who have signed up for these 10 or
higher Mbps service are actually only getting only 1-2 Mbps.
Q. What is driving Bell to adopt an FTTN-based network? How far do you
drive fiber into the network?
A. It averages about 3,000 feet (1km) from the fiber drop. The neat
thing about Bell is that because our territory tends to be urban with a lot
of multi dwelling units, we can cover big chunks of our population very
quickly. We’ll be announcing Optimax in Toronto in the near future. By
the end of year, we’ll cover all of Greater Montreal and Greater Toronto,
and then in the next few years we’ll reach 85 percent of the Windsor to
Quebec City area, which is really our territory.
Q. Are you utilizing ADSL, ADSL2+ as the last mile/foot connection into
the house?
A. We’ll be using ADSL2+ cards on our DSLAM/DLC equipment.
Q. Do you anticipate using FTTN as a foundation to deliver enhanced
services such as IPTV?
A. Well, the answer is absolutely yes. Let me tell you about two things
that make me really excited about the telecom landscape that I can’t tell
you has always been the case. One, is the value of access. It was a bad
word to just be a commodity access provider. I am really excited about
the value creation from broadband access that is still ahead of us. With
the launch of Optimax, we started to introduce price plans that are a
foundation for how we think monetizing access in the future is powerful.
A recent survey of access customers in Canada found that 70 percent of
Canadians consider broadband Internet is an essential part of their daily
life. Because the utility, usefulness and importance of broadband access
is so high, you’re starting to see price elasticity come down. Secondly,
because the usage profiles are with the heavy users going mass market,
we’re pivoting to pricing methodology that will look more and more like a
usage-based model. If you sign up for a speed-based package and you
get a bucket of Gbps, and when you go over that you pay usage on a
per-chunk of Gpbs basis. The key here is not at all to be punitive in our
pricing. Rather our goal is to align the utility value of the product so that
people who have shifted a lot of their entertainment activity to
broadband the dollars spend shift as well. We got this in our lower-speed
DSL products, and I say in the future our entire portfolio will be priced
this way. There aren’t many products were consumption of the product
has gone up tenfold in three years and the price has come down.
Because of that we need to get our pricing more onto that curve of
usage.
The second thing you were asking was around IPTV. Let me say first we
are very excited about IPTV. We believe that the winning model here is
to introduce a product that is not just TV the way everyone knows it
delivered over the Internet. We envision a product that leapfrogs cable
and changes the game with enhanced features, but we’re not going to
introduce a me-too service. There is some sense that we are preparing
for when those capabilities are available. IPTV is part of a broader
opportunity. Once you get QoS and a consistent high bandwidth pipe
into the customer’s home, you can have more applications that the
experience is better than what can be delivered on the unmanaged
public Internet. IPTV carves out a part of the pipe that’s dedicated for
this pay TV video service. I can see other applications going that route.
Q. There’s a lot of talk about the value of the bundle (i.e. triple play,
quad play, etc.) What’s your take on the services bundle concept?
A. We use the word bundle carefully because bundling is often used to
represent discounting. I think one thing that we have done that’s
different than AT&T, SBC and BellSouth is that we don’t use discounts to
entice multi-product households. Rather, we use our channels, our
products, and integrated capabilities (one bill and single customer
service), but I don’t have bundled discounts. Will I sell this product along
side Sympatico High-speed Internet? Absolutely. Today, we don’t do the
same kind of bundled discounts that other carriers do which has paid off
tremendously in profitability in a measure that’s really important for us:
flow-through EBITDA. We are maniacally focused on growth that we get
out of our growth products be it high-speed data or wireless.
Q. What about home networking. Are you seeing more demand from your
customers for that?
A. Well, we are. We sell a home networking kit that sells very briskly,
which is an integrated DSL/WiFi router for our Optimax service. I think
that home networking is becoming more and more common as the access
itself. We find that the self-install capabilities of our home networking kit
today are such that our customers are very comfortable setting it up
themselves.
Q. Beyond FTTN, Bell is also driving hard on CDMA EVDO and WiMAX. Can
you tell us about how those services are going?
A. Our Optimax service is the third in a string of broadband rollouts this
year. We launched mobile EVDO earlier this year, a portable WiMAX-
based broadband service called Inukshuk. Our network deployment of
broadband access service covers the spectrum of super high-speed fixed
residential to broadband portable and broadband mobile.
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