Bell says its gigabit service marks ‘major shift’ in telecom

BCE Inc. is leveraging its fibre-to-the-home network to launch a new gigabit Internet service, making it the first large telecommunications company in Canada to offer such connections. It will launch first in Toronto, where 50,000 homes and businesses will have “first access” to the Gigabit Fibe service this summer, a number that Bell said in a press release will later expand to 1.1 million premises in the city. Bell said it would extend the service to “other cities in Ontario, Quebec and the Atlantic provinces as soon as this summer in some locations.” It listed a number of cities “primed for Gigabit Fibe,” including Quebec City and some parts of Montreal and the surrounding area, as well as Gatineau, Sherbrooke and several other towns in Quebec. In Atlantic Canada, those cities include St. John's, Charlottetown, Halifax, Saint John, Fredericton and Moncton, while cities in Ontario include Sudbury, North Bay, Peterborough and Kingston. “Gigabit Fibe infrastructure rollouts are under way in even more cities and service availability will be announced over the next year,” Bell added. Until Thursday’s announcement, it was small Internet service providers (ISPs) who had taken the lead on gigabit Internet service in Canada, in contrast to the United States where Google Inc. is spearheading such efforts. The 1,000 Mbps Internet speeds available with gigabit connections are many times faster than the average speeds of Canadian home Internet users, most of whom have a connection between 5 and 49 Mbps for downloads and about 1 Mbps dedicated to uploads, according to CRTC data. Bell said Thursday its new service would initially be available “at a maximum 940 megabits per second and rise to a full 1,000 megabits per second or faster in 2016 as modem equipment suppliers catch up to gigabit speeds.” It would not share information about the pricing of the service. Nicolas Poitras, vice-president of marketing for Bell's residential services, said in a phone interview that “this is sensitive information” and that it would release pricing information closer to when the service becomes available. He suggested bundling would be part of Bell’s pricing strategy, stating that “one of our promises at Bell for consumers is that when you bundle your services with us, our prices … are actually more affordable than the other options out there.” Bell fully acquired Bell Aliant last year, which was the second-largest provider of fibre-to-the-home (FTTH) in North America after Verizon Communications Inc., with a network that reached a million homes and businesses. Bell had also invested in FTTH in its own territory prior to that acquisition, said Poitras, passing a million homes in its non-Bell Aliant territory. In response to a question about why Bell chose to market a new service running on FTTH to consumers as Gigabit Fibe, instead of continuing to build up the network relatively quietly, Poitras said that “the speeds we will be introducing will be the absolute fastest in the country, and so we believe this calls for a strong message to the consumer, because it is unlike anything you can get in Canada today.” He added: “And so, from our standpoint, this needed to be elevated and clearly mentioned, so that consumers understood that this was not just another Internet announcement. … It is a major shift in Canadian telecommunications, because we will be bringing speeds that this country, from a consumer standpoint, has never seen before.” Poitras said Bell chose to make such a move now because “increasingly we see that consumers’ lives revolve around the Internet, and more so in 2015 than ever.” About 70 per cent of the completed network in Toronto will be aerial, Bell said in a press release, and 30 per cent will be located underground. “When the project is complete, Bell teams will have upgraded 27 Bell central office facilities across the city and installed over 9,000 kilometres of new fibre, both underground via more than 10,000 manholes and on about 80,000 Bell and Toronto Hydro poles around the city,” it added. The company said it had reached “long-term agreements with Toronto Hydro to share utility poles across the city are accelerating the Gigabit Fibe project's efficiency and speeding up deployment.” RBC Dominion Securities analyst Drew McReynolds said in a research note that the $1.1 billion Bell is spending on the project is part of its previously announced commitment to invest $20 billion in broadband fibre and wireless by the end of 2020. McReynolds said the agreements between Bell and Toronto Hydro “should help lower deployment costs and speed up deployment.” He said aerial infrastructure is “key” to getting a satisfactory return on investments in fibre-to-the-home networks. “The ability for BCE (and other telcos for that matter) to find innovative ways to expand the aerial footprint versus buried footprint in important markets like Toronto will be a key delta in lowering the overall cost of FTTH and generating adequate returns for investors,” McReynolds wrote. “We view this announcement as a positive first step to expanding that aerial footprint.” He said he believes Bell’s target is to extend its FTTH network to about eight million premises over about a decade. That eight million premises would make up about 70 per cent of a “total future footprint of” 11 million, and “the ultimate goal” of 5.5 million broadband customers, McReynolds said. “Within this footprint, Toronto represents a considerable challenge for BCE given the significant cost of deploying buried FTTH,” which can be four or five times more expensive than deploying aerially. Heather Burnett Gold, president of the U.S.-based Fiber to the Home Council, said in a phone interview the announcement Thursday was “exciting” because the last time “a large incumbent directly said they were going to deploy in a major metro area was Verizon.” She noted that it was Google who “opened the market” to marketing FTTH connections with gigabit service in the U.S. “That sort of approach to unlimited bandwidth, with no constraints, has really caught the public’s imagination,” she said. — With reporting by Anja Karadeglija at akarad@thewirereport.ca and editing by Derek Abma at dabma@thewirereport.ca

Bell says its gigabit service marks ‘major shift’ in telecom

News | June 25, 2015

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