Telus 2007 Annual Report Download - page 31

31
Within TELUS’ ILEC territories a number of competitors offer voice and data service
through a combination of their own facilities and unbundled network elements provided
by TELUS. The primary competitors are: BCE Inc. including its subsidiary Bell Canada,
Shaw Communications, Allstream (a subsidiary of Manitoba Telecom Services Inc),
Rogers Telecom (formerly Sprint Canada), and Primus Telecommunications Canada.
Certain of these competitors have built extensive local fibre optic networks in TELUS’
ILEC service territories. All of these competitors are increasingly integrating or bundling
voice and data services in order to provide both discounted and more extensive service
offerings to customers.
TELUS is an ISP in Alberta, B.C., and in parts of Ontario and Québec. In the residential
sector and, to a lesser extent, the business sector, cable-TV companies are also
providing high-speed Internet access and represent significant competition to the ILECs.
Shaw Communications is TELUS’ primary competitor in the provisioning of high-speed
Internet services to consumers in Alberta and B.C. ILEC regions. In Québec ILEC
regions, the primary competitor is Cogeco.
In recent years a number of new Internet based competitors have entered the market for
local and long distance voice services in TELUS’ ILEC and non-ILEC regions. These
competitors utilize voice over Internet protocol (“VoIP”) technology to offer customers
phone service over existing Internet connections. In the past few years, non-facilities
based VoIP service providers (such as Vonage and Skype) have had some success,
however the cable-TV companies including Shaw Communications, Rogers, Videotron
and Cogeco, are expected to be the more capable competitors in this area having
captured approximately 1.9 million VoIP service subscribers by the end of 2007. At
present VoIP competitors are largely free from regulatory burden, offering them
significant flexibility in competing against ILECs such as TELUS. Competition from VoIP
competitors continued to be intense in 2007 and is expected to intensify further in
coming years.
TELUS also faces competition from companies without wireline networks. Wireless
service providers offer rate plans and services that are intended to compete directly with
ILEC local services. Resellers of primary local exchange services and smaller
competitors in niches such as dial-around plans and calling card services have been in
operation in Alberta and B.C. for several years and also present competition to TELUS’
ILEC operations.
In its non-ILEC territories, TELUS’ major competitors for wireline voice and data services
are the incumbent carriers. In most cases these competitors are subsidiaries or affiliates
of BCE Inc. The other primary competitors are Allstream and Rogers Telecom with
increasing competition beginning to emerge from cable-TV companies and municipal
hydro company owned telecommunications providers.
For higher bandwidth and other data services to businesses nationally, systems
integrators such as IBM Canada and EDS also represent a competitive threat as they
compete with TELUS not only in IT services but also in the provision of data and voice
network management and network integration services.
A significant development on the competitive front in 2007 was the initiation of the
strategic review process at BCE Inc., parent company of Bell Canada. As a result of this
strategic review, in June 2007 BCE announced that it had entered into a definitive