Cogeco 2007 Annual Report Download - page 19

Management’s Discussion and Analysis COGECO CABLE INC. 2007 17
providers that use resale or third-party access arrangements in effect. It is anticipated that the federal Department of
Industry Canada will proceed soon with the advanced wireless spectrum (AWS) auction which could lead to new entrants
entering the wireless telecommu
nications markets in Canada on a national, regional or local basis, and incumbent wireless
carriers obtaining more spectrum for the provision of advanced voice, data and video services, thus resulting in increased
competition for the voice, data and
video services of Cogeco Cable.
In Portugal, Cogeco Cable’s indirect subsidiary Cabovisão faces competition in its service areas, for all its lines of business,
mainly from incumbent telecommunications carrier Portugal Telecom, SGPS, S.A. (PT) and its present subsidiary Portugal
Telecom Multimedia, SGPS, S.A. (PTM), as well as from Sonaecom, SGPS, S.A., a subsidiary of diversifi ed Portuguese
conglomerate Sonae, SGPS, S.A. (Sonae), which recently purchased the fi xed telephony and HSI residential business from
the operator ONI as well as all fi xed telephony business previously owned by TELE2, another indirect access telephony
operator, and unsuccessfully attempted a takeover of PT or PTM earlier this year. PT is expected to complete before the
end of the calendar year the distribution of the shares that it owns in PTM to its own shareholders and, thus, cease to hold
a controlling equity interest in PTM. PTM owns TV Cabo, the largest cable telecommunications operator in Portugal, and
also offers a direct-to-home satellite distribution service to the Portuguese market. PTM’s cable plant overlaps a major
part of Cabovisão’s footprint in Portugal. PT’s national telephone network, PT Communicaçoes, which offers a full range
of fi xed wireline and mobile wireless telecommunications services throughout Portugal, has recently started the rollout of
a
competitive IPTV service over its telephone plant, starting with the Lisbon, Oporto and Castelo Branco areas, with a view
to offering triple-play service (voice, high speed Internet access and video distribution) and PTM’s cable subsidiary, TV
Cabo, started a full triple-play offer covering all its footprint. Sonaecom owns and operates the Clix (Residential Fixed
Telephony, HSI and IPTV), Novis (Business Telephony Solutions) and Optimus (Wireless Telephony and Wireless HSI)
services, which provide voice, data, high speed Internet, video and mobile services to the residential and business markets.
Cabovisão is no longer the only provider of triple-play service bundles in its footprint, as Sonaecom, PT and PTM now have
competitive
triple-play offers available in the Portuguese market. Cabovisão has started the rollout of a Digital Television
service in order to improve signal security and quality, provide an expanded choice of programming, make better use of
the distribution capacity of its network and better compete with the digital video service offerings of its competitors. This
rollout will extend at least throught 2008. The Portuguese regulatory authorities are expected to award several licenses in
2008 for new digital terrestrial television services providing both national and regional digital television signals for free-to-
air and paid reception. This will likely lead to increased competition for video distribution throughout the areas served
by Cabovisão in Portugal.
The level of piracy of video signals and the actual penetration of illicit reception of video distribution services in households
within the Corporation’s service areas may also have a signifi cant effect on the Corporation’s business and the competi-
ti
veness of its service offerings.
TECHNOLOGICAL RISKS
The evolution of telecommunications technologies unfolds at breathtaking speed, fuelled by a highly competitive global
market for digital content, consumer electronics and broadband products and services. The Corporation continues to
monitor the development of technologies used for the transmission, distribution, reception and storage of data and their
deployment by various existing or potential competitors in the broadband telecommunications markets.
There are now several terrestrial and satellite transmission technologies available to deliver a range of electronic communications
services to homes and to commercial establishments with varying degrees of fl exibility and effi ciencies, and thus compete
with cable telecommunications. On the other hand, cable telecommunications also continue to benefi t from rapid
improvements, particularly in the areas of modulation, digital compression, fractioning of optoelectronic links, multiplexing,
HD distribution and switched video distribution.
Management of the Corporation remains of the view that broadband wireline distribution over fi bre and coaxial cable will
continue to be an effi cient, reliable, economical and competitive platform for the distribution of a full range of electronic
communications products and services for the foreseeable future. The competitiveness of the cable broadband telecommu-
nications platform will however continue to require additional capital investment on a timely basis in an increasingly
competitive and uncertain market environment.