DSL winning the broadband race...lessons from Canada
Rogers@Home is losing the high-speed Internet race
MATHEW INGRAM
Friday, April 27, 2001
It may be a little early to declare a winner in the high-speed Internet access war, but in Eastern Canada at least, Bell Sympatico has clearly taken the lead over Rogers@Home -- something that may come as a surprise to those who thought the early push by the cable guys into high-speed service would translate into industry dominance. Whether because of publicity about cable outages or a marketing push by the phone company, cable seems to be pulling up the rear both in terms of raw numbers and growth.
In its quarterly results released Wednesday, BCE reported that the number of subscribers to its high-speed ADSL service grew 39 per cent from the previous quarter to 466,000. In its latest quarter, Rogers Communications said the number of subscribers to its high-speed @Home service increased by just 8.9 per cent from the previous quarter to 346,800.
Until not that long ago, the conventional wisdom among many industry watchers (including this one) was that Rogers -- and Shaw Communications in the West -- had an almost unbeatable head start on Bell because they came out of the gate early, in 1996, and built out their networks fairly quickly to offer two-way, high-speed service. The phone company was criticized for being late to the game and for not seeing the value of high-speed Internet access, or for being too wedded to its existing businesses.
Over the past year or two, however, the momentum of the cable guys has slowed while Sympatico's has hit the accelerator. In a way, the fact that high-speed access is becoming more and more common may be hampering things for the cable companies: In the early days, high-speed was a novelty, and something that you could only get from the cable company. Now it is seen as close to being a commodity like regular phone access -- so why not get this new thing from them as well?
The past year has seen both sides wage a fairly heated marketing battle, emphasizing the perceived weaknesses of the competition. In the case of the cable guys, it has meant playing on the fact that most Sympatico subscribers still use slower dial-up accounts, while the phone company suggested that cable is slower and less secure than ADSL (Asymmetric Digital Subscriber Line) because it uses a shared network.
Both of these campaigns ignore several things, of course. For example, while the speed over cable is theoretically faster than an ADSL line, at times of high usage it is often not. When it comes to ADSL, meanwhile, users can also leave their computers vulnerable to outsiders if they aren't careful, just as @Home users can -- and the speed varies depending on the quality of a customer's home phone lines, as well as the distance a user is from Bell Canada's central switch.
Both sides have also unwittingly done their own negative marketing: In the case of Rogers, over the past several months the @Home network has been subject to a series of slowdowns and outages. Sympatico, meanwhile, has been criticized for long delays in getting would-be customers hooked up. (Full disclosure: I am a user of Rogers@Home, and Sympatico parent BCE Inc. owns a controlling stake in The Globe and Mail through Bell Globemedia.)
But while Sympatico's problems could be seen as stemming from its rapid growth, Rogers' problems are a different issue. Some of the outages have been the result of natural causes -- such as the fibre-optic line chopped in half by vandals, and the subsequent outage caused by a rodent that chewed through a cable. The other network slowdowns and service disruptions have been attributed to Rogers' U.S. partner, Excite@Home.
Shaw Communications (which has about 400,000 subscribers in Western Canada and saw its @Home business grow by about 15 per cent in the most recent quarter) said some time ago that it was dissatisfied with Excite@Home, and it has been expanding its own network in order to reduce its reliance on the financially troubled U.S. company.
Rogers has said it is committed to working with @Home, either because it doesn't want to take on that load or because it can't afford to.
Whatever the reason, the result is that Rogers has not only dropped back into second place in the high-speed Internet access race in Eastern Canada, but continues to fall further behind with every passing day. |
