Bell expects Internet access sale to AOL Canada
Globe-31Mar99
>old news , just want it for future reference<
High-speed connection deal would give phone giant its first
service provider customer, help it meet expansion targets
Wednesday, March 31, 1999
MARK EVANS
Technology Reporter
AOL Canada Services Inc. is poised to break ranks and become the first Internet service provider (ISP) to purchase high-speed access from BCE Inc.'s Bell Canada unit.
Jean Monty, president and chief executive officer with Montreal-based BCE Inc., said yesterday that Bell expects to sign an agreement with AOL Canada within a few weeks. AOL Canada will pay about $25 a month per user to access Bell's one-meg modem service.
Mr. Monty said wholesale agreements with ISPs such as AOL Canada are a key part of Bell's plan to have 80,000 high-speed customers by year-end, compared with 10,000 now.
The expected deal with AOL comes after more than six months of haggling between Bell and many ISPs over high-speed access. The ISPs have wanted to purchase the service from Bell but balked at paying a wholesale price that's higher than the $39.95 retail price offered by Bell's Sympatico ISP unit.
Bell sweetened the pot earlier this month by offering its one-meg service to ISPs at a wholesale price of $24.95 a month. The ISPs, however, complained the cost was still too high because it didn't take into account their additional administrative and marketing expenses.
Instead, several ISPs suggested that a cost of $15 a month would allow them to offer high-speed access at the same price as Sympatico and make a profit.
Jim Carroll, an Internet consultant and co-author of 1999 Canadian Internet Handbook, said AOL Canada's willingness to jump on the high-speed wagon is simply a matter of "competitive necessity."
"Whether it's cable or one-meg modems, it's fast and anybody who sees either of these services and then looks at AOL or any other dial-up ISP, there's no comparison," he said.
Bell's motivation to bring the ISPs on board has been heightened by the rapid gains made in the high-speed Internet market by cable companies such as Rogers Communications Inc. of Toronto and Shaw Communications Inc. of Calgary. The cable companies' At Home service has about 150,000 subscribers who pay $39.95 a month.
Mr. Monty said Bell needs to expand the distribution of its high-speed service to compete with At Home, and Bell sees the ISPs as one way of achieving this goal. However, he said Bell has the marketing clout to go it alone if the ISPs do not want to participate.
"We can help them and they can help us," he said. "If they are indifferent, we will push retail [business] rather than wholesale."
AOL Canada, which refused to comment, is Canada's third-largest ISP with about 130,000 subscribers. The Toronto-based company is a unit of Dulles, Va.-based America Online Inc.
America Online signed a deal with San Antonio-based SBC Communications Inc. this month to offer high-speed access to AOL members in seven U.S. states. AOL expects to charge $20 (U.S.) a month for the service, in addition to its monthly access fee of $21.95. |
