A large chunk of Canada called New Brunswick is east of Maine, so far east that it’s in the Atlantic time zone, which is an hour earlier than Eastern. The two major cities in New Brunswick, Fredericton and Saint John, will have the fastest Internet connections in the country by mid-2010, according to the incumbent telco Bell Aliant Regional Communications. It’s spending C$60 million to build a fiber-to-the home network, a first for a Canadian city.
About 70,000 homes will be connected. Bell Aliant is promising them downloads speeds twice as fast as DSL broadband. The company says it’s studied Verizon’s successful fiber-to-the-home deployment in the States. Verizon is, to the best of our knowledge, the only major telco in the world that’s running fiber all the way to most homes in its footprint, albeit at a cost of $20 billion.
The Halifax company is making the investment as cable companies continue to eat at its core customer base, home phone subscribers. In the first three months of the year, the operator lost 4% of its residential phone accounts.
‘One of the reasons they would be doing this [investment] is to protect their access lines, which is [responsible for] the vast majority of the cash flow, and which is necessary to sustain the dividend. So this is as much a defensive investment as it is an offensive investment,’ said Greg MacDonald, an analyst with National Bank Financial. In Fredericton and Saint John, the cable companies have won fewer home phone customers than they have in other parts of Eastern Canada, which means there’s still a strong opportunity for Bell Aliant to keep residential subscribers in the two cities, he added.
Bell Aliant will use the upgraded network to deliver not only phone service and super-fast Internet connections, but also high-quality television. Karen Sheriff, president and chief executive officer, said Fredericton and Saint John were chosen because the company doesn’t yet offer TV service in these two cities. In other markets, such as Halifax and St. John’s, Bell Aliant sells IPTV, which sends TV signals over copper phone lines.
The New Brunswick government, which has championed high-speed networks in the province for years, will contribute $1-million to the project. In addition, it will extend two existing service agreements with Bell Aliant for three years, a move worth about $7-million to the company, Sheriff said.
Vancouver-based Telus and Montreal-based Bell Canada, which owns 44% of Bell Aliant, will be watching the results closely. All of the major phone companies are gradually bringing the fiber in their networks closer to the customer to better compete with the cable companies, analyst Mr. MacDonald said.