Forrester urges firms to multisource telecom needs

It’s time Canadian organizations stopped giving the bulk of their telecom business to Bell Canada and Telus, says a telecom industry consultant.

“If we want new services and don’t want to be a backwater to what’s going on in the U.S. and Europe, Canada needs healthier competition,” said Montreal-based Forrester Research analyst Brownlee Thomas.

“Multisourcing telecom services encourages competition and gives incentive to innovation,” she said in an interview. But, she pointed out, according to recent CRTC figures incumbent telecos – especially Bell and Telus, but also MTS Allstream, Bell Aliant and other regional incumbents – captured 84 per cent of Canadian business wireline spending.

That left others such as Rogers, Shaw, Videotron, Primus and a range of virtual service providers with a tiny slice of the piece.

Had Telus been able to buy Bell, as it rumored to be trying over the summer, there would have been a “sharp shrink” in the number of companies selling phone-related services. That’s why Brownlee entitled a recent report on the industry “The Worrisome State of Canadian Business Telecom Competition.”

“As new IP services mature during the next three years and demand ramps up,” she wrote, “business telecom services buyers should solicit proposals from MTS Allstream, Rogers Telecom and regional or local providers of business-grade DSL, cable and Ethernet access and site-to-site connectivity.”

It’s not that they don’t want to already, the report says, citing anecdotal evidence of a desire for more competition. But, she added, organizations don’t want to subsidize new entrants.

Fair enough, but in an interview Thomas said some providers now heavily targeting the consumer market could move more aggressively into the business market. There’s room, she pointed out in the report, citing a Forrester survey of 57 enterprise decision- makers showing 21 per cent of respondents have no plans yet to deploy site-to-site MPLS, while 16 per cent have no plans yet to deploy site-to-site IPSec VPNs. Yet these are technologies large organizations will have to turn to eventually as older long-haul technologies offered by carriers fade.

In the U.S., it is common for enterprise-sized organizations to have up to three providers to cover their bets, she said, and make sure they get the lowest possible price. With more companies looking for alternatives, more providers – such as Rogers – will be encouraged to get deeper into the business market, she added.

Thomas urges companies of all sizes to do a fresh assessment of offerings from smaller and alternative service providers. Often they are leaders in introducing innovative services and technology, she wrote. Then match the options with the organization’s requirements and costs.

“I don’t like it people go with a single service provider,” said Thomas. “You’re basically saying, ‘Here’s a blank cheque.’”