ISPs can

Shaw Communications Inc.’s recent announcement of a new broadband Internet services company

might be good news for Shaw subscribers, but independent ISPs should not get too excited just yet, according to observers.

The new firm, announced in late July, will operate as Big Pipe Inc. and become the primary fibre-optic Internet backbone for Calgary-based Shaw’s broadband Internet customers.

The first step in the company’s evolution will involve accessing the fibre-optic network laid down by Vancouver-based 360 Networks Inc. that reaches from Victoria, B.C. to Toronto. Subsequent phases will see the network pushed out to the Maritimes and into the U.S., according to Shaw.

“When completed, Big Pipe’s fibre network will extend connectivity to all the major Internet peering points in Canada and the U.S. and provide our customers with fast, reliable access to the Internet and the World Wide Web”, said Shaw President and CEO Jim Shaw. “Big Pipe will also be open for business to other ISPs and organizations that need end-to-end broadband connectivity to the Internet,” he added.

According to Jay Thomson, president of the Canadian Association of Internet Providers (CAIP), however, the service will not be available to any customer that does not have access to the fibre-optic network.

“There’s a step that has to be taken before [this announcement] is of interest to smaller ISPs,” said Thomson. “Shaw announced the backbone, but they have to get ISPs onto the network…Smaller ISPs will have to survive on the basis of dial-up services and the extent to which they can offer high-speed DSL (Digital Subscriber Line).”

Jordan Worth, an analyst with IDC Canada Ltd. in Toronto, agreed, saying that the new network will be useful to smaller ISPs “only if they can get access to it.”

Worth added, however, that the move is a sound one for Shaw.

“This makes a lot of sense for Shaw; [the broadband fibre-optic market] is a big growth area,” he said. “Shaw needs a dedicated backbone for their customers because they have had a lot of problems with slow speeds because (traffic is currently running) on the LAN. All the [companies offering high-speed communications] have had problems.”

Thomson said that while there is a growing number of high-speed subscribers in Canada that will be courted by the large cable companies such as Shaw, there is still a lot of room for independent ISPs in this market.

“Seventy per cent of Canadians have access to the Internet, but according to a recent study from the cable industry, the top four cable companies – Rogers, Shaw, Videotron and Cogeco – have only 14.5 per cent of the entire Canadian market. There is room for growth if the opportunity is there.”

When asked whether he was hopeful that independent ISPs would gain access to the Big Pipe network in the near future, Thomson was hopeful.

“The Canadian policy is that ISPs are to get access to cable lines,” he said. “If the rates are okay, they will be able to.”

He added that that rate would have to be set in the neighbourhood of $16 per subscriber per month in order to give independent ISPs a chance to make a venture into the cable realm a viable move.