Qwest arrival should be a boon for large enterprises

Fibre bandwidth is the Holy Grail of large, far-flung enterprises with regional sites spread across the country or the globe. Through fibre connections, satellite offices can communicate almost instantaneously with one another, whether they be two kilometres apart or 10,000 kilometres apart. For this reason, large enterprises, much like the bumbling, stumbling heroes of Monty Python’s incomparable Quest for the Holy Grail, are on a constant quest.

What is their goal? To find reliable bandwidth as cheaply as possible. (The questions of favourite colours and the average wingspeed of swallows, whether they be African or European, will be addressed in a later column.) For this reason, large Canadian enterprises should welcome the news that Qwest Communications is coming north of the border. With the 6,923km of fibre acquired from Worldwide Fiber of Vancouver, Qwest has a significant Canadian presence, which should allow it to compete head-to-head with large providers such as Bell Nexxia, AT&T Canada and Telus.

The Canadian communications market is certainly not lacking in competitors. Over the last several months a bevy of firms have sprung up to service businesses in major Canadian cities including the likes of Norigen, Group Telecom and C1. However, these firms are focusing on the small- to medium-sized business market and not the large enterprise.

The reason for this is simple. None of the smaller carriers currently has national fibre networks, so to connect firms with offices in several cities, they’d have to buy bandwidth at wholesale rates from larger providers. This makes large business clients less economical to serve than small- to medium-sized outfits that the smaller providers can attach directly to fibre that the providers own themselves.

Another reason that there’s more competition in the small- to mid-size market is that large customers place heavy demands on their communications providers. The smaller providers just don’t have the resources to meet these demands effectively.

Denver-based Qwest, however, is a different story. Across North America, the firm now possesses almost 40,000km of fibre. In the U.S. Qwest boasts major clients such as Delta Airlines and Walgreens, the largest drug store chain south of the border. There’s little doubt that Qwest will have the resources and the will to go after large Canadian corporate accounts and win them.

Unfortunately for Canadian businesses, Qwest will not begin operating in Canada for some time. The company still has to staff its Canadian operation and figure out exactly how it will comply with the Canadian Radio-television and Telecommunications Commission’s foreign ownership regulations.

Even when Qwest does open its Canadian operations, businesses might be prudent to take a wait-and-see approach before committing all their data communications to the carrier. Qwest has run into some problems in the U.S. with a frame relay and ATM outage in Atlanta, ISDN problems in Los Angeles and a Web hosting facility in Sunnyvale, Calif. that ran out of space less than two weeks after it opened.

Qwest’s mere presence in the Canadian market though, could be enough to force carriers such as Bell, Telus and AT&T to offer their large corporate clients better rates on their data services. As Yankee Group analyst George Karidis noted in this issue’s front page story on Qwest’s entry into the Canadian market, losing a large corporate client that spends tens of thousands of dollars is a bit more serious than losing a $20 per month residential customer.