Bell Nexxia announced last month that it has signed a $28 million agreement with Canadian Pacific Railway (CPR) to provide it with communications services including voice and data services, as well as calling cards.
“Choosing a quote that provided us with the best value for the dollar — essentially that’s how we landed on Bell Nexxia,” said Len Cocolicchio, the senior manager of corporate communications for CPR.
Under the three-year agreement, CPR will receive Centrex and Datapac services from Nexxia.
The Centrex, or voice services, include “all the voice services. Person-to-person contact, in other words just the regular phone calls, the voice mail, the call forwarding, and that sort of thing,” Cocolicchio said. “Datapac is a data service that carries legacy information. For example the transmission of computer data by dedicated switched lines would happen over Datapac service.”
Prior to the agreement, CPR was with Telus. But its contract with the telco was coming close to an end, so it decided to go out and look for bids, Cocolicchio said.
“It is not (a situation) where one company can’t provide the services and another can. It is a question of how much value you generate for the dollars you spend,” he explained.
The services will essentially be the same as they were before, he pointed out.
Jordan Worth, a Toronto-based analyst with IDC Canada, said it isn’t surprising that the railway company would switch. Times and prices are changing, he noted, and Nexxia has been trying to gain an advantage over Telus in Western Canada. The lower prices are part of its attempt to gain that business.
“They won this deal, in my mind, by undercutting Telus. Nexxia is now in the mindset where they will compete on price. They are going to do whatever they can to win the business on price,” he said.
Mark Quigley, an analyst with Brockville, Ont.-based The Yankee Group in Canada, said that if Bell went to the table intent on having CPR as a client, then competing in pricing was certainly the way to get there.
“It’s important for Nexxia going forward to be able to march out these marquis sorts of clients,” he said. “It certainly helps strengthen any marketing initiatives and those sorts of things in Western Canada, which I think is important for Nexxia and Bell” in the future.
While Worth said the price-competitiveness from Bell Nexxia might be seen nationally, he said the company will be more aggressive in Telus territory to win business.
But it is not just Telus customers who will be making a switch, Worth pointed out. “You’re going to be seeing Telus customers switching to Bell, and I think in Ontario and Quebec you’re going to be seeing, over the next year, some major Bell customers switching to Telus, probably for the same reasons.”
Quigley agreed, and said he would not be surprised to see a similar announcement from Telus with a company that is headquartered in Eastern Canada.
He also noted that an interesting part of the three-year agreement between the CPR and Bell Nexxia is that “Nexxia will provide dedicated teams…to help develop next generation communications infrastructures for CPR, so perhaps there will be more to come out of that as we go forward.”
While Bell can go in and try to invade what has typically been considered Telus’ market, IDC Canada’s Worth pointed out that there are another eight provinces for Telus to make a play for. “Telus ultimately has a bigger opportunity than Bell,” he said.
Bell Nexxia was unavailable for comment .