Think the telecommunications sector is dead? Or maybe “just sleeping” like that definitely deceased parrot from the famous Monty Python skit?
Better think again.
Telecom is not only very much alive in Alberta, the industry is stretching its wings in a big way, major telecom firms and analysts say.
True, communications equipment makers including Nortel, Lucent, JDS Uniphase and others are hurting financially. Overbuilt wired networks have reduced demand for such things as optical switches and fibre-optic cable.
But other telecom segments – especially wireless, Internet applications, data management and network security – continue to enjoy robust growth. All these areas represent the present and the future strengths for Alberta.
“There’s a tendency by investors or the stock market crowd to tar everything with the same brush,” says Lawrence Surtees, senior telecom analyst at IDC Canada Limited.
Despite the “steer clear” attitude that Wall Street and Bay Street have toward telecom, incumbent companies such as TELUS, Bell, AT&T and others “are in a pretty enviable space in comparison to a lot of other segments,” Surtees says.
TELUS Mobility, for example, plans to launch this year the first of its high-speed third-generation (3G) wireless services in Alberta and B.C.
Third-generation networks will allow users, for example, to insert a modem card in their notebooks computer to get Internet access from anywhere, at speeds 10 times greater than current digital networks.
“Worldwide, there has been a continued strong growth in wireless,” says Robert Blumenthal, vice-president of products and services for TELUS Mobility.
“People are not giving up their (cell) phones,” personal digital assistants or other handheld wireless devices, he says.
Bell Mobility, which already provides a high-speed wireless network for mobile users in Montreal and Toronto, plans to roll out its 3G network this summer in Calgary, Edmonton and Vancouver.
“From a service-provider perspective, we’re still charging ahead all guns a-blazing,” says Tim Hodge, general manager of Alberta and B.C. for Bell Mobility. “Our growth rates are measured in hundreds of per cent.”
Bell Mobility arrived in the Alberta market about two years ago to challenge TELUS Mobility – just as Alberta-born TELUS went east to take on “Ma Bell” on its home turf.
Bell Canada is about to take a huge stride in its cowboy boots to increase its profile in the West.
Hodge says the company has signed a five-year sponsorship agreement as exclusive telecom supplier to the Calgary Stampede for wireless, long- distance, network infrastructure, high-speed Internet and satellite services.
AT&T Canada tends not to get as much attention as TELUS and Bell. But AT&T says demand from its Alberta customers for data management and network security is so strong, the company may need to build a new data centre in Calgary to complement its large data centre in Vancouver.
“Customer demand for telecommunications services continues to increase. There’s no end in sight for what customers want to do with our services, and new applications they want to deploy,” says Doug Westlund, vice-president of data and Internet services for AT&T Canada.
IDC Canada analyst Surtees has compiled statistics showing that the telecom services market in Canada (both wired and wireless) was worth about $31.8 billion last year. While the entire sector grew by about six per cent from the previous year, provision of wireless services increased by 14 per cent.
“I’m expecting very healthy and very decent growth in a lot of segments this year, including the Internet space and data communications and wireless,” Surtees notes.
Alberta’s oilpatch is leading the way in expanding its telecom wireless capability, mainly to reduce the costs of finding and producing oil and natural gas, says Charles Reichert, director of INFO-Port, a division of high-tech incubator Calgary Technologies Inc.
“If oil and companies can reduce the number of people they need to go out and monitor things and they can do it electronically, so much the better.”
Oil and gas companies have certainly picked up and run with services such as TELUS Mobility’s unique ‘Mike’, Blumenthal says.
‘Mike’ is a fully functional PCS (personal communications services) digital network that has telephone calling, text messaging and data services.
‘Mike’s’ difference is that it also has “direct connect,” based on Motorola’s iDEN (integrated Digital Enhanced Network) technology. It works like a walkie-talkie, with a range that spans Western Canada.
“So you can have someone in Red Deer alert someone on Vancouver Island, and at the touch of a button they have a conversation. It’s a hugely powerful capability,” Blumenthal says.
In the world post-Sept. 11, everyone from the FBI to state police used iDEN units at the Winter Olympics in Salt Lake City.
Look for police and RCMP to employee the technology during the G-8 Summit in June in Kananaskis Country.
Hodge says Bell Mobility’s 3G network, to be launched this summer, will enable people with the new generation of cellphones to wirelessly download a page of text in three seconds or a digital colour photograph in just five seconds.
Third-generation networks also have “instant-on” and “always-on” capabilities, making dialing up a thing of the past.
But is there a market for high-speed wireless, coupled with new 3G devices with their larger screens, personalized ring-tones, screen savers and cellphone batteries that last days as opposed to hours?
You bet, analysts say. Consider the fact that the number of subscribers to wireless services in Europe is about a 60-per-cent to 70-per-cent penetration rate.
In Canada, that rate is about 35-40 per cent.
Big Canadian wireless operators – TELUS Mobility, Bell Mobility, Microcell Connexions Inc. and Rogers Wireless Communications – recently announced an agreement to allow short text messages to be sent via cellphone by a user over any of their four competing networks. This “cross-carrier” service, already highly popular in Europe and Japan, is widely expected to boost text messaging and revenue for companies.
Consumers in Canada are still out-spending businesses on wireless services by about two-to-one, Surtees notes. “I think there’s still incredible pent-up demand and huge potential for growth of wireless in the business space.”
Demand for secure and redundant networks, and expert advice on how to create them, is driving telecom growth – especially among medium-sized businesses (100 to 500 employees), says AT&T’s Westlund. More and more companies are establishing “contact centres” – essentially a call centre connecting customers 24/7 via the Internet to a firm’s products and services.
AT&T, which owns and runs extensive networks in both Canada and the U.S., “is the leading choice for customers who want to have seamless conductivity between operations across the border and globally,” Westlund says.
INFOPort’s Reichert says he expects to announce in the near future that a new 300-seat contact centre is locating in Calgary. He’s talking with another four companies about setting up similar facilities here, including a 500-seat centre.
Aldo Zanoni, founder and president of Network Learning Masters in Edmonton, says the small elite training centre can’t turn out graduates fast enough to fill the demand from Alberta businesses looking for high-quality, hands-on skills in Microsoft infrastructure, applications, integration and security.
“This sector of the industry is still healthy, it’s still hiring,” Zanoni says. “But employers are looking for quality.”
Nine-year-old Network Learning Masters accepts a maximum of 64 students a year in its intensive five-month program. The Edmonton school recently won this year’s Microsoft Canada Certified Training Centre of the year award, making it the top facility among about 80 Microsoft training centres in the country.
So, if telecom is still hot in Alberta, why did electronics giant Panasonic pull the plug in February on its $13-million wireless design centre in Calgary, axing about 40 jobs?
Panasonic’s pullout was influenced by a host of factors, including formidable competition from global firms including Nokia and Compaq in developing 3G handheld devices, IDC Canada’s Surtees says. “But one can’t say: ‘Oh, Panasonic pulled out of its lab in Calgary. Therefore, the wireless services space is in the dumpster.’ Hardly.”
Given the still-struggling worldwide economy, Alberta companies certainly face challenges in the next six months to two years, says Bill Hughes, former president of Wi-LAN, who was also at Nortel for 20 years. He’s now president of Fideliter, a Calgary consulting firm involved in several high-tech initiatives and projects.
However, wireless innovators like Cell-Loc, Wi-LAN, CSI Wireless, Novatel, Zi Corporation and others have shown staying power, even in tough economic times, Hughes notes.
“They continue to develop . . . to capture customers and mature their products.”
INFOPort’s Reichert says if Alberta cities can keep inflationary pressures in check, including the cost of housing and wages, he expects to continue getting calls from companies looking to set up telecom services here. “Not only that,” he adds, “but we’re starting to get (Canadians) that are being laid off in the States that are coming back.”
So Monty Python’s parrot aside, the telecom providers that have flocked to Alberta are very much alive – and they’re talking up a growing business.
