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Quebecor Inc not likely expanding cell service across Canada following CRTC decision, say analysts

National Post Tech Desk - Wed, 05/06/2015 - 15:58

MONTREAL – The CRTC’s decision to regulate wholesale roaming rates is good news for small Canadian cell phone carriers such as Quebecor Media’s Videotron, but analysts say it doesn’t mean the Montreal-based company will rush to expand outside the province.

“I think among all the decisions the CRTC could have taken, this was not the best outcome that would have increased the odds of them going to Western Canada,” said Maher Yaghi, a telecom analyst at Desjardins Securities.

Though the CRTC will cap the amount Bell, Rogers and Telus can charge other carriers for allowing their customers to piggyback on major networks while roaming, it decided against other regulations the smaller rivals were pushing for. The regulatory body chose not to mandate pricing for leasing broadcast towers, as requested by Quebecor and Wind Mobile.

“What new entrants were hoping to get from the CRTC was some kind of a normalization or standardization of what they should pay the incumbents to place their antennas on these towers,” Yaghi said.

“I think this is going to lead to many sorts of delays getting set up if someone decides to build a wider area of wireless network outside of their current home base.”

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The new entrants – including Quebecor – had also asked that incumbents be forced to provide seamless roaming when travellers switch from one network to another. The CRTC decided the big carriers did not have to do this.

“Reduction in roaming fees outside Quebec does help reduce the cost of operating a network, however, it is a very small part of the overall cost structure,” said Yaghi.

Quebecor has said publicly that it’s holding off on rolling out national cellular service until it knows the final wholesale roaming rates in areas where it won’t be building its own networks. Although the CRTC has decided to regulate rates, the actual price won’t be announced until November.

“The rates will be one of many factors considered.  The others will include prospective partners, spectrum and financing,” said Rob Goff, telecom and new media analyst at Euro Pacific Canada.

In 2008, Quebecor was among the successful bidders in the AWS-1 spectrum auction. Then in March 2014, the company picked up seven licences in the 700 MHz spectrum in Quebec, Alberta, British Columbia and Ontario for $233 million. However, Yaghi says that for Quebecor to run a successful wireless business elsewhere in Canada, spectrum is only a small part of the equation.

“You need to build the network, you need to open points of sales, you need to subsidize handsets, and you need to brand. You need to do a lot of things to be successful, which they did in Quebec,” he said.

Still, Yaghi says the CRTC’s decision will have an impact on the company, even in Quebec. In 2013, Quebecor spent about $14 million on roaming fees within the province.

“Any reduction by the government of roaming fees, even inside Quebec, is a positive for them,” he said.

Quebecor is not yet saying how the CRTC’s decision will affect their business strategy, though they do consider the move to regulate roaming rates “a step in the right direction.”

I think among all the decisions the CRTC could have taken, this was not the best outcome that would have increased the odds of them going to Western Canada

“The final rates set by the CRTC will be decisively important for the viability of genuine competition,” said Quebecor Media vice-president of public affairs, Martin Tremblay, in a news release.

When contacted, Quebecor did not provide further comment on the decision. In Desjardins Capital Markets’ report it says that while the company does have a multi-product service offering in Quebec, it does not have the same advantages outside its borders.

For that reason, Yaghi says Quebecor may be better off strengthening its presence in Quebec, perhaps even buying up the 24.6 percent of the company owned by a subsidiary of the Caisse de dépôt et placement du Québec pension fund.

“Given how well they are doing in Quebec, they should stick to what they have been doing so well, and double up on that,” he said.

Financial Post
Dvanderlinde@nationalpost.com
Twitter.com/DamonVDL

Bell Media’s Super Bowl appeal can proceed, Federal Court of Appeal rules

National Post Tech Desk - Wed, 05/06/2015 - 14:47

Bell Media’s court case appealing a ban on the simultaneous substitution of Canadian commercials over U.S. ads during the Super Bowl can go ahead, the Federal Court of Appeal has ruled.

In January, Canadian Radio-television and Telecommunications chairman Jean-Pierre Blais announced Canadian television stations will be barred from the practice, known as “simsub,” starting with the 2017 Super Bowl.

He said the CRTC had received complaints from Canadians who want to see the big-budget, hotly anticipated U.S. advertisements that run during the event.

In response, Bell filed a motion with the Federal Court of Appeal in March, arguing the CRTC had overstepped its jurisdiction, violated the tenets of the Broadcasting Act and unfairly discriminated against Bell.

Bell also released the results of a Nanos Research survey finding only one in five Canadians thought the ability to watch U.S. Super Bowl advertisements was more important than supporting Canadian broadcasters who paid for the rights to air the event.

The court ruled Bell can proceed with its appeal on Monday.

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Crowdfunding campaign for home espresso machine brews backlash

National Post Tech Desk - Wed, 05/06/2015 - 12:34

TORONTO — Backers of a failed effort on the crowdfunding website Kickstarter are considering their options after founders of a coffee maker missed a mid-April deadline to get the project back on track.

ZPM Espresso claimed its Nocturne coffee maker was the world’s first smart espresso machine for the home because of a programmable control chip, more common in commercial machines, that would allow consumers to create the perfect shot of concentrated java by precisely controlling water pressure and temperature.

Yet the company’s plans never materialized, and now supporters who spent as much as US$1,000 on the machine — and assorted bonuses including T-shirts and coffee paraphernalia — are looking for answers.

Christopher Browne, a Toronto-based computer scientist, said he contributed $350 during ZPM Espresso’s original Kickstarter campaign from December 2011 to January 2012, which was supposed to cover the cost of the machine as well as a few extra gifts. The campaign raised US$369,569, well above the original US$20,000 goal.

The creators posted frequent updates in the beginning, Browne said. As the months passed, he remained positive even as the company ran into problems. There were issues with the quality of the manufacturing, and ZPM Espresso hired outside consultants to adapt the design.

Browne said he knew the project was destined for failure last fall as updates became less frequent and problems seemed to multiply.

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In January, ZPM Espresso announced it was shutting down and that only a small amount of the initial money remained to return as refunds. The news prompted other backers to complain on Kickstarter and social media, Browne said, with some comments from those who felt “betrayed” by the company turning vitriolic.

In an interview, one of the founders of ZPM Espresso shed light on some of the problems.

“The way you make something at volumes of 50 is completely different than the way you make things at volumes of a thousand,” said Gleb Polyakov.

Consumers need to understand that crowdfunding is a different consumer experience than buying an existing product from an online retailer like Amazon, he added.

“That feeling of involvement and early access and participation is probably the main reason people go towards crowdfunding as a platform and find it exciting,” he said.

“But when a company is only three people instead of IBM or Apple, the manufacturing process and the customer service process looks much different.”

On its website, Kickstarter says the responsibility for completing the project lies with the creator and that any refunds must be processed between the creator and the backers.

The company has updated its rules and terms of use several times since the site launched. Last year, it clarified the legal rights of backers to sue creators if they fail to bring the project to its “best possible conclusion.”

Browne said he and other backers have discussed going to court to pursue a refund or some other remedy.

“The agreements that Kickstarter set up are worded such that this isn’t formally a product, where you can have a direct expectation of delivery,” he said. “Anyone that’s looked at Kickstarter with any care ought to be aware of that, but people like to imagine otherwise.”

Despite that, Browne hasn’t soured on the idea of crowdfunding. On April 24, he posted on Twitter that he was proud to be the 1,119th backer of a specialized 3.8-litre insulated flask for storing beer that claims to be the world’s largest personal keg.

Facebook Inc’s Oculus to sell virtual reality headsets for consumers from early 2016

National Post Tech Desk - Wed, 05/06/2015 - 07:42

Virtual reality technology company Oculus said it would start shipping the much-awaited consumer version of its Rift headset in the first quarter of 2016.

Pre-orders for Rift will start later this year, Oculus, which Facebook Inc bought for US$2 billion last year, said.

Previous versions of the VR headset, available since 2012, were aimed at developers to make games and run tests. The consumer version was widely expected sometime this year.

“In the weeks ahead, we’ll be revealing the details around hardware, software, input, and many of our unannounced made-for-VR games and experiences coming to the Rift,” the company said on a blog post.

Screen grab/OculusA first look at the Oculus Rift. Screen grab/OculusThe inside of the Oculus Rift.

© Thomson Reuters 2015

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