Rivals Bell and Telus spend $3-billion in very different ways - Macleans.ca

Rivals Bell and Telus spend $3-billion in very different ways

Which high-stakes strategy will pay off best for the future of communications

The $3-billion gambles

Paul Chiasson/CP

Bell Canada Inc. and Telus Corp. share a similar history as former phone monopolies, but their visions of the future could not be more different. Last week, Bell parent BCE Inc. said it was buying Astral Media Inc. in a deal valued at $3.4 billion, part of an ongoing effort to bulk up on content for its broadband, wireless and satellite TV distribution businesses. Astral owns 24 specialty channels and pay-TV networks, including the Movie Network and HBO Canada. The Astral buy is on top of BCE’s $1.3-billion purchase of CTV in 2010 and last year’s $1.32-billion co-purchase (with Rogers Communications Inc., which owns Maclean’s) of Maple Leafs Sports and Entertainment. By some estimates, BCE could now control 34 per cent of the Canadian TV universe.

BCE has been here before. It used to own a host of online and traditional media assets, including CTV, which it later sold. However, CEO George Cope is adamant that things are different this time around as consumers increasingly turn to their iPhones to watch TV and use their TVs to browse the Internet.

By contrast, Telus said earlier this month it would spend a similar amount, $3 billion, on a further rollout of fibre optic cable in B.C., more wireless coverage, a $750-million office and residential tower in downtown Vancouver and expansion of its Internet protocol television offering. So far, Telus is the only major telecom or cable company in Canada that hasn’t purchased a television asset, focusing instead on its core businesses of connecting customers.

Analysts are split on which strategy is the right one. Some say the Astral deal will guarantee Bell’s access to cheap content, and give it a leg up in Quebec where it competes with Quebecor Media. But Dvai Ghose, an analyst at Canaccord Genuity, argues that Quebecor’s success has more to do with “superior broadband and customer service” than ownership of French TV shows, which must be made available to competitors under new regulatory rules.

Marshall McLuhan famously said the “medium is the message.” But in 2012, everyone except Telus is betting the precise opposite is the case.

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Rivals Bell and Telus spend $3-billion in very different ways

  1. I’m betting Telus has it right.  Which sucks, because I find their customer service to be approximately what you’d expect in an Afghan prison.

    The reason is that while Bell may be able to restrict competitors from accessing their content, they won’t be able to restrict their competitors’ *customers* from accessing it anyway through piracy and the internet.  At the same time, their own customers won’t be able to access their competitor’s content except through lower quality internet connections.

    Convenience is king, and if you want everything, you want the better connection.

  2. You make it sound like Bell is not spending any money on their network, which is false.  Bell spent $3.2 billion on network and technology in 2011 and we can expect more of the same in 2012.  This is in addition to the Astral purchase.  

    Further, the Telus investment in BC is over 3 years.  So about $1 billion a year in their core market.  Bell is spending over 3 times that amount per year.  

    But then, to truly compare their respective capital expenditures, you could simply look at their quarterly statements and publish actual numbers.  But then, that wouldn’t draw in as many readers as some random misleading comparison.  

    The bright spot in all of this: You made me think and question your logic, which is always enlightening.