Quebec is now home to some of the fastest internet access in North America with a rollout of new services by Videotron Ltée that allow customers to download a full CD of songs in about 10 seconds or a movie in five minutes.

The Montreal-based cable company on Wednesday announced two new broadband packages for business and residential customers with speeds of 30 and 50 megabits per second, which it said was the fastest available commercially in North America.

Canada was once a world leader in broadband adoption, but the country now has the second-slowest growth rate in the OECD.
(Justin Sullivan/Getty Images)

It's a move that has analysts talking about the ramifications on the industry and how other companies will react.

The service itself is available to 112,000 households in Laval, just north of Montreal, with plans to expand to Montreal and Quebec City this year.

The offerings are aimed at households with multiple internet users, where the high speeds make it possible for a number of people to be on the internet at the same time without slowing their connections.

The monthly cost of the 30-mpbs plan, which has a download limit of 30 gigabytes, is $64.95, while the 50-mbps service costs $75.95 and has a 50 GB cap.

Manon Brouillette, Videotron's vice-president of marketing, content and product development, told reporters at a press conference in Montreal that the new speeds are being offered in response to requests from customers.

"They are demanding immediate access to the content they want," Brouillette said. "They want to [be] able to download it and port it to the platform of their choice, and access it when and where they want ... Videotron understands these needs and strives to respond quickly."

The new services also give Videotron bragging rights as a technological innovator. By comparison, the fastest speed offered by the cable company's biggest competitor in Quebec, Bell Canada Inc., is only 16 mbps, although most customers can receive only a maximum of 7 mbps. Most other residential ultra-high-speed access in Canada caps out at about 20 mbps.

Verizon Communications Inc., one of the largest U.S. internet service providers, also offers some customers speeds of up to 50 mbps over its fibre-optic network, but at $139.95 U.S. a month, it's nearly double the cost of Videotron's top service.

"It's blown the doors off ..."

Videotron's new offerings are therefore notable on two fronts, analysts say.

"It's blown the doors off of the speeds offered to at least some Canadians and it has held back on trying to make it not affordable," says Iain Grant, president of telecommunications consultancy The SeaBoard Group. The company is "trying to put Bell out of business, to put it in a nutshell."

Videotron began testing its ultra-high-speed service, which was built by Cisco Systems Inc., a year ago. The network is capable of achieving speeds of up to 100 mbps, but the company decided to cap commercial offerings at 50 mbps because the servers that house all the content found on the internet aren't yet able to spout out information fast enough.

"The network was too fast for the internet," says Isabelle Dessureault, general manager of communications for Videotron. "It's like a car that has an engine that can go 200 miles an hour, but that would cause the rest of the car to explode."

Videotron has been throttling Bell in internet access in Quebec, Grant says, with the company adding 34,000 new high-speed customers in the past quarter alone for a total of 933,000. Most of those customers aren't subscribers new to broadband, but are instead coming from Bell.

The mere announcement by Videotron last year that it was testing an ultra-high-speed network in Quebec was enough to spark a broadband arms race in the province — Bell reacted by immediately raising speeds.

Mark Langton, a spokesman for Bell, would not comment on whether the company plans to boost speeds. He did say that according to customer feedback, speed is not often the top concern.

"They look for superior security and added services like networking ... and of course consistency and reliability of service, as with the never-shared nature of our internet technology," he says.

Critics of Canada's telecommunications providers have praised Videotron for breaking the mold and introducing some competitiveness back into the internet access market. In the early part of this decade, Canada was a world broadband leader and ranked second among the 30 countries in the Organization for Economic Co-operation and Development in terms of how many inhabitants were internet subscribers.

Canada's early lead was the result of fierce competition between phone companies such as Bell and cable providers such as Rogers Communications Inc. to quickly grab broadband customers, which meant ever-faster speeds at affordable prices. But that competition soon fizzled as phone and cable firms divided up the market and settled on an equilibrium of customers, and prices have risen steadily since.

In Ontario and Quebec, Bell has about two million broadband subscribers while Rogers and Videotron combine for about 2.3 million. In Western Canada, phone provider Telus Corp. has about 1.1 million subscribers while its main rival, cable company Shaw Communications Inc., has about 1.4 million.

Canada in 9th place

Canada has over the past few years squandered its broadband lead and slipped to ninth place in OECD rankings — with 23.8 subscribers per 100 inhabitants — while ultra-high-speeds of up to 100 mbps are now commonplace in leading countries such as Japan and South Korea.

The OECD's 2007 Communications Outlook, released last July, confirmed that Canada's slipping position was because of rising prices. Among the 30 member countries Canada ranked 18th in both monthly and per-megabyte pricing, and its growth rate in adding new broadband customers, meanwhile, was second last in the OECD as a result.

The Canadian Radio-television and Telecommunications Commission has also said ISPs haven't done enough to expand broadband services to areas outside heavily populated cities. The regulator last month ordered providers to spend more than $300 million to provide high-speed internet access to rural communities.

Grant says the problem comes down to competitiveness between Canadian ISPs, or lack thereof. The providers like to say they're competitive with each other, but the statistics show anything but.

"If Rogers truly thinks it's a competitive company, in these times of turmoil at Bell, why wouldn't they goose up the speeds? It would make life a little less pleasant for Bell."