San Francisco-based NorthPoint Communications Group Inc. and Toronto’s Call-Net Enterprises Inc. have created a new standalone company, NorthPoint Canada, which plans to deliver wholesale DSL (digital subscriber line)-based broadband services to Canadian businesses.
“It’s kind of an ‘Intel Inside’ thing where NorthPoint is the underlying DSL provider,” said NorthPoint’s chief development officer, Whitey Bluestein. “We’ve got over 200 ISPs that offer DSL service powered by NorthPoint and we’re basically using the same business model in Canada.”
Call-Net, a publicly-owned Canadian telecommunications company, offers local and long distance voice, data and on-line services across Canada through its principal arm, Sprint Canada Inc. Call-Net will outfit NorthPoint Canada with an already established telecommunications infrastructure that includes 90 central offices in 18 of Canada’s top 25 markets with 5 million addressable local lines, allowing NorthPoint Canada to deploy DSL services quickly, said Bluestein.
NorthPoint is entering the Canadian market to compete with the nation’s one true DSL provider, Bell Canada, said Bluestein. “We see a window to come in and be a competitive provider of DSL services and in our partnership with Call-Net we saw a very exciting and capable partner that had facilities in place that will enable us to get into the market very quickly and build out a broad, far-reaching footprint in relatively short order to bring competitive broadband services to Canada,” he said.
Ultimately for Call-Net, the service is branded as a Sprint Canada service, but is provided by the joint venture and will also be available through NorthPoint Canada. Although NorthPoint Canada is a standalone company, it will be a key component in Call-Net’s own strategic plan to roll out DSL services to its established customer base as well as playing a key role in Call-Net’s desire to grow in the burgeoning data market.
“DSL technology, which enables low-cost, broadband local access is a key component of our data strategy going forward,” said Call-Net’s vice-president of corporate development, Jon Macdonald. “This DSL joint venture and the product it will offer to Call-Net is an essential component of our desire to grow in this rapidly-growing data market.”
Mark Quigley, an analyst with the Brockville, Ont.-based Yankee Group in Canada, sees any wholesale DSL venture as a good thing for the data market.
“Obviously these folks (NorthPoint) have a lot more experience in widespread rollout of DSL service than any Canadian company does at present,” he said. “I think it makes sense to enter into a joint venture where you can leverage both ends of the equation.”
Quigley said the venture will enable both companies to leverage their existing strengths: Call-Net can leverage its existing sales force and the small and medium-sized businesses it currently serves, while NorthPoint will be in the position to leverage its expertise in rolling out service and in marketing that service.
Because The Canadian Association of Internet Providers has complained that Bell’s wholesale DSL tariff is too high, Quigley predicts that once this joint venture, and others like it, get under way, they will have some success.
“I think Bell Canada will be exploring those avenues as well, and that it will be important going forward to be able to provide both those types of product (wholesale and retail),” said Quigley. “The bottom line is, the more lines you have that are DSL-enabled…the better. I think there’s a lot of demand out there and it only makes sense to offer something that’s there to meet it.”
The new company will function as a 50/50 joint venture under a separate management team to be jointly appointed by both companies, and will launch service in the third quarter of this year as NorthPoint Canada. For more information, visit NorthPoint at www.northpointdsl.com or Call-Net at www.callnet.ca