why northwestel should get out of the voice business

Northwestel LogoAs I mentioned yesterday, Northwestel is in a middle of a 5-year plan that, I bet, will see their voice services totally transitioned to IP. That means they’ll no longer deliver voice over cable. Instead, all voice traffic will travel over the internet. I would argue they needn’t even remain in the voice business.

Voice over IP (VoIP) offers tons of inherent cost and service benefits due to its digital nature. Whether Northwestel decides to pass on those benefits to its customer base is anybody’s guess. But why wait another 24 months to see what Northwestel might introduce?

There is a world of improved service and massive savings to be had by northerners already, with minimal pain. And here is a key weakness in Northwestel’s current strategy: the competition is already out there, and Northwestel has fallen well behind in the game. The only reason the company is not in a more dangerous position is the same as that which keeps viruses off the Mac platform: the northern market is miniscule, so who really wants to be in it? Northwestel only exists, in the first place, by law, so any other operator has got to be crazy to consider Canada’s north as a feasible business environment.

But the fact is, geography is no longer a relevant attribute in the voice telecommunications industry. The internet opens up a world of options for virtually any product or service, even those that were once exclusive to a particular region. And that is particularly true of voice telecommunications: it’s a commodity now, and anyone, even northerners, can take advantage of huge costs savings and quality improvements from the VoIP revolution.

Like, I just cut my monthly landline telephone costs by two thirds and vastly improved the service I enjoy. My only sacrifice was my area code: I no longer have 867, I now have 604. (Ironically, however, I can now call any northern community for free. Inter-community calling was an expensive proposition with an 867 area code.) On the up side, if and when I move away from – or even just travel away from – the North, I can take my number with me; never shall an 867 line leave this chilly clime.

I subscribed to Vonage, a VoIP telephone service that is indistinguishable from a traditional landline, such as that offered by Northwestel. The Vonage model is one that Northwestel must surely be transitioning towards; but it’s doubtful we’ll see their service before the Olympics finish up in Vancouver.

So, again, why wait?

Savings and service improvements can be had by anyone in the North now. Here’s a breakdown of costs for an average residential phone line, by provider:

  Vonage Northwestel
Monthly fee $19.99 $31.33
Call display Included $5.95
Call waiting Included $5.00
Call return Included $5.00
Enhanced voice mail Included $8.95
Fixed call forwarding Included $5.00
3-way calling Included $5.00
400 long distance minutes Includes 500 minutes $22.95
Total monthly cost $19.99 $89.18

Again, the caveat here is that the federal government prevents Vonage from provisioning 867 area codes, so any northerner who would like to take advantage of Vonage must give up their current area code and phone number. But how much is that worth to you? Certainly not $830 a year, I’d wager. That’s the difference of a flight to Vancouver.

But VoIP is not just about cost, it’s about quality of service. So far, Vonage has been just as good, if not better than Northwestel’s voice line. But several other features are far better, such as voice mail. I can access my voice mail by using my phone, as usual, or I can listen to the messages on a secure web site. I can also have each message emailed to me, so I can listen to them right away.

The web site that Vonage maintains for my line also lists the details of all of my calls and offers me an easy-to-use interface for setting up the huge assortment of included calling features like call forwarding.

Another important aspect of VoIP is its mobility. Vonage runs through a small box that plugs into my internet connection. Wherever I go, I can take this box and maintain access to my phone line.

While at first blush, losing your distinct “northern” 867 number might seem like a disadvantage, think again. Your friends, family, and business associates in the south won’t get fleeced anymore when they call you, as they did when they dialled into the 867 area code. And your number can accompany you should you move. Try that with the north-locked 867.

One more bonus that’s common with VoIP networks: Vonage users can call other Vonage users for free. With Northwestel, it costs you dearly just to call Dawson from the Horse.

When you consider the reduced cost, improved quality of service, and vastly increased convenience of VoIP services like Vonage, you have to wonder why northerners haven’t abandoned Northwestel in droves. The primary problem, up until very recently, was that telephone-based internet services such as ADSL made VoIP somewhat redundant. It didn’t make a lot of sense to subscribe to VoIP if you were already paying Northwestel a king’s ransom for your landline.

But now that in many northern communities cable is the preferred method of internet connection, that Northwestel phone line begins to look like the redundant one. It would cost roughly the same to sign up for Northwestel Cable’s lowest tier of service ($39.95 per month) and Vonage ($19.99 per month), as it would to sign up for a just Northwestel landline with a few calling features and a long distance plan alone. 

The source of Northwestel’s monopoly, indeed almost its entire raison d’etre, is the 867 area code. VoIP renders the 867 area code – or any area code, for that matter – irrelevant. As Northwestel works through their 5-year plan that focuses very largely on internet, they should transition out of the voice business altogether. Any number of southern VoIP providers already do a much better job  than Northwestel can ever hope to do at the highly commoditized internet phone business. And these companies are already Northwestel’s competitors. (Such a move, however, would threaten the company’s monopoly and their healthy subsidy.)

Instead of voice, Northwestel should focus on building out a big, huge, dependable, mission-critical-quality internet pipe. Then they should simply partner with an established VoIP provider such as Vonage as a reseller. I’d wager that they could negotiate far greater margins on such a deal than they could ever hope to recoup after building out a custom VoIP platform. Plus, northerners would be assured telephone services on par with the best any other global region enjoys, along with significantly reduced costs and improved telecommunications convenience.

But even that would take quite a while. Instead, you might do like I did, and hook up with a company like Vonage right now. You could enjoy the benefits of VoIP today and buy yourself a ticket out of here with the savings.

6 thoughts on “why northwestel should get out of the voice business

  1. wow. that’s surprising (and relatively new, no? iirc, they didn’t have it last time i looked at vonage – back when they first came out?). but (as someone who’s had occasion to use 911) the write-up on it on their site doesn’t really inspire confidence. i guess it’s not a show-stopper for most people, unless they have an ill family member, or something, and might have reason to need 911 more often…

  2. I’ve been a Vonage customer customer ever since it became available in Canada (5 years? Is it really THAT long?!), and use it for 99% of my family’s long distance.

    Sound quality is actually better than that of the landline (that I still maintain, reluctantly, but for that nasty 867 problem–it’s not really polite to make my friends here in town incur an LD charge to Calgary just to call me).

    I’m guessing all voice traffic WILL move to VOIP in a few short years, but I suspect it will remain POTS for the “last mile”…

  3. Live in Yellowknife and have had Vonage for probably 5 years after kids kept running up NWTel bills to $300 plus a month. So “strapped” my NWTel line (no outgoing long distance allowed) and have a Vonage phone for LD. But NWTel still sticks it to you as they charge for cable internet use after 5 gigs I think. At about 90k a second it does not take long to get over 5 gigs a month with kids calling all over Canada. Switched my band width from 90 to 60 on the Vonage and no more internet overages, and surprise surprise, Vonage reception is even better. Vonage claims the better reception is due to NWTel’s antiquated cable system (that we pay top dollar for) that is not up to handling 90k bandwidth. Looking so forward to leaving the north and its Shylocks demanding their pound of flesh behind in the near future.

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