BCE investing $854M in fibre expansion

Broadband connections to Montreal homes

TORONTO • will spend $854 million on fibreto-the-home broadband connections in its home base of Montreal, an investment the telecom giant described as the largest-yet communications infrastructure project in Quebec.

Bell announced Monday that it plans to hook up 1.1 million residences and businesses directly to fibre in order to deliver ultra-fast Internet speeds, which are increasingly demanded by data-hungry consumers and needed by telecoms to compete with their cable rivals that already offer higher speeds to a wider footprint.

The investment in Montreal follows Bell’s fibre installation in Toronto in 2015 and Quebec City in 2012, where it spent $1.14 billion and $225 million, respectively. Bell said the full project in Montreal will be “largely completed” within five years.

Bell estimates the project will create 2,700 direct and indirect jobs as it installs more than 7,000 kilometres of fibre and upgrades 25 central offices. Since 90 per cent of Bell’s network in Montreal is on aerial structures, the build out is expected to be cheaper and faster than in cities where fibre must be buried.

“By connecting everyone in Montreal with the best in broadband, Bell is enabling the benefits of increased innovation and economic growth for our home city now and into the future,” CEO George Cope said in a statement.

Montreal Mayor Denis Coderre said Bell’s announcement will help his city attract leading-edge businesses in industries such as gaming and aerospace that require advanced digital infrastructure.

“There is a direct and positive correlation between access to an ultra-fast Internet network and a community’s economic development,” Coderre said in a statement.

Bell has already connected several thousand locations in Montreal to fibre, but analysts believe it has little choice but to spend more on fibre if it wants to compete against its cable competitors in Quebec, particularly Rogers Communications Inc. and Quebecor Inc.’s Videotron. Fibre is more expensive than upgrading cable networks to deliver gigabit speeds, but it allows for faster upload speeds and is expected to be the best-in-class technology for 30 or 40 years.

“It’s kind of a defensive move, but you need to do it for the long-term health of your wireline business,” Desjardins analyst Maher Yaghi said.

Meantime, Rogers and Videotron have been using their speed advantage to win back market share, Yaghi said, and it’s starting to show in Internet subscriber numbers.

That’s tough for the telecoms, which need to get an Internet market share of more than 45 per cent in order to get a really good return on capital, he said.

Scotiabank analyst Jeff Fan noted that Telus Corp. has also been spending heavily on fibre in order to compete with its cable counterparts.

“It is not investment that they can avoid,” Fan said in an email.

He expects cable companies will continue gaining momentum in the Internet market in the medium term while telecoms build out their networks, he wrote in an industry report last week. BCE Inc. will be spending $854 million to connect Montreal homes to its fibre network.