GIANTS TEAM UP ON WIRELESS NETWORK

Co-operation cuts costs for Rogers and Bell Canada

In a marriage of mortal enemies, Bell Canada and Rogers Communications Inc. will spend $200-million over the next three years to roll out a high-speed wireless network across Canada.

The Inukshuk network, which has been in the works since 1999 when the federal government granted wireless spectrum, will serve 40 urban centres and 50 rural communities. Bell and Rogers decided to work together because it is less expensive for them to build a single national network.

Iain Grant, managing director with consultancy Seaboard Group, said the exciting part of Inukshuk will be its ability to provide high-speed Internet access to underserved and unserved rural communities for about the same cost as service in urban centres.

Mr. Grant said Inukshuk will bridge the divide between urban and rural communities by giving rural consumers access to reasonably priced high-speed Internet services such as Internet phone ( VoIP), high-speed broadband and music downloads.

Inukshuk will initially be aimed at residential customers in every province except Manitoba and Saskatchewan, where the joint venture does not own wireless spectrum. It will be marketed as a “ plug- and- play” service where consumers can get up and running by simply connecting their computer to a wireless modem.

The service is portable so a subscriber can have a high-speed Internet connection if he takes his modem to a different location. As the technology develops, it is possible the service could become mobile and let consumers access the Web while travelling.

A key part of the joint venture’s creation and investment plans was Bell’s purchase of billionaire Craig McCaw’s 25% stake in Inukshuk. Inukshuk will be owned and controlled equally by Rogers and Bell. Both companies have the right to use 50% of the network’s capacity but will market and sell services separately. There are no plans to offer wholesale access to rivals such as Telus Corp.

Since Microcell Telecommunications Inc. was granted spectrum six years ago, Inukshuk’s development has seen plenty of promise but not a lot of action. For several years, Microcell did little with the spectrum despite Ottawa’s mandate to launch broadband service to remote communities.

In late- 2003, Inukshuk was revived when Microcell, Allstream Inc. and NR Communications LLC, which is controlled by Mr. McCaw, unveiled a $135-million joint venture to offer high-speed Internet access and voice services. In March, 2004, Allstream, however, was acquired by Manitoba Telecom Services Inc. for $1.7billion. In May, Telus launched a $ 1.1- billion hostile takeover of Microcell. Rogers eventually purchased Microcell for $1.4-billion and then acquired Allstream’s stake in Inukshuk from MTS.

Rogers and Bell said they expect to negotiate a roaming agreement with Mr. McCaw’s Clearwire Corp., which plans to offer high-speed wireless service to 100 U.S. centres.