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"Wanted: robust Canadian fiber optic network seeks U.S. partners for broadband 'connections'. I give you access to Canada; you give me the rest. Call 'Big Pipe' at Shaw Ventures in Calgary, 403-750-4500."
Okay, the above personal ad is fictional. But the information in it isn't. And the message of market expansion that it's sending is as subtle as a gold chain-sporting lounge lizard.
Shaw Ventures' Big Pipe Inc. is a Canadian fiber optic network with U.S. points of presence (POPs) in Washington, DC; Palo Alto, Calif.; Chicago; Seattle; and New York, among others.
Over the next three years, Big Pipe is spending $65 million to upgrade its fiber optic networks. Combined with Shaw's own fiber backbone-built to support sister company Shaw Communication's cable TV and high-speed Internet traffic-and dark fiber leased from 360networks, Big Pipe is creating a 12-strand fiber optic backbone covering 3,939 miles. The backbone is being split across two separate routes, for network redundancy and safety.
Yet despite this ambitious foray into the U.S. market, Big Pipe says its intentions towards neighboring broadband carriers are nothing but honorable. "Our primary focus is to provide broadband service in Canada," says Michael D'Avella, Shaw Communication's senior vice president of planning. "Since most Canadians look southwards across the Internet for information, we need to provide that interconnectivity."
With U.S. POPs in place, it only makes sense for Big Pipe to seek U.S. traffic. However, D'Avella would prefer to get it through alliances with U.S. broadband carriers rather than by taking them on head-to-head. "We see companies such as Williams Communications coming to us to lease capacity in Canada," he explains.
Shaw's not the only Canadian cable TV company to go down the fiber backbone road. Other MSOs have also started down this path, because they're already feeding their cable TV systems and Internet access customers using fiber.
However, "it became too capital-intensive a business for them to continue with," says Debbie Lawes, associate publisher of the Canadian industry newsletter Canadian Communications Reports.
As well, other Canadian MSOs have focused on rolling out digital cable TV, Lawes says. Unable to pay for everything they wanted, these MSOs "decided to unload their fiber assets to other companies."
But Shaw Communications didn't sell out. Instead, last July it rolled its Fiber Link division into Big Pipe, and got serious about becoming a North American player.
Big Pipe isn't Shaw's only foray into broadband. The company's also been licensed to place its own Ka-band satellite into the 107.3 degrees west orbital slot. This commercial satellite-the first in Canada not owned by Bell Canada Enterprises' (BCE) Telesat Canada-will allow Shaw to deliver two-way access at speeds between 300 and 500 kilobits per second. It will cover both Canada and the continental United States, and is due to be in service by January 2004.
Again, like Big Pipe, Shaw could use its Ka-band satellite to compete directly in the U.S. market. But mindful of the power of DIRECTV, EchoStar, and other U.S. DBS carriers who plan to launch their own Ka-band broadband services, Shaw prefers to strike deals with U.S. partners instead.
"Our objective is not necessarily to be become a U.S. player," says D'Avella. "Indeed, we'd like to get American investors to help us in designing and planning our satellite."
One reason why Shaw's seeking wealthy U.S. patrons is Canadian telephone giant BCE. As competition comes to Canada, bringing cable TV MSOs into telephone's territory and vice versa, Shaw and BCE are quickly emerging as the country's two most powerful, most diverse communications companies.
In fact, these once quite-different rivals are now quite similar, thanks to their aggressive takeover sprees. Today, Shaw owns cable TV systems, a DTH satellite service (Star Choice), a satellite service provider (Cancom), the Shaw@Home broadband ISP, radio and TV channels, and is said to be working towards launching voice-over-cable. Meanwhile, BCE also owns a DTH satellite service (Bell ExpressVu), commercial satellite owner/operator Telesat Canada, ISP Bell Sympatico, and CTV, Canada's largest private TV network.
Despite these similarities, however, BCE has one distinct advantage: it has much deeper pockets than Shaw. Hence Shaw's need for some U.S. partners-and their money--to even the playing field.
Shaw's Canadian resources, plus the proven business savvy of the Shaw family, could make Big Pipe attractive to U.S. investors. But can a company born in the shadow of the Canadian Rockies really make it in the North American big time?
Yes, replies Wagner Rios, a network and industry analyst with Boston's AMR Research. After all, "we've seen Nortel doing very well in the U.S. market," he says.
All of which seems to indicate that Shaw won't be a member of the lonely hearts club for long.
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