Swifter, Higher, Stronger: Competing in the Internet Economy

Convergence is indeed bringing more of the world to more Canadians. And increasingly, it's enabling us to get more information, entertainment and e-commerce from one supplier, whether it's over TV, wireless and wired telephones, or satellites. The common bond is the Internet.

Where is convergence headed? Straight to the Internet, to be sure. But how and in what form? There's no shortage of brave predictions out there, but no one knows for certain how the Internet will evolve, not the media gurus, not the dot-com millionaires. It's like the Olympic Games; we tune in because we don't know who will cross the finish line first.

So when it comes to picking winners, even the savviest can miss the obvious. May I remind you that IBM dismissed an obscure operating system that beget Microsoft? And may I also remind you that just a few years later Bill Gates was just as dismissive about the Internet.

As Canada's leader in communications and multimedia, BCE can't afford to wait by the sidelines. Our shareholders and our customers can't afford it. But if we move quickly and selectively, then I think we can stay well ahead of the competition at home and abroad. And indeed I believe BCE is making the right strategic moves, as I trust today's address will demonstrate.

BCE's Internet strategy centres around three axes: connectivity, content and commerce. These three elements represent the building blocks, or drivers behind some of the past year's transactions. Why buy CTV and Teleglobe? And just a few weeks ago, why did we join forces with the Thomsons to found Canada's premier multimedia company; a company owning powerful media brands such as CTV The Globe and Mail and Sympatico?

Allow me to point out that long before CanWestGlobal's acquisition of Hollinger newspapers, before Rogers' purchase of the Blue Jays and before Quebecor's pursuit of Videotron, BCE had its sights on the Internet. Since 1998 we've invested some $20 billion to transform Bell from Ontario and Quebec's phone company into Canada's Internet and multimedia powerhouse; a powerhouse with significant scope and scale for the Internet economy.

Let's look at how connectivity, content and commerce are driving BCE's Internet strategy. Let's begin with connectivity.

Connectivity is simply a measure of how widely connected we are with Canadians. Add up the number of homes and businesses that are hard-wired to Bell's network, the number of wireless subscribers to Bell Mobility and the number of Bell ExpressVu satellite TV subscribers and that's our connectivity.

With Bell's increased national presence and the scope of its connectivity, we now have more than 18 million points of contact with our customers and we're still growing. While that's the best connectivity in Canada, sheer numbers don't make a national company. Only presence in every region can do that. This is why during the past year we began rolling out services from coast to coast. We increased our stake in Aliant, which serves Atlantic Canada, we purchased a 20-per-cent interest in Manitoba Telecom Services and we co-founded Bell Intrigna to serve Alberta and British Columbia.

In 1998, we purchased Fonorola fibres and Nortel optics equipment worth $500 million and built Canada's only coast-to-coast broadband network serving the country's largest users of band width.

With this national network in place, we're set to further grow Sympatico, our Internet access service. Sympatico's 900,000 subscribers make it Canada's leading Internet service. Significantly, 160,000 of those subscribers have high-speed access, which means they enjoy a richer online experience.

Of course, it's now possible to get that experience in more ways than ever before, not just through wires and fibre optic strands, but over thin air. Bell Mobility's wireless Web services are growing at 35 per cent every month. In fact the last time I checked, nearly one-third of digital subscribers were logging on with their cell-phone to get email, check their portfolios and, these days, catch up on the latest Olympic news.

There is no question in my mind that the next big leap will be wireless access to the Internet. In this respect, Bell Mobility is a leader, a fact acknowledged by the Yankee Group, a top industry watcher. They noted that ""once again, Bell Mobility is setting the pace"" in the race to develop the wireless Internet and named us North America's most innovative wireless company in 1999.

A moment ago I noted that Bell ExpressVu strengthens BCE's connectivity. There's a reason for that. Bell ExpressVu is not just Canada's leading satellite TV service. It also beams the Internet to remote communities and schools. All this was made possible by the launch of Nimiq, Canada's first high-power direct-broadcast satellite. With Nimiq in the sky, Bell ExpressVu can now offer the country's largest programming lineup at 200 digital video and music channels and smallest dish. Bell ExpressVu has already signed up half a million subscribers, and will likely top one million by 2002.

BCE's Internet connectivity at home is matched by its growing connections abroad. This explains our acquisition of Teleglobe, which owns the third-most extensive undersea fibre optic cable network in the world. Teleglobe has great strategic value. It's a gateway to the world for our business customers and a partner for other BCE companies seeking connections in foreign markets. It is also an enabler for additional growth beyond Canada.

Teleglobe customers are a who's-who of the Web, including America-On-Line, Yahoo!, Microsoft, Excite, Akamai; they also include 800 carriers, 100 broadcasters and hundreds of ISPs.

Like BCE, Teleglobe is in transition. It's shedding yesterday's dependence on voice traffic to become a full-fledged Internet player. In fact, Teleglobe is now building the most advanced broadband network in the world-a network that will support the growing demand for data around the world.

As with any major transition, this one will require Teleglobe to meet some challenges. However, like Nortel in the 80s and Bell Canada in the 90s, Teleglobe is close to turning the corner. Since taking over, BCE has installed new management, helped to trim costs, and improved margins.

Let's now turn our attention to content. Content is a rather dry way of describing everything from election coverage to a hockey game; from Atom Egoyan's latest movie to a sitcom; from buying books on-line to providing stock listings over cell phones. It's all content: information, entertainment and e-commerce carried by copper and fibre optic strands; by radio waves beamed from antennas and satellites.

As I noted some moments ago, BCE's connectivity brings us to millions of Canadians and businesses. But until recently, we did not provide any of the content we carried. For BCE to claim a viable growth strategy in the Internet economy, content is key. After all, the Internet is where media intersect; increasingly, it's what broadcasting, print and communications have in common.

As you know, this year BCE purchased CTV, Canada's leading private TV network, whose programming reaches 99 per cent of English Canadians. The CRTC, which must approve the purchase, held Change of Ownership hearings just last week, and we expect its decision later this year. Two weeks ago, together with the Thomsons, we announced the creation of Canada's largest multi-media company.

That company gathers under one umbrella: CTV and its 13 specialty and payTV channels; The Globe and Mail, Canada's leading national newspaper; ROBTV and nine Globe Interactive sites, including Workopolis.com and Globelnvestor.com; and Sympatico-Lycos, Canada's leading Internet portal, which logs nearly 100 million page views per month. It will also include other Sympatico websites, such as our much-visited city sites, like Toronto.com, and on-line White and Yellow Pages. All told, the company will reach one-third of all on-line Canadians and generate 200 million Web page views per month. Not incidentally, it will be based in Toronto and employ some 4,000 Canadians across the country.

Now, very importantly, we will continue to build each media brand in its own market segment and cherish the value it creates by itself. But add it up, and it's an unbeatable multi-media powerhouse. And simple addition doesn't do justice to the potential. Only multiplication can convey the built-in synergies: the potential for distributing content from platform to platform; for cross promoting programmes, reporting and other content; for enhancing each other to reinforce Canada's best known and most respected media brands.

This is how we intend to differentiate ourselves in order to encourage the majority of Canadian Web surfers, that bypass Canadian websites, to go through our Canadian sites first as they connect to the worldwide Web rather than go directly to U.S. sites.

This is something that no foreign-owned competitor is able to match. Nor can they match our commitment to local and national content; our commitment to building a window on the world for Canadian eyes and ears, and a window on Canada for the world to enjoy.

Now let's examine e-commerce, the third axis in BCE's Internet strategy-BCE Emergis and CGI, our two e-commerce specialists, in the business-to-business market. This means that they provide business customers more ways to connect and to seamlessly buy and sell products and services on-line. Indeed, they're Canada's e-commerce leaders, and are expanding into the U.S. and beyond.

Business-to-business e-commerce is lubricating the wheels of Canadian business, particularly among small and medium-size firms. For these smaller players, e-commerce delivers the speed and critical mass once enjoyed only by the biggest. I'll cite just one e-commerce initiative, Procuron, and how it will change the way companies are doing business. Unveiled yesterday, Procuron enables firms of all sizes to gain the procurement clout of large corporations. BCE Emergis is a partner in Procuron, along with Bell Canada, CIBC, e-Scotia, and Mouvement des caisses Desjardins. They've combined their purchasing power to create a marketplace any company can join; a marketplace that stocks everything from office supplies and computers to travel and translation services-all at volume discounts.

Examples like Procuron suggest that our confidence in business-to-business e-commerce is being borne out. According to Forrester Research, the Canadian market will generate an estimated $218 billion in transactions by 2004.

So there you have it: connectivity, content and commerce, the three axes of BCE's Internet strategy. At this point you might well ask, what's the advantage of having our fingers in so many pies? Why not focus on Bell's traditional phone business, which has served us well for generations? Well, it's simply because there is no such thing anymore. The network we built to carry voice is now buzzing with Internet traffic. Where growth in voice traffic is nearly flat, data is climbing the chart at roughly 25 per cent every year. In short, voices and ears are being replaced by eyes and minds, eager to embrace the Internet.

I began today with the Olympic motto. I began by suggesting that today's communications players are racing to become ever swifter, higher and stronger. What I did not mention is a corresponding empowerment in ordinary Canadians, an empowerment that enables them to choose when and how they get their information and entertainment.

Today, our customers can log on Bell.ca to add or subtract services, to check their account, order equipment or sign up with Bell ExpressVu. They can customise their Sympatico-Lycos home page so that what interests them-local weather, sports, headline news, whatever pops up when they log on. Liberated from the desktop, they can use their cell-phone to check e-mail, shop or locate a nearby restaurant.

If one of our Canadian athletes wins a gold medal halfway around the world, he or she can choose to wait for the sportscast, the evening news or morning papers or find out immediately, with just a keystroke. Swifter, higher, stronger indeed!

BCE owes it to customers, employees and shareholders to evolve the business; to go where value is being created; to continue providing more choices to our customers and to deliver experiences and destinations rather than only a connection. We also owe it to Canada, if we are to maintain Canadian cultural spaces, and if Canada is to compete toe-to-toe in the Internet economy. Thank you.

The appreciation of the meeting was expressed by Harry T. Seymour, Partner, GBC Asset Management Inc. and Past President, The Empire Club of Canada.