Cogeco’s disastrous investment in a Portuguese cable company may be the beginning of the end for the Canadian cable operator.  Cogeco, which primarily serves smaller communities in Ontario and Quebec, may eventually find itself the property of Rogers Communications, Inc., particularly if its messy overseas cable operation can be dispensed with soon.

The Financial Post suggests rumors of Cogeco’s increasing efforts to rid itself of Portugal’s Cabovisao could be a prelude to a bigger sale of its Canadian cable operation to Rogers.

Cogeco’s interest in Portugal’s cable industry came after the company determined there were limited opportunities to invest or acquire cable operations in the highly concentrated North American market.  In 2006, it spent $660 million to acquire Cabovisao, two years before Portugal felt some of the worst impacts of a global economic crisis that continues to this day.

Cogeco's financial mess in Portugal.

Portugal’s efforts to stabilize its economy have brought widespread salary reductions and tax increases, making luxuries like full-priced cable service untenable.  Subscribers have been canceling in droves, either because they found a better deal from a competitor, or because they could no longer afford the monthly bill.

Earlier this summer, Cogeco wrote-off its entire investment in Cabovisao and has been rumored to be shopping the cable system for a quick sale.

One analyst told the newspaper if Cabovisao is for sale, Cogeco may be perceived to be “throwing in the towel” on the strategy of investing abroad — and moreover, paving the way for a takeover by Rogers.

Rogers already holds a nearly one-third equity interest in Cogeco.  Being rid of Cabovisao could make Cogeco that much more attractive to Rogers, whose systems largely surround Cogeco’s operations.

The only thing remaining in the way of a wholesale takeover could be the Audet family, which controls the majority of shares in Cogeco.  Earlier this summer, it was clear the Audets had no interest in selling, but that may be changing with the unwinding of its international investment strategy.

Upcoming wireless spectrum auctions are critically important for some of Canada’s newest players in the cell phone marketplace.  Most are working hard to make sure they have plenty to spend to secure new frequencies for advanced wireless services that will help them remain competitive with larger players.

Globalive Holdings, the parent company of Wind Mobile, has convinced backers to provide hundreds of millions of dollars in financing, so long as all of the money is spent on acquiring wireless spectrum.

Wind’s nearly 400,000 customers will appreciate the additional room for growth, and new customers may keep Wind in mind for advanced 4G networks most Canadian providers intend to build and expand into the new spectrum they acquire at an auction next year.

Much of the funding, estimated to approach nearly a half-billion dollars, is coming from Wind’s parent entities, Egypt-based Orascom Telecom and the European conglomerate VimpelCom that acquired Orascom earlier this year.  Because the Canadian government is expected to set-aside some of the valued 700MHz spectrum exclusively for bidding among new entrants in the market, Wind could walk away a big winner, particularly if other similar-sized competitors Mobilicity and Vidéotron Ltee./Quebecor have trouble raising enough money to remain competitive in the bidding.

As far as Canada’s largest cell companies are concerned, set-asides are unnecessary and they prefer a winner-take-all auction.  Rogers, in particular, has been lobbying hard to convince Canadian officials it needs access to the 700MHz spectrum up for auction to roll out service in rural communities and upgrade networks in larger cities.

Those who feel Canada’s cell phone marketplace is already too concentrated have little sympathy for Rogers’ point of view, and expect an auction free-for-all will mean the largest incumbent players will walk away with everything they can bid on.

Among smaller players, assuming the set-asides are in place, analysts expect Wind will probably secure the most spectrum, but Vidéotron is expected to stay competitive and walk away with at least some frequencies for use in its home province of Quebec.  Big losses among the smaller players could fuel calls for additional mergers and acquisitions among those carriers deemed to have been left behind.

The Canadian government is expected to be the biggest winner of all, netting a potential $3-4 billion from the spectrum sale.

A joint venture between Rogers, Videotron, Bell and Telus will bring major improvements in cell phone service in Montréal’s métro by the end of 2013.

Isabelle Tremblay, a spokesperson for the Société de transport de Montréal, which manages the métro system, told the Montréal Gazette there has been a plan in place for several years to have a cellular network in the subway tunnels, which are often cell-phone-free zones because of reception problems.

Montreal métro provides coverage in these areas of Montreal.

None of the carriers involved would confirm the report, originally published in La Presse, but subway cell phone networks are not unprecedented.  Both New York and Washington, D.C. have cell service provided by underground antennas.  Many trains now also provide Wi-Fi service, and Montréal is expected to be no different.

Tremblay said Wi-Fi would come after cell phone service is established.  In most cases, carriers use third party contractors to construct and manage the networks on their behalf.  Only existing customers get to access the respective networks.

Fiber optic cable spool

For the most populated provinces in Canada, questions about when fiber-to-the-home service will become a reality are easy to answer:  Never, indefinitely.

Some of Canada’s largest telecommunications providers have their minds made up — fiber isn’t for consumers, it’s for their backbone and business networks.  For citizens of Toronto, Calgary, Montreal, and Vancouver coping with bandwidth shortages, providers have a much better answer: pay more, use less Internet.

Fiber broadband projects in Canada are hard to find, because providers refuse to invest in broadband upgrades to deliver the kinds of speeds and capacity Canadians increasingly demand.  Instead, companies like Bell, Shaw, and Rogers continue to hand out pithy upload speeds, throttled downloads, and often stingy usage caps.  Much of the country still relies on basic DSL service from Bell or Telus, and the most-promoted broadband expansion project in the country — Bell’s Fibe, is phoney baloney because it relies on existing copper telephone wires to deliver the last mile of service to customers.

Much like in the United States, the move to replace outdated copper phone lines and coaxial cable in favor of near-limitless capacity fiber remains stalled in most areas.  The reasons are simple: lack of competition to drive providers to invest in upgrades and the unwillingness to spend $1000 per home to install fiber when a 100GB usage cap and slower speeds will suffice.

The Toronto Globe & Mail reports that while 30-50 percent of homes in South Korea and Japan have fiber broadband, only 18 percent of Americans and less than 2 percent of Canadians have access to the networks that routinely deliver 100Mbps affordable broadband without rationed broadband usage plans.

In fact, the biggest fiber projects underway in Canada are being built in unexpected places that run contrary to the conventional wisdom that suggest fiber installs only make sense in large, population-dense, urban areas.

Manitoba’s MTS plans to spend $125-million over the next five years to launch its fiber to the home service, FiON.  By the end of 2015, MTS expects to deploy fiber to about 120,000 homes in close to 20 Manitoba communities.  In Saskatchewan, SaskTel is investing $199 million in its network in 2011 and approximately $670 million in a seven-year Next Generation Broadband Access Program (2011 – 2017). This program will deploy Fiber to the Premises (FTTP) and upgrade the broadband network in the nine largest urban centers in the province – Saskatoon, Regina, Moose Jaw, Weyburn, Estevan, Swift Current, Yorkton, North Battleford and Prince Albert.

“Saskatchewan continues to be a growing and dynamic place,” Minister responsible for SaskTel Bill Boyd said. “The deployment of FTTP will create the bandwidth capacity to allow SaskTel to deploy exciting new next generation technologies to better serve the people of Saskatchewan.”

But the largest fiber project of all will serve the unlikely provinces of Atlantic Canada, among the most economically challenged in the country.  Bell Aliant is targeting its FibreOP fiber to the home network to over 600,000 homes by the end of next year.  On that network, Bell Aliant plans to sell speeds up to 170/30Mbps to start.

In comparison, residents in larger provinces are making due with 3-10Mbps DSL service from Bell or Telus, or expensive usage-limited, speed-throttled cable broadband service from companies like Rogers, Shaw, and Videotron.

Bell Canada is trying to convince its customers it has the fiber optic network they want.  Its Fibe Internet service sure sounds like fiber, but the product fails truth-in-advertising because it isn’t an all-fiber-network at all. It’s similar to AT&T’s U-verse — relying on fiber to the neighborhood, using existing copper phone wires to finish the job.  Technically, that isn’t much different from today’s cable systems, which also use fiber to reach into individual neighborhoods.  Traditional coaxial cable handles the signal for the rest of the journey into subscriber homes.

A half-fiber network can do better than none at all.  In Ontario, Bell sells Fibe Internet packages at speeds up to 25Mbps, but even those speeds cannot compare to what true fiber networks can deliver.

Globe & Mail readers seemed to understand today’s broadband realities in the barely competitive broadband market. One reader’s take:

“The problem in Canada (and elsewhere) preventing wide scale deployment of FTTH isn’t the technology, nor the cost. It’s a lack of political vision and will, coupled with incumbent service providers doing whatever they can to hold on to a dysfunctional model that serves their interests at the expense of consumers.”

Another:

“The problem with incumbents is they only think in 2-3 year terms. If they can’t make their money back in that period of time, they’re not interested. Thinking 20, heck even 10 years ahead is not in their vocabulary.”

Hours before the deadline imposed by the Canadian Radio-television and Telecommunications Commission, Rogers Communications responded Tuesday evening to the CRTC, which demanded Rogers correct malfunctioning speed throttle technology that slowed certain online gaming traffic to a crawl, because is mistook it for peer-to-peer file sharing traffic.

In a four-page letter to the Commission, Rogers essentially rehashed the Commission’s original concerns and then attempted to explain why the company throttles broadband traffic in the first place:

We manage P2P upload traffic because if we did not, this traffic would grow to occupy the capacity available on our network and so impact our customers’ experience. The vast majority of P2P upload traffic is being sourced by non-Rogers customers. Without our traffic management practices, our customers, including online gamers, would experience difficulty uploading traffic. The traffic management we do slows down the upstream delivery of P2P file sharing but does not prevent it. Since P2P file sharing is not as time sensitive as other forms of traffic, we believe managing it has little impact on customer satisfaction.

Remarkably, unthrottled peer-to-peer traffic on other Internet Service Providers in places like the United States does not seem to threaten the viability of those networks, but evidently Rogers is a special case.

Our ITMP policy does not target any customer group or content: it is designed to allow us to manage traffic to maximize our customers’ overall experience. Online gamers, in particular, need a responsive upstream network. In an effort to provide the best service for all of our customers, Rogers’ ITMPs limit only P2P file sharing applications to a maximum of 80kbps of upstream throughput. Our traffic management deploys specialized network appliances to classify traffic and apply our policy where appropriate. Gamers who would like to win extra cash online may play different motobola joker123 games.

That explains why the Canadian Gaming Organization (CGO) was so upset about Rogers’ throttling technology malfunctions which can slow game traffic to a crawl. But Rogers decided in light of the evidence exposing the gaming traffic throttling problem, the best thing to do was to blame someone else. Getting the right kind of server with the right Keywords can be helpful:

The technology and software in use at Rogers is provided by a leading network equipment vendor: Cisco. This is the same technology that is in place in hundreds of other ISPs worldwide, and Rogers does not believe the problems we have experienced are unique to our network.

Most traffic, such as web browsing or email, can be clearly identified by our Cisco equipment with very little chance of error. In very rare situations, traffic that is not P2P file sharing may be misclassified, such as was the case with World of Warcraft (WoW). Rogers has experienced a small number of cases of gaming traffic being misclassified as P2P file sharing traffic. In these cases, gaming customers have only been affected when running P2P file sharing simultaneously with a misclassified game. The typical game requires less than 80 kbps and so would not be affected even if a misclassification were to occur. It is only when the games are running in conjunction with P2P file sharing that our ITMP would be deployed. This has been confirmed by repeated testing in our lab. We have currently resolved all of these cases.

In other words, if customers shut off the offending peer to peer software, gaming traffic won’t be impacted by the throttle which reduces file sharing speeds to around 80kbps, which is just above dial-up.

Rogers’ “Rube Goldberg” Throttled Traffic Resolution Flow Chart. (All you wanted to do was play your online game in peace.)  Our suggestion for improvement: turn off the broadband traffic throttle and upgrade your network and the problems go away for everyone.

Rogers denies there is a problem worth getting upset about, because in their view, game traffic doesn’t need anything faster than 80kbps anyway.  Rogers’ attitude and response were both hotly contested by CGO co-founder Jason Koblovsky, who says his members are still directly and clearly affected by Rogers’ throttle.

“Rogers is stating here that they are actively dealing with throttling issues, and suspecting throttling when connection problems are being reported to them.  Quite frankly we are seeing quite the opposite,” Koblovsky says.  “They are actively refusing to even acknowledge that throttling might be taking place, and evidence of this has been submitted to the Commission in previous complaints proving what Rogers is claiming with this flowchart is false.  Hopefully the CRTC can read flowcharts and connect the dots.”

Rogers says it will take a two-step approach to make further corrections to reduce the impact of its errant broadband throttle, but did not provide any timeline.

“In the few cases where we have determined there has been a misclassification of an online game, we have used a two-stage solution to fix the problem. In the short term, we whitelist the game manufacturer’s servers. Whitelisting means creating a policy that will not apply ITMPs to packets going to and from a game manufacturer’s servers no matter how the traffic is classified. This can usually be accomplished in a very short period of time. Whitelisting is effective where the game manufacturer’s server can be located. The second stage is a long term solution that involves a software upgrade created by Cisco and deployed on our network that will correct the misclassification. We note that we did not use whitelisting until recently. Using whitelisting allows us to resolve problems much more quickly than was the case with WoW.”

Whitelisting, according to CGO, is not a sufficient solution to the problem because game manufacturers often change or add additional servers that Rogers will not initially be aware of, requiring constant tweaking to keep the whitelist up to date.

CGO co-founder Teresa Murphy added that “World of Warcraft traffic isn’t safe until the final fix from Cisco is applied to all Rogers-controlled Deep Packet Inspection systems.  Until that happens, if Blizzard moves any of their servers (as they did last summer), the whitelist will no longer apply to World of Warcraft traffic, and we’ll be back in this same situation all over again.  We’re also curious as to the current status of the other games users reported to Rogers back in March which were experiencing the same problems as World of Warcraft, but which didn’t get as much user outcry as World of Warcraft garnered.  There has been no update from any Rogers employee regarding these other games, which we find concerning.  Updates were sparse on the World of Warcraft issue before the CRTC complaint went in, but updates to users on the forums became non-existent after Rogers was forced to admit their practices with WoW.”

Rogers also promises to begin testing the top-ten most popular gaming titles on an ongoing basis to make sure game traffic for those applications goes unaffected.  Woe to those who don’t make the top-ten list, however.

CGO calls Rogers’ response wholly inadequate.

“The way the CRTC has put this to Rogers is that the CRTC expects a plan with dates to have this misclassification issue resolved. This just simply hasn’t happened here,” Koblovsky added.  “The CRTC has been pretty clear to Rogers they want no possibility of misclassification here on any programs, games etc.”