Article content continued

“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.

Financial Post

ejackson@postmedia.com