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Is EXFO’s success an argument against Usage Based Billing?

EXFO
Germaine Lamonde, President and CEO of Quebec City's EXFO.
Germaine Lamonde, President and CEO of Quebec City's EXFO.

The Canadian debate about Usage Based Billing has become predictably political. Although, as the National Post’s Terence Corcoran pointed out today, there is little concrete evidence to suggest it is in fact true, many fear that Draconian measures from the CRTC will result in a monthly 30 gigabyte download limit per household in Canada. That is, as the Toronto Sun’s Kalvin Reid illustrates, about six high definition Netflix movies.

The backlash against these real or imagined restrictions has sparked a movement of sorts, with hundreds of thousands of Canadians signing a petition to end usage based billing, a political outcry that now has PM Stephen Harper backing Industry Minister Tony Clement’s probe into the matter.

Heady stuff. But while the UBB debate has been framed as one of consumer rights, there is no such populist movement in the United States. In the US, Comcast has imposed a usage cap of 250 gigabytes on its customers. AT&T and Verizon, however, have no usage caps.

Americans have become voracious consumers of bandwidth, and they’re part of an exploding trend, worldwide. The Cisco Visual Networking Index forecasts that global IP traffic will quadruple from 2009 to 2014, reaching almost 64 exabytes per month in 2014.

With ongoing debate about what role the stimulus package had in the US economic recovery, and the Canadian version of it winding down, it is worth noting that the build out of next-generation networks, those confusing acronyms known by names such as such as LTE’s 4G/LTE, IMS, OTN, and FTTx’s is one area of the US economy that is experiencing an unparalleled boom.

Canadian shareholders of Quebec City’s EXFO (TSX:EXF) have joined a growing list of those north of the border benefiting from Canadian technology companies, including Sandvine (TSX:SVC), DragonWave (TSX:DWI) and Bridgewater (TSX:BWC), playing pivotal roles in the US broadband expansion. EXFO, which specializes in telecom measurement equipment and boasts several tier one US based networks as clients, just reported its best quarter ever in its Q1 2011. The company’s telecom sales were up 62.9%, and this was the fifth consecutive quarter of revenue growth for EXFO. CEO Germain Lalonde credited the company’s growth with the fact that “…wireline and wireless operators are escalating investments in broadband deployments and IP convergence in order to increase network performance and lower operating expenses..” He added that EXFO expects to “increase even faster over a three-year horizon from 2010-2012.

So is Canada participating in this boom? A geographic breakdown of EXFO’s sales, for what it’s worth, says no. While the company posted a whopping 48.2% gain in the United States, and was up 24.1% in Latin America, the Canadian bump was a modest 5.5%. And in light of the belief some hold that Canada is losing ground in the digital race, globally, EXFO’s Q1 2011 Management Discussion and Analysis was sobering. The company noted that “…large order to tier one network operators “did not occur in 2010 in Canada.”

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About The Author /

Cantech Letter founder and editor Nick Waddell has lived in five Canadian provinces and is proud of his country's often overlooked contributions to the world of science and technology. Waddell takes a regular shift on the Canadian media circuit, making appearances on CTV, CBC and BNN, and contributing to publications such as Canadian Business and Business Insider.

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