REPORT

Table of Contents

Section Page

About This Report V

1.0 INTRODUCTION 7

2.0 LOCAL SERVICES MARKET PARTICIPANTS 9

3.0 THE LOCAL SERVICES MARKET SIZED 11

3.1 CLARIFICATION AND DEFINITION 11

3.2 OVERVIEW 11

3.3 ILEC AND COMPETITOR SPECIFICS 13

3.4 GROWTH FORECAST 14

4.0 TRENDS IN THE COMPETITIVE LOCAL MARKET 26

4.1 THE SHOW MUST GO ON OR THE EVOLUTION OF

THE BUNDLE

4.2 VOIP PROVIDERS - THE LAST GASP 28

4.3 HOSTED SOLUTIONS 29

4.4 WIRELESS SUBSTITUTION 31

5.0 CORPORATE PROFILES 33

5.1 BELL ALIANT 33

5.2 BELL 39

5.3 BELL IN THE WEST 49

5.4 COGECO 52

5.5 EASTLINK 55

5.6 MTS ALLSTREAM 58

5.7 PRIMUS 67

5.8 ROGERS 72

5.9 SHAW 77

5.10 TELUS 80

5.11 TELUS IN THE EAST 88

5.12 VIDEOTRON 90

5.13 VONAGE 95

List of Figures and Exhibits

Exhibit Page

1 WIRELINE LOCAL ACCESS LINES BY PROVINCE (2010) 18

2 WIRELINE LOCAL ACCESS LINES BY CITY (CMA) (2010) 18

3 PROJECTED ILEC SHARE OF WIRELINE LOCAL ACCESS LINES BY
CITY (CMA)(AS OF DECEMBER 31, 2010) 19

4 ILEC WIRELINE LOCAL ACCESS LINES (2008-2013) 20

5 LINES SERVING ILEC CUSTOMERS (2008-2013) 20

6 TOTAL ILEC LOCAL SERVICES REVENUE (2008-2013) 20

7 COMPETITOR SHARE OF TOTAL WIRELINE LOCAL ACCESS LINES (2008-2013) 21

8 COMPETITOR SHARE OF TOTAL WIRELINE LOCAL ACCESS REVENUE (2008-2013) 21

9 WIRELINE RESIDENTIAL LINES & REVENUES, BY NON-ILEC COMPETITOR, (2008-2010) 21

10 WIRELINE BUSINESS LINES & REVENUES BY NON-ILEC COMPETITOR, (2008-2010) 22

11 WIRELINE ACCESS LINE SHARE BY SEGMENT, TOTAL MARKET, (2008-2013) 22

12 REVENUE SHARE BY SEGMENT, TOTAL MARKET, (2008-2013) 23

13 RESIDENTIAL AND BUSINESS LINE SHARE, BY PARTICIPANT, (2008-2013) 23

14 VOIP RESIDENTIAL SUBSCRIBERS & BUSINESS LINES, BY PARTICIPANT, (2008-2013) 24

15 VOIP RESIDENTIAL SUB & BUSINESS LINE SHARE, BY PARTICIPANT, (2008-2013) 24

16 VOIP RESIDENTIAL AND BUSINESS REVENUES, BY PARTICIPANT, (2008-2013) 25

17 COMPETITOR GAINS VS. ILEC LOSSES, RESIDENTIAL LINES, (2009-2013) 31

18 BELL ALIANT: RATE OF DECLINE OF RESIDENTIAL LINES VS. REVENUES, (2009-2010) 34

19 BELL ALIANT RESULTS AND FORECAST (2008-2010) 37

20 BELL ALIANT OPTIONAL FEATURE PENETRATION (2008-2010) 38

21 BELL CANADA’S RESIDENTIAL AND BUSINESS BUNDLES 46

22 BELL CANADA RESULTS AND FORECAST (2008-2010) 47

23 BELL CANADA OPTIONAL FEATURE PENETRATION (2008-2010) 48

24 BELL IN THE WEST RESULTS AND FORECAST (2008-2010) 49

25 COGECO RESULTS AND FORECAST (2008-2010) 52

26 COGECO SUBSCRIBER GROWTH TRENDS FEB. 2009- AUG. 2010 54

27 EASTLINK RESULTS AND FORECAST (2008-2010) 55

28 MTS ALLSTREAM RESULTS AND FORECAST CLEC (2008-2010) 60

29 MTS ALLSTREAM OPTIONAL FEATURE PENETRATION (2008-2010) 61

30 MTS ALLSTREAM RESULTS AND FORECAST CLEC (2008-2010) 66

31 PRIMUS RESULTS AND FORECAST (2008-2010) 67

32 ROGERS RESULTS AND FORECAST (2008-2010) 72

33 SHAW RESULTS AND FORECAST (2008-2010) 77

34 TELUS BUSINESS AND RESIDENTIAL BUNDLES 85

35 TELUS (ILEC) RESULTS AND FORECAST (2008- 2010) 86

36 TELUS (ILEC ALTA. & B.C.) OPTIONAL FEATURES PENETRATION (2008-2010) 87

37 TELUS (CLEC) RESULTS AND FORECAST (2008- 2010) 88

38 VIDEOTRON RESULTS AND FORECAST (2008- 2010) 90

39 VONAGE RESULTS AND FORECAST (2008- 2010) 95

About This Report

This is NBI/Michael Sone Associates' twelfth report on the Canadian Local Telecom Services Market. The extensive primary research that is the hallmark of all NBI/Michael Sone Associates' reports was carried out over the past several months as the Local Services Market has undergone many changes. Information, both quantitative and qualitative, was analyzed and organized so as to provide the reader with a detailed understanding of the background, current state and probable future of the local services sector. The final product, Canadian Local Telecom and VoIP Services Market Report, 2011 Edition, is the most detailed research report available on this industry.

The local services market will experience a myriad of developments over the coming months that NBI/Michael Sone Associates will continue to track.

Following an introduction and definition of Local and VoIP services and participant sectors in Sections 1 and 2, NBI/Michael Sone Associates provides detailed quantitative data in Section 3 that measures the size of the market, the growth for incumbents and new entrants in both the business and residential sectors over a six-year period (2008 to 2013), and forecasts the share of the market by lines and revenues to be held by the various participants. Included as well are forecasts for the VoIP market, segmented by industry sector (ILEC, cableco, etc.) and by business versus consumer. (It should be noted that all reference to "lines" within the report refers to wireline local access lines unless explicitly stated otherwise.)

Section 4 looks at some the current trends within the market among various industry segments.

Section 5 presents the all-important Corporate Profiles (13 in total) that provide a wealth of qualitative and quantitative information including marketing strategy, product development, competitive positioning, bundles, pricing and impacts of regulatory developments.

The report is supported by 39 comprehensive Exhibits that examine line and subscriber counts, revenues, business and residential analysis, bundling, and provincial and cityspecific data.