Content is fast becoming a big deal again with service providers, especially for consumers, but there certainly are implications for business customers as well. There’s a lot of ground to cover here, and I’m just going to touch on a few things.

For those of you who follow my blog, you’ll know that the past two weeks have been busy in Canada’s communications sector. First was Videotron’s long-awaited entry into the mobile market, followed almost immediately by BCE’s (News - Alert) top-up to acquire the rest of CTV that it didn’t own. If you don’t know the landscape, Videotron is the dominant cable operator in Quebec, and they have been very successful taking wireline subscribers from the local incumbent, Bell, with VoIP. Their parent company, Quebecor, is a media powerhouse, mainly in Quebec, and with all this content at their disposal, their entry into wireless is particularly interesting.

BCE, on the other hand, is the parent of Bell Canada, the incumbent wireline telco for both Quebec and Ontario. Their wireless arm, Bell Mobility, is the number two player nationally behind Rogers. CTV is one of Canada’s major broadcasters, and being national, is focused on English language content. While Bell Mobility has a national customer base to protect, Videotron (News - Alert) is focused solely on Quebec, with a heavy emphasis on French content.

Even from this brief synopsis, you can see there are a lot of moving parts here, with varying priorities and target audiences. Content is central to everything, and it raises some fundamental issues about what drives value and what is the best way to provide it.

The first thing that comes to mind for me is how the lines are blurring more than ever now between telcos and cablecos. Whether it’s Videotron adding mobility or Bell adding content, both are after the same customer, and both are out to own the customer outright. The convergence strategy has had a history of failure, but there’s no doubt that the technology is in place today to make it work. Both companies can ultimately provide the same bundle of services, so really, how is the consumer going to choose?

Videotron brings cable TV, VoIP, wireless and Internet, and Bell can counter with IPTV and satellite for video, along with wireless, POTS and Internet, especially via their new Fibe service. Fibe is their fiber offering that supports power users for video and of course, IPTV, and is comparable to FiOS (News - Alert) from Verizon. In essence, both providers can deliver across the all-important three screen footprint – TV, PC, mobile device – so there is a lot at stake here.

With all these common capabilities, the playing field on the network and services delivery side is fairly level. DOCSIS 3.0 may give cable operators the upper hand for speed, but telcos can hold their own here with fiber. Both companies have moved to 3G and beyond for wireless, and for today’s mobile needs, there is no real advantage to concede to either side. Neither is really depending on wireline telecom for growth, and longer term, it will be a loss leader at best. What was once the cornerstone of a great company for over a century, wireline has now gone to becoming almost an albatross in less than 10 years for Bell. POTS may still be the most important connection for Bell with many of its subscribers, but in today’s market, that’s simply not where the growth is.

So, this begs the question, what is the definition of a service provider, and how do they remain competitive? For many years, I’ve been saying that the service provider of the future will be different from a traditional telco or cableco, and as their convergence strategies unfold, the distinctions will matter less and less. Of course this also gives rise to the worst fear for any service provider – being reduced to a “fat, dumb pipe.” This brings us back to content as the best way to differentiate, but raises an entirely new set of questions and issues.

I’ll just raise one here, and move on to some others in my next article. One of the standard strategy decisions from my MBA days was the question of make versus buy. This usually boils down to core competencies and the best way to deploy resources. The rule of thumb is to make/own that which creates competitive advantage, and buy/outsource that which does not. There are many exceptions in today’s global, services-oriented economy, but service providers need to pick a path here regarding content.

Every service provider situation is different, and that’s what makes this make-or-buy paradigm so interesting. Videotron has it easy, since they’re already a content company. They have both English and French content to serve their cable customers, and unrivalled French content to satisfy anyone’s local cultural agenda. Their market is well-defined – Quebec – and their audience will have a natural demand for French content. If they were to expand outside Quebec, their offerings would have to appeal to Anglo subscribers, and that’s not their core competence. I don’t see the scenario unfolding, but if it did, they would almost certainly need to shift from make to buy for the content.

Bell faces a more complex challenge since they must compete in Quebec with Videotron for ownership of the home subscriber, but nationally, they must compete primarily against Rogers and TELUS (News - Alert) for the mobile subscriber. There will certainly be overlap here in Quebec, but their audience goes well beyond that. As such, there was a clear imperative to get all of CTV, a national broadcaster that can immediately give them content to serve across all three screens.

It’s too early to tell if Bell’s decision is the right move. Are they better off spending the money upfront to own the content and have exclusive control or to simply pay-as-you-go and buy the content from various media partners to create their own unique mix? Bell’s western counterpart, TELUS, is of course, asking the same question. Like Bell, they face a new wireless competitor with Shaw – who also owns a major content producer - but have not themselves made a move to acquire a media play. In the short term, they will likely be better off buying content from others, but longer term, this could become a costly strategy. Canada does not have many content providers of substance, and once the majors are gone and tied up with exclusive owners, they will have to look further afield – or embark on a program to create their own content, which can both expensive and risky.

As I’m sure you can see, these ideas just keep raising more questions, and that will keep this theme going for future articles. Here are just a few to consider – what about Net Neutrality? How long can these operators keep their content exclusive? Can an operator survive long-term without owning at least some of its content? Can service providers really keep subscribers based on content? If content is so valuable, what is stopping the likes of Apple, or Wal-Mart, or even Cisco (News - Alert) from getting into the game? Will service providers be able to use content to gain back control over subscribers from smartphone vendors? What will this mean for business customers? You get the picture. Please, join the conversation any time, or sit tight and wait for my follow up article later this month.