It can't be easy being the last one standing. That's how Telus must feel in the wake of Bell and Rogers teaming up to acquire a majority stake in Maple Leaf Sports and Entertainment Ltd.
By buying into the parent company of the Toronto Maple Leafs, the Toronto Raptors, the Air Canada Centre and a host of other sports properties and related real estate holdings, Bell and Rogers are drawing a clear line in the sand between carriers that have heavily converged their broadcast, Internet and wireless networks and content-related assets, and those that have not.
They're betting they'll be able to squeeze out more revenue by owning the sports properties that generate content, the buildings where they play, the broadcast assets that put them on-air, and the distribution assets that deliver the resulting content to consumers' televisions, radios, computers, tablets and smartphones.
This latest deal is a large-scale example of convergence, a concept that's been tossed around the telecommunications industry for a generation, but is only now taking shape as carriers extend their reach in ever more vertical directions.
Telus, as the only national-scale carrier that hasn't played the convergence game to this extent, is now unique among the big three in not owning content to deliver — and charge extra for — over its existing network infrastructure.
It's also the other partner in a national 3G wireless network it built in partnership with Bell and launched in 2009. The impact of the Bell/Rogers MLSE acquisition on the future the Bell/Telus network — and any additional deals to share infrastructure costs — remains to be seen. When contacted by Yahoo! Canada, Telus declined to comment on the MLSE deal.
Despite the long-held promise of convergence, not everyone is convinced it's an optimal value-generating proposition. In a research note, Canaccord Genuity analyst Davi Ghose said vertical integration isn't necessarily a slam dunk.
"While we see more value in owning content creators like MLSE than content aggregators, telcos and cablecos have never shown discernible value in owning sports franchises," he wrote. "We continue to prefer Telus' unwavering focus on telecom assets."
Still, Ghose says the new focus by Bell and Rogers on sports-related content puts it ahead of Shaw, whose Canwest assets include no sports exposure and are thus more vulnerable to so-called over-the-top (OTT), Internet-delivered video. Against that backdrop, Canada's telecom pecking order is set for additional evolution now that the two top players have thrown down the gauntlet.