The History Of Mts Allstream

Published Date: 02 Nov 2017

Manitoba Telecom Services or MTS Allstream is a prominent service provider in Canada and frontrunner in Manitoba. MTS provide modern technology communications solutions to Manitoba residents and business community all over Canada. MTS serves all market segments in Manitoba through MTS subsidiary (‘‘MTS’’) and business customers coast to coast of Canada through Allstream subsidiary (‘‘Allstream’’). MTS Allstream office is headquartered in Winnipeg, with eight other corporate offices around Canada1.

MTS Allstream is more than 100 years old company, with 5,500 employees across Canada. MTS Allstream has more than two million customer connections traversing business customers throughout Canada and residential consumers across the province of Manitoba2. MTS Allstream operational transactions in Manitoba add approximately $1 billion to Manitoba’s gross domestic product on yearly basis3.

MTS Allstream connects businesses across Canada with IP network nationwide that covers more than 30, 000 kilometers (Coast-to-coast IP network). In 2012, they have increased their on-net presence and had an existence in a total of 2,723 buildings (up 335 buildings over last year)1.

Following are major OBJECTIVES of MTS ALLSTREAM for 20131:

Spread on-net footprint nationally and provincially across Manitoba

Improve cost efficiencies i.e. lower OPEX to increase profit

Refine business products by exiting from legacy business services and invest/focus more on IP based solutions to improve margins

Bundle up a services at cost-effective prices

Improve brand recognition by participating in community and environment friendly initiatives

Annual Financial report of 2012 indicates that MTS wireless and Wireline revenue has gone up but Allstream revenue has gone down due to well calculated exit from legacy services. But now Allstream revenue from converged IP accounts for 32% of operating revenue in 2012 and has gone up by 1.6%.

In 2012, MTS Allstream was first service provider in Manitoba to offer LTE services which helped their data revenues to go up by 29.7%. By offering "MyBundle" (Bundle services – MTS brand) expanded customer base by 8.5%. Also they bagged $55-million contract to provide IP services to Shared Services Canada and increased footprint for Fiber to the home (FTTH) by adding 4 more communities in order to expand FTTH to 120,000 homes which is great achievement.

MTS Allstream Company Overview

MTS Allstream is a leading national telecommunications service provider in Canada and the frontrunner in Manitoba. The Company had two operating segments: MTS and Allstream. Revenues for 2012 were $ 1,704.1 million down from 2011 $ 1,765.6 million.

MTS Allstream (TSX: MBT)

MTS (Manitoba) Allstream (Canada wide)

MTS offers a complete variety of wireless, broadband, high-speed Internet (HIS), unified communications, converged IP, home alarm monitoring, Internet Protocol TeleVision (IPTV), local access, security, and long distance services to public and small/medium business customers in Manitoba.

Allstream offers legacy services, IP-based communications, unified communications, hosting, voice and data connections, and state of art security services to enterprise customers across Canada.

Source [1] – MTS Allstream 2012 Annual Report

MTS Allstream – Legacy of Innovation4

Some interesting key facts of innovation by MTS Allstream –

Chart Source [4] – Economic Development Winnipeg

The first center to receive all-dial service in Canada – Brandon – 1917

The first major city in North America to receive all-dial service – Winnipeg – 1926

The first telex message – 1956

North America’s first use of the three-digit emergency number 999 – Winnipeg – 1956.

(The number was changed to 911 in 1975, to conform with the emergency number used across North America.)

The first microwave system for television transmission – 1964

The first network capable of handling switched voice or high-speed data transmissions – 1967

The first Canadian city to have Touch Tone Service – Brandon – 1968

The first offering of the 12-button phone – 1968

The world’s first rural fibre optics transmission – Elie and St. Eustache, Manitoba – 1981

The world’s first dedicated fax network – 1987

Canada’s first virtual private voice network ("VPN") – 1990

The first competitive long distance provider in Canada – 1992

The first Internet Service Provider in the world to offer 56 Kbps service across an entire national network – 1997

Canada’s first Multiprotocol Label Switching ("MPLS")-based Internet Protocol ("IP") VPN – 1999

The first Canadian Internet and email service for Personal Digital Assistants ("PDAs") – 2001

Television service delivered over telephone – lines launched in 2003 – became a leading provider in Canada.

The first Digital Ink Solutions in the Canadian market – 2004

Canada’s first hosted Microsoft Live Communications Server solution and collaboration suite using Microsoft’s awardwinning Real-Time Collaboration technology – 2005

Canada’s first national IP trunking solution – 2006

Manitoba’s first Evolution-Data Optimized ("EVDO") network, providing Internet access wherever cell phones work – 2006

MTS Allstream Executives

Source [1] – MTS Allstream Annual Report 2012

MTS Allstream Board of Directors1 –

MTS Allstream ‘‘the Board’’ is governed by a Board of Directors which have 10 members whom are key business and community leaders. The Board members are elected precisely in order to maintain its independence and to make sure that Board has a concrete foundation of experience and expertise. The Board is the top governing authority of MTS Allstream management.

The Board’s core responsibilities include the following1:

• Review and give an approval to Company’s planned direction, financial targets and

major policy decisions;

• Select important executive management team and decide their compensation;

• Overlook financial and operational performance, risks, business conduct and

ethics and internal auditing controls;

• Proficient Board governance and director education;

• Disclose shareholder information in precisely and timely manner.

Consumer Analysis

MTS Allstream provides a vast variety of telecommunication services in Manitoba to residential and enterprise customers. Residential/public services offered in Manitoba include wireless (both voice & data), TV (regular channels & on-demand), hi-speed internet (HIS), home phone and home security (AAA). In Manitoba, MTS has hold of more than 55% of market.

Image Source: MTS.CA

Allstream is offering the widespread range of services to business customers all over Canada which includes next generation and legacy services. But Allstream has decided to decommission the legacy services and focus all resources on IP based services. Below image represents major service offered to enterprise services:

Business IPVPN5 - Allstream’s Business IP-VPN service integrates enterprise voice, data and multimedia applications into a single private network. With efficent use of advanced Multiprotocol Label Switching (MPLS) technology, enterprise customer can efficiently send data via Allstream’s national network5.

Switched Ethernet5 - To assist enterprise staff work more effectively & efficiently over several locations, Allstream provide connectivity to remote area networks. Allstream Switched Ethernet is designed for such businesses that are currently using Ethernet connectivity which lowers the cost and complexity of administering independent LANs with centrally maintained WAN5.

Business Internet5 - Allstream’s Business Internet services offers fast, reliable connectivity for all of enterprise critical online tasks and applications. Ethernet umbrella have E1000, E100 and E10, which supports access speeds from 3 Mbps to 1 Gbps. It’s also offered with three ADSL alternatives and T1 access for small locations which may be decommissioned in near future5.

IP Trunking5 - IP Trunking (also called SIP Trunking) run all of enterprise data and voice traffic such as private site to site, long-distance and local communications – on one IP backbone that seamlessly interconnects enterprise to the public switched telephone network (PSTN)5.

Secure Connect5 – With this service, Business IP-VPN customers can expand their virtual private networks through the public Internet – and add Internet-based services to their VPNs – all on a single access circuit. Secure Connect unifies private and public IP networks, enabling customer to integrate their VPN, Internet services and Secure Connect is a simple extension of your existing Allstream network5.

Rests of services are broadly categorized below.

Revenue analysis

As per MTS Allstream, Revenue definition is following – "Revenue is realized when it is feasible that joined economic benefits of the transaction will move to the Company and profit amount can be presumably measured". Revenue is calculated at reasonable value of the estimation received or receivable from customers for sale of devices and provisioning the services, net of discounts and sales tax incurred. MTS Allstream revenue recognition policies are following1:

Revenues from residential services such as voice, data connectivity, wireless, Internet, IPTV, alarm monitoring and security services are determined in time during which services are provided

Monthly network access fees

Returns from wireless airtime, long distance and other pay as you use services are determined in time in which services are provided

Revenues from other operators by providing interconnections

Revenues by maintenance services to existing customers

Revenues from the sale of devices

Advance payments received from customers

Revenue received by entering into agreements with customer

Revenues from renting POPs to other Telco’s

Note: Below facts & figures are referenced from MTS Allstream Annual Report 2012

MTS Allstream Operating Revenue Summary:

As per 2012 annual report, total operating revenues went down by 3.5% in 2012. But if we look carefully at figure below, MTS operating revenue went up by 0.4 % from 2011 but Allstream operating revenue went down by 8.2%. Overall as a company it went down by 3.5%. Major reasons for Allstream operating revenue to go down were due to legacy revenue declines, including $33.3 million in strategic legacy cutback. But same negative trend was counterbalanced by IP revenue growth of Allstream and planned business line at MTS.

Source [1]: MTS Allstream Annual Report 2012

MTS Allstream Operating Expense Summary:

As per Annual Report 2012, operating expense decreased by 6.5 % from 2011. In 2012, operating expense was $1,094.6 compared to $ 1,171.2 (in millions). Difference or savings of $76.6 million in 2012 was due to a 16.9% decrease in efficiency of operation. There were several initiatives taken by company to improve operating cost structure. Also MTS Allstream achieved yearly cost savings of $33.6 million due to operational efficiency programs such as cutting back the legacy product lines. We can see in below chart trend of last 5 years, operating expense is going down year by year and has decreased by app. 15% ($ 192.2 millions) in last 5 years which is quite an achievement.

It will be quite interesting to watch the operating expense trend for next 5 years when legacy services are decommissioned totally and only next generation services operating expense. It may not be same as last 5 years trend but expected app. 5 - 6 % reduction due to better operational management.

MTS BUSINESS LINES:

MTS has total six business lines and below graphs represents an analysis of the results for each line of business on a year-over-year basis. We can see a trend in a chart that even for MTS legacy services revenue is going down year by year. Long distance and legacy access services are depicting negative revenue due to decommissioning of them. But next generation services such as wireless and broadband are going up year by year.

Source [1]: MTS Allstream Annual Report 2012

MTS Services Revenue Trend of last 5 years (In million $) of 5 services

Wireless Line of Business

2008

2009

2010

2011

2012

MTS Wireless Customers

394,463

434,776

458,478

483,754

496,432

ARPU

$57.40

$56.68

$57.32

$59.66

$60.35

From the above 2 charts we can see a positive trend in terms of wireless subscribers and revenue. Wireless revenue has increased has gone up by $ 6 million mainly steered by a 29.7% rise in wireless data revenues. Also wireless customer base has increased by 12, 678. An increase in wireless average revenue per user (‘‘ARPU’’) in 2012 also because of higher wireless data revenue, which was up 28.9% over the same period in 2011. Gain of 11,935 post-paid customers was relatively compensated by decrease in pre-paid and wholesale customers. Attaining wireless costs for 2012 were $2.3 million less than 2011, showing restrictive demand for smartphones as a result of the 4G HSPA+ wireless network launch and the introduction of the iPhone 5 earlier that year1.

Broadband and Converged IP Line of Business

Source [1]: MTS Allstream Annual Report 2012

From above figure and 5 year trend chart can see that broadband and converged IP Revenue has gone up in last 5 years which is very good sign for business. In 2012, revenue increased by 9% from 2011. Another noticeable point, no service under broadband and converged IP has shown any decline in profit, all are going up. Main contribution factors to 9% increase are solid growth in IPTV, high-speed Internet and converged IP.

The increase in revenues from IPTV services was factored by increase in ARPU and grown customer base. In 2011, there were fewer subscribers on promotional plans and higher premium but in 2012 total TV subscriber base grown to 101,550. Moreover at end of year 2012, there were 97,232 higher ARPU TV subscribers, showing increase of 1.8% in IPTV customers.

High-speed Internet revenue was higher due to less customers on sales boosting plans and increase in monthly premium. By end of year 2012 HIS customer base increased by 2.3% in comparison to 2011. There were 193,690 HSI customers which is not a big figure in comparison to national players.

UNIFIED COMMUNICATIONS, SECURITY AND MONITORING SERVICES

Unified communication revenue grows by 5.3% in 2012 which shows increasing demand for these services. But security and monitoring does not see any change, it was $ 12.3 million.

Source [1]: MTS Allstream Annual Report 2012

Legacy Data , Local access, and Long Distance services revenues

All these 3 services showed a decline in revenue. It’s mainly due to newer technologies available, more alternative/IP based services which are much cheaper and accessible from anywhere such as text, email, Skype, social networks etc.

Local access revenue went down by 3.9% in 2012.

Long distance revenues showed decline of 11.4% from 2011.

Legacy data services revenue has seen a negative trend of 6.8% due to customers moving to converged IP based services.

Source [1]: MTS Allstream Annual Report 2012

Source [1]: MTS Allstream Annual Report 2012

ALLSTREAM BUSINESS LINE

Allstream has total five lines and following is an analysis of the results for each line of business on a year-over-year basis.

We can in below figure and charts that all legacy services revenues are going down except next generation converged IP services.

Source [1] – MTS ALLSTREAM annual report 2012

In above chart, it clearly shows that Allstream revenue is going down year by year. From 2011, total revenue of Allstream has gone down by 8.2 %. Main contribution to decline is legacy services decommissioning and business is going through technology shift. Major trend to watch will be next 5 years where all legacy services will be decommissioned and converged IP based services.

Chart on next page is showing increase in revenue from converged IP, where we are seeing positive trend. Converged IP revenue growth continues but it’s slightly affected by loss from Government of Ontario department’s policy change on the acquirement of telecom services for respective doctors’ clinics and offices.

Converged IP revenues have increased by 1.6% but if Government of Ontario policy change not be there, it would have grown by 6.5% in 2012. But good news is multi-year contract signed with Shared Services Canada (‘‘SSC’’) which will significantly add to 2013 converged IP revenue.

In 2012, the number of Allstream fiber-fed buildings grew to 2,723, up by 335 over 20111.

In above chart, as we have discussed before that all Allstream services except converged IP has seen downward trend. Unified communications, hosting and security services revenues declined because of management decision to move away from low-margin products. It has gone down by 9.7% from 2011.

Local access revenues also declined, due to reasons discussed above. It has decreased by 8.6% from 2011.

Revenues from long distance services have also decreased. Major reason in decline is due to reduced magnitude in the domestic, international and cross-border markets, along with lower domestic, cross-border and international rates.

The legacy data revenue decrease was because of Allstream customers’ migrating to broadband and other IP-based services. Also Allstream is moving away from legacy services, is in process of decommissioning them and moving it to IP-based service.

Both Long distance and legacy data services have seen decline of 11.8% from 2011.

MTS Allstream Financial Statement of Income and Net Loss 2012

Below statement of net income and other losses provide overview of MTS Allstream financial status. The consolidated statement of net income shows approximately 80% of the expenses incurred are operating expenses. MTS Allstream has reduced their operating expenses from 2011.

Source [1]: MTS Allstream Annual Report 2012

Competitors and Challenges

MTS Challenges1

Wireless Division Challenges & Competition

Primary competitors in the Manitoba wireless division are Rogers Wireless and to a smaller limit, Bell and TELUS, including Bell’s Virgin Mobile and PC Mobile brands. Shaw is also deploying wireless ‘‘hot spots’’ in Manitoba using unlicensed Wi-Fi spectrum. Moreover, TELUS is increasing its horizon in Manitoba, which it offers to Bell Canada as well. TELUS now covers approximately 70% of the Manitoba population, compared to MTS coverage of approximately 97%1.

To deploy LTE in all parts of Manitoba is a waiting game and will be awaiting regulations set by Industry Canada in lieu of the 700-MHz spectrum auction. Also fast changing mobile technology creates extra burden on company to compete and increased CAPEX.

Demand for wireless data is increasing exponentially. To meet this demand, it’s quite a big challenge for MTS due to CAPEX increase. The shortcoming to meet data demand of wireless data could have a serious impact on their financial results and business.

As we all know Spectrum is scarce resource which is very expensive to obtain. The failure to acquire new spectrum in upcoming Spectrum auction of 700-Mhz in November 2013 would affect its strength to implement new cellular technologies or to service existing customers with latest technologies.

Changes in Government policies and regulations can impact MTS wireless market. For example, consumer protection legislation brought by Government can affect MTS flexibility in marketing their products or acquiring long-term contracts with custmers1.

Wireline Division Competition

MTS major competing companies in residential and small business are – Westman and Shaw. This competition in cable market and growing shift in technology (which inclues popular wireless solutions as wireless providers are also competitors here) have contributed to the depletion of MTS residential network access line.

Broadband competition

Major competitors of MTS in urban markets are Shaw and Westman and wireless ISPs in smaller and rural community areas. Shaw is also now matching Internet speeds. This can lead to unfavorable affect in ability to withhold market share. In addition, new wireless technologies, such as LTE, is most prominent shift for Wireline broadband offerings, putting further pressure on MTS business results.

Television competition

Major competitors of MTS in TV market are Shaw and Westman and satellite television providers (Shaw and Bell TV).

Over the top (OTT) poses a major challenge as content providers, such as Netflix. Over-the-top content streaming on smartphones via internet also poses risks to TV viewership percentage.

Shaw has introduced a whole home PVR that will be very competitive with MTS IPTV services.

All most of content is created and/or owned by MTS competitors (Rogers, Shaw and Bell), who may have clashing concerns when MTS negotiate for their content.

Competitive carriers and service providers

MTS faces competition from Bell and TELUS, even though they are not incumbent in Manitoba but as they are big in other geographic region and larger operations in other parts of Canada.

Telus, Rogers, Bell are in superior position to get enterprise consumers such as Oil companies, banks and other big nationwide business customers that have few locations in Manitoba but do national business.

New smaller competitors and competitive network alternatives, ranging from larger competitors such as Westman and Manitoba Hydro to wireless ISPs, internet based voice SPs, and city/public dark fiber and cellular networks. These minor companies give prime competition to MTS in small to medium and publicly serviced markets.

Certain dependency on key customers

MTS also depends on many large enterprise customers such as City of Winnipeg and the Province of Manitoba that account for a noticeable percentage of revenues. If it loses any of these important clients that may significantly impact MTS financial results.

ALLSTREAM Challenges1

Highly competitive markets

Business/enterprise market in Canada is highly competitive both in terms of revenues and margins. Some services offered by Allstream are declining across the industry. Allstream major competitors are: Bell, TELUS and upcoming Rogers business solutions. Also, various cable and hydro companies compete in rural and semi-urban areas.

Reliance on third parties

Mostly enterprise customers require services in bigger geographic locations. Even though Allstream has a Canada wide Wireline network and main urban areas, still there are many locations where Allstream depend on third parties for ‘‘last mile’’ access. In areas where Allstream offer services using their own network, they believe they face significantly less risk in their ability to offer competitive services to customers.

Allstream is also facing risks related with changes in the regulatory framework, which can affect their interest to use such networks at fair prices.

One more threat is where Allstream operate outside of their network footprint, the incumbent carriers may increase the prices they charge for services or impose other conditions that can impact their ability to service their customers and affect revenue.

Significant exposure to legacy services

Allstream has invested a lot in its legacy services, which are operated on prior data and voice network. This legacy business is declining as customers are migrating to next generational products like converged IP which offers a broader range of features. Due to this, legacy services revenue is diminishing. Managing the migration from legacy services is complicated, money intensive and there is always a risk of customer loss. To manage this decline they also need to decrease internal resources dedicated to maintain and operate these legacy services, and finally decommission them.

Demand generation and market growth

To manage the decline in Allstream legacy services, they need to focus on growth of IP based services. This is a major challenge and poses a great risk. Allstream have had to change their vision, encourage sales teams and become more careful about what is their product line, where and to whom they are selling. These growth rates may become harder to keep as IP services market turns more competitive and mature.

Key customers Dependency

Allstream have several large enterprise customers that account for a significant percentage of their revenues. This is true for both of IP and legacy based services. Any key customer loss could critically impact their financial results.

Recent history of negative cash flow

The negative free cash flow of Allstream in last years is posing a big challenge for them to re-invest into new business and infrastructure without using new capital.

Changes in regulation

Allstream operate in federally regulated telecommunications industry and due to this their business is precisely impacted by ruling of these agencies such as Industry Canada and CRTC. The result of these administrative audits, appeals, proceedings and other administrative and policy rulings may have a significant (positive or negative) on their financial position1.

MTS Allstream Revenue Increase Options

There can be several options for MTS Allstream to increase the revenue but it all depends on vision of company and how willing are they to spend CAPEX or roll out new ideas?

As we have seen MTS is a regional or provincial player but Allstream is national provider so I will discuss MTS and Allstream separately.

MTS -

Expand Horizons – MTS is a small player in terms of number of customers and geographic area covered i.e. only offering its services in Manitoba only. MTS have the options either to expand its network from Manitoba to other part of Canada or buy local players like Wind to expand its presence. Other option can be to do partnership with big players like Bell, Telus or Rogers to offer services in different parts of Canada but these giants may not welcome this.

M2M (Machine to machine) Services – MTS has not taken any major initiative to sell M2M services or capture any big customer like Manitoba Hyrdo or Oil companies. They should seriously focus on selling M2M services as by year 2020 it will be 50 billion connected devices (as per Ericsson). So no major provincial player would like MTS would like to miss this opportunity to get extra revenue by offering these services.

As MTS is established player in Manitoba, they can sell services like online PC/laptop repair (Virus prevention etc.) to its customers or anyone in Canada. It is quite competitive market but MTS is already established brand in Canada and also it is not much investment in terms of CAPEX except human resources.

MTS can expand its data center infrastructure and sell Cloud services to residential or public domain. They can at least become resellers of Amazon in Manitoba and other regions.

MTS has big customer database and more than 55% of Manitoba market capture; they can tap new markets such as Mobile Advertising and make extra revenue from this.

As far I searched, MTS has not invested in IMS which can generate extra revenue by offering VoLTE and other value added services such as online mall, advertising, converging customer all services in one, audio/video conferencing etc.

Invest in new upcoming technologies such as OpenFlow and be first in Canadian market to offer services such SaaS, IaaS etc and save by reduced OPEX.

MTS should also team up with some banks to offer mobile payments, online wallets etc. to attract more customers and generate revenue by capturing more market.

Other services like consulting services such as network setup, app development, hosting for small business.

Provide better customer service, reliable network, optimize network which in turn will increase customer satisfaction and quality of experience. This will add to small churn rate and expanding customer base rather than leaving. Also it will reduce OPEX and eventually MTS will see tangible benefits.

Allstream –

Allstream is a national and well established player for enterprise customers, have more than 30,000 km of fiber network and ever expanding. Also Allstream is offering most of new services such as Cloud computing, IP Convergence to its enterprise customer. But still it’s been seen in Revenue analysis section that revenue of Allstream is going down. Major reason for revenue to go down is maintenance of legacy services while minimum profit from it. Allstream is offering almost all of services other service providers are offering in same market.

Allstream have a good opportunity to expand its business in M2M as they have huge fiber footprint in almost all parts of Canada. They can do partnership with regional wireless players to offer machine to machine services to its enterprise customers.

Allstream can increase revenue by expanding its data center infrastructure and offer cloud computing services to enterprise customers.

Allstream can make extra buck by offering professional consulting services to any size enterprise customers especially banks. Consulting services such as optimizing network, process and technology, better management and analyze areas for improvements etc. to make extra revenue.

Allstream is in telecom market for last many decades but I can also see Allstream in a professional software development business. Allstream have tons of experience in telecommunications market and understand market very well, software solutions like billing software for service providers, application development for small to large enterprises. This new line of business can open a new revenue area for Allstream.

Allstream also can go to international markets such as US or developing countries like India, China, Africa, South America to offer similar solutions offered by them in Canada. With Allstream experience in Canada, it will be not that difficult for them to establish in new markets provided they are willing to spend CAPEX. But this will open up a huge market for them.

MTS Allstream General Network Model

Wireless 4G and CDMA network Coverage Map are shown in next 2 pages. MTS covers 97% of Manitoba region.

Allstream IP Network Infrastructure (Coast to Coast)

Allstream National IP Network

Source [7] – Allstream.ca

Allstream IP Network Highlights7 -

30,000 route km Canada wide

30 local city networks are operating

International MPLS reach

Inter-city fiber of 18,000 route km

Total eight cross-border connections

More than 2,100 buildings touched

DWDM transport capable of 100 Gig

Source [6] – mts.ca/coverage

Source [6] – mts.ca/coverage

MTS Allstream Network Model:

In this modeling of network, we can see there are 4 major network hubs:

Eastern HUB – Montreal

Eastern POPs (Point of Presence) – St Johns, Halifax, Quebec City, Champlain, Ottawa

Central HUB – Toronto

Central POPs – New York, Chicago, Detroit, Buffalo, Sudbury, Thunder Bay

Mid-West HUB – Winnipeg

Mid-West POPs – Saskatoon, Flin Flon, Thompson, Churchill

Western HUB – Calgary

Western POPs – Edmonton, Kamploops, Vancouver, Victoria, Seattle, Spokane

General Network model of MTS Allstream as shown above, it’s depicting that for all of sites/cities, there are back up paths or physical links. We can see that there are two redundant links between POPs HALIFAX and ST JOHNS, QUEBEC City and Montreal, and other sites can reach each other through different path which provides redundancy. If one of link fails in network in a region, then traffic can be re-routed via redundant link. Also there may be 20-40gig interconnection between sites and they may be using IP equipment of Cisco, Juniper, Alcatel and transport equipment of Fujitsu etc.