Bell Canada, Microsoft Web sites click together

Bell Canada and Microsoft Corp. announced a five-year deal yesterday to combine the Sympatico.ca and MSN.ca Web sites in 2004, aiming to offer a single site that helps make using the Internet simpler and more fun.

"We will make the Internet easier to use," said Michael Sabia, president and chief executive officer of BCE Inc., owner of Bell Canada.

Mr. Sabia, speaking at a business luncheon in Montreal, said the new site will make its debut in the late winter or early spring next year and will mean users are "never further than a click away from the best the Internet has to offer."

Sympatico.ca employs about 200 people while MSN.ca employs about 30. The sites are already similar, linking to a large variety of things, including news and shopping.

Observers were intrigued by the combined heft of Microsoft and Bell Canada - a long-rumoured connection - but they said there was nothing tangible yesterday. The companies refused to disclose financial terms, for instance.

"They didn't say a whole lot of anything," said Mark Quigley of consultancy Yankee Group Canada.

"But there's some decent potential, sure."

Mr. Quigley said Microsoft and its wide name recognition is at least a better partner for Bell than Terra Lycos, the Internet company with which it cut ties last year. With Lycos, Bell had a joint venture. With Microsoft, it's a revenue-sharing deal.

"We think there are substantial opportunities," Mr. Sabia told reporters after the luncheon speech.

Microsoft said it will benefit by gaining access to Bell's national presence in Canada. Bell said it benefits by hooking up with Microsoft's product and content development.

Bell and Microsoft also said they want to develop new services to push the growth of high-speed Internet connections, hoping to exploit the areas of home networking, mobile computing and interactive entertainment. Again, however, details were scarce. "There's a lot of questions that need to be answered," Mr. Quigley said.

The deal raised other questions regarding Microsoft's ownership stake of about 7 per cent in Rogers Communications Inc., a major Bell Canada competitor.

"We're not backing away from the investment we've made in Rogers," Owen Sagness, a Microsoft Canada Co. sales director, said on a conference call with reporters.

Microsoft invested in Rogers because of its cable television assets, Rogers said yesterday.

"It's not an issue for us," Rogers spokeswoman Jan Innes said.

Rogers Wireless Communications Inc. also works with Microsoft and on Thursday plans to introduce a new pocket computer that will replicate a computer desktop on a wireless device.

"We're expanding on our own relationship with Microsoft," said Heather Armstrong, a Rogers Wireless spokeswoman.

Combining Sympatico.ca and MSN.ca - two of Canada's most popular Web sites - should be positive for advertising sales and electronic commerce, said Chris Potter, an analyst at Convergence Consulting Group.

"It should give them pretty good clout," Mr. Potter said. Still, another unanswered question in the Bell-Microsoft deal is how the software package MSN8 will be sold, Mr. Potter added. MSN8 - which is available at present from Microsoft by subscription for $15 a month - offers a variety of services, including programs for digital photos, junk e-mail filters and filters for unwanted content to protect children.

Mr. Potter said Microsoft partners in the United States have taken different approaches. Verizon Communications Inc., the largest U.S. phone company, bundles MSN8 as a part of its Internet access service and keeps prices low. This approach, Mr. Potter said, could attract more customers to Bell.

With a file from reporter Bertrand Marotte in Montreal