published weekly by Angus TeleManagement Group
Number 522: March 24, 2006
Publication of Telecom Update is made possible by generous
financial support from:
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** BELL CANADA: www.bell.ca
** CISCO SYSTEMS CANADA: www.cisco.com/ca/
** ERICSSON: www.ericsson.ca
** MICROSOFT CANADA: www.microsoft.com/canada/telecom/
** MITEL NETWORKS: www.mitel.com/
** NEC UNIFIED SOLUTIONS: www.necunifiedsolutions.com
** ROGERS TELECOM: www.rogers.com/solutions
** VONAGE CANADA: www.vonage.ca
IN THIS ISSUE:
** Telecom Panel Proposes Fast Track to Deregulation
Change the Regulatory Framework
Create New Agencies
"Complete the Job" on Broadband
Encourage ICT Adoption
Review Broadcasting Policy, Loosen Foreign Ownership
** Report Gets Mixed Response
** Opposing Appeals Hit Deferral Account Ruling
** Lucent, Alcatel Seek Merger
** Coast Guard Vessels to Get Internet Access
** Nortel Merges Data Divisions
** James Bay Hospitals Link to Provincial Network
** Virgin Offers Flat-Rate Evening Calling
** Matthews Startup Launches IPO
** Alan Horn Named Rogers Chair
** Glentel Records Banner Year
** Pulver's VON Returns to Canada
TELECOM PANEL PROPOSES FAST TRACK TO DEREGULATION: Bell Canada and
Telus got almost everything they wanted in the 400-page Telecom Policy
Review report, submitted to Industry Minister Maxime Bernier this
** The report acknowledges that legislative changes will take
time, but urges Cabinet to begin the recommended
institutional changes now, and to direct the CRTC to act
in the spirit of the recommendations as much as possible
in the meantime.
** Bernier responded: "In the coming weeks and months, my
department and I will carefully review this thorough
report and its recommendations."
CHANGE THE REGULATORY FRAMEWORK: The report calls on the government to
amend the Telecom Act and to make several institutional changes. Its
127 recommendations include:
** Rely on market forces "to the maximum extent feasible" as
the means to achieve policy objectives.
** Use economic regulation only when a carrier has
"significant market power" or when market forces are
unlikely to achieve a policy objective within a reasonable
** Have tariffs automatically take effect seven days after
filing, unless the CRTC suspends or disallows them. Make
enforcement ex post, based on complaints after the fact,
rather than by advance approval.
** Bring resellers under direct CRTC authority. Give them the
same rights as CLECs if they take on the obligations.
** Move regulation of spectrum, submarine cables, satellite
orbital slots, and telecom equipment from Industry Canada
to the CRTC. Give the CRTC clear legal authority to rule
on access to electrical poles and support structures,
inbuilding wire, public rights-of-way, and sharing of
** Reduce the number of CRTC commissioners from 13 to five.
Create a more open selection process, geared to hiring
experts and paying them well.
** Eliminate appeals of CRTC decisions to Cabinet. Allow
direct appeals to the Federal Court, without a preliminary
"leave to appeal" application.
CREATE NEW AGENCIES: The report proposes two new regulatory bodies:
** A Telecom Competition Tribunal, jointly operated by the
CRTC and the Competition Bureau, to deal with competitive
issues and complaints, including issues relating to
"market power" and "essential facilities." It should have
fining authority, as should the CRTC.
** A Telecommunications Consumer Agency to handle individual
and small-business customer complaints.
"COMPLETE THE JOB" ON BROADBAND: The report says Canada should make
broadband available to 98% of Canadian households by 2010. A new
"U-CAN" program would fund broadband projects through "least cost
subsidy auctions" to fill in the gaps where commercial deployment is
uneconomic and no other programs are providing funding.
** Note: in 2001, the National Broadband Task Force called
for broadband to all Canadian communities by 2004 (see
Telecom Update #288). Despite progress, this target was
not reached, for many reasons including lack of funding.
ENCOURAGE ICT ADOPTION: The panel wants the federal government to
develop and implement a national strategy to foster increased adoption
of information and communications technology, including creating a tax
credit for small and medium enterprises to encourage "smart adoption"
REVIEW BROADCASTING POLICY, LOOSEN FOREIGN OWNERSHIP: The report
recommends that broadcasting policy be reviewed, to create separate rules
for "content" and "carriage." This would allow carriage ownership rules to
be liberalized without undermining Canadian cultural objectives. In the
meantime, foreign ownership restrictions should be liberalized for telecom
service providers that aren't subject to the Broadcasting Act.
REPORT GETS MIXED RESPONSE: Industry reaction to the Telecom Policy Review
report ranged from enthusiastic to downright hostile. Some early comments:
** Lawson Hunter, EVP, Bell Canada: "This is a landmark
report that will ignite a key driver of Canada's
economy.... It is in the interests of all Canadians that
the government act quickly and decisively on the report's
** Willie Grieve, VP, Telus: "The presumption of no
regulation is a great opportunity for players to roll out
new services, to introduce more flexibility and build the
business that makes rates lower."
** Chris Pierce, Chief Regulatory Officer, MTS-Allstream:
"The recommendations appear hopelessly complicated and
impractical. They appear based on the rather implausible
notion that greater bureaucracy will result in greater
efficiency for Canadian consumers and businesses."
** Ken Engelhart, VP, Rogers: "I'm not sure we need to go
through this, given how close we are to deregulation. Why
bring in a whole new regime at this point?"
** Pippa Lawson, Consumer Advocate: "Current regulations hold
the many systemic flaws in check and replacing that with
some toothless, industry-run body is totally inadequate."
** Bruce Robertson, Marketing Director, Vonage Canada:
"Deregulating too quickly, before the playing field has
been leveled with more and fair competition, will risk
entrenching a duopoly of dominant telephone and cable
** Cogeco Cable: "In an environment of convergence and
bundling of all types of communications services, this
review process must be extended to the broadcasting
sector.... Also, Cogeco Cable is not convinced that it is
necessary to establish several new regulatory bodies as
proposed in the Report."
** Charles Dalfen, Chair, CRTC: "We believe the review has
provided Canadians with an opportunity to think about
where Canada has been, where it is now and about where it
should go in telecommunications in the context of a global
OPPOSING APPEALS HIT DEFERRAL ACCOUNT RULING: The Federal Court of Appeal
has received two directly opposed applications for leave to appeal the
CRTC's recent deferral account decision, which ordered the telcos to spend
most of the money on broadband deployment. (See Telecom Update #517)
** The Consumers Association of Canada and the National Anti-
Poverty Organization want the Court to rule that all of
the money in the account should be returned to customers,
not just the remainder after broadband spending.
** Bell Canada wants the Court to rule that none of the money
should be returned to customers, because the CRTC has
previously found the telco's rates to be "just and
LUCENT, ALCATEL SEEK MERGER: The New York Times reports that Alcatel
is considering buying Lucent for about US$12.6 billion. Lucent and
Alcatel have confirmed that they are discussing a "merger of equals."
The two companies tried to merge in 2001, but gave up because of
disagreements about control. (See Telecom Update #286)
COAST GUARD VESSELS TO GET INTERNET ACCESS: The Canadian Coast Guard
is moving to equip some of its vessels with email, Voice over IP, and
television through a satellite link provided by Telesat.
NORTEL MERGES DATA DIVISIONS: Nortel Networks has combined its carrier
and enterprise data units into a single organization, Converged Data
Networks, headed by Nortel veteran Aziz Khadbai.
** The new division has launched Secure Router Portfolio, a
set of routers for small and branch offices, most of them
developed by recently acquired Tasman Networks. (See
Telecom Update #511)
JAMES BAY HOSPITALS LINK TO PROVINCIAL NETWORK: Hospitals in Moosonee
and Moose Factory in northern Ontario are now connected to the Ontario
Network for e-Health (ONE). The project was a joint effort of the
province's health ministry and K-Net ( http://www.knet.ca ), a network
serving First Nations in northwest Ontario.
VIRGIN OFFERS FLAT-RATE EVENING CALLING: Virgin Mobile's new
All-Nighter rate plan provides unlimited local calling from 6 p.m. to
5 a.m. for $24 a month. Incoming calls can be included for an
additional $7; daytime minutes are 20 cents.
MATTHEWS STARTUP LAUNCHES IPO: Waterloo-based Sandvine Inc, which
makes network equipment for residential broadband providers, has
raised about $35 million through an initial share offering. Terry
Matthews is a major investor in Sandvine, which was created by former
executives of PixStream. (See Telecom Update #281)
ALAN HORN NAMED ROGERS CHAIR: Rogers Communications has named Alan
Horn as chairman, replacing Garfield Emerson, who held the post for 13
years. Horn was formerly Rogers' CFO, a post now held by Bill
Linton. (See Telecom Update #510)
GLENTEL RECORDS BANNER YEAR: Vancouver-based wireless equipment
provider Glentel Inc. had sales of $146 million in 2005, a 51%
increase over the previous year. Net income grew 48% to $6.1 million.
PULVER'S VON RETURNS TO CANADA: The Canadian edition of Jeff Pulver's
Voice on the Net conference will take place at the Metro Toronto
Convention Centre, April 3-5.
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