Telecom Update #510, December 16, 2005

************************************************************ TELECOM UPDATE ************************************************************ published weekly by Angus TeleManagement Group Number 510: December 16, 2005

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IN THIS ISSUE:

** We're Taking a Holiday ** Bell to Sell Stake in CGI ** CRTC Combines Broadcast and Telecom Groups ** Rogers Promotes Linton, Hires Reynolds ** Telecom Policy Report Delayed ** Price Cap Rules Extended to 2007 ** Wade Oosterman Leaves Telus ** Study Blames CRTC for Cellphone Lag ** Bell Mobility Offers Single-Rate Global Roaming ** No Do-Not-Call List Until 2007 ** Forecast 25% of Home Lines to Be VoIP by 2008 ** Shaw Postpones Target for Wireless Launch ** RIM Wins Another Patent Ruling ** Nortel Names Toronto Lawyer as Chief Counsel ** Ottawa Optical Developer Folds ** Com Dev Revenue Steady ** Wi-LAN Books Large Loss ** Consultants Call for Speakers

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WE'RE TAKING A HOLIDAY: Telecom Update is taking a winter break; our next issue will be published Friday, January 6. We wish all readers a joyous holiday season and a successful and rewarding New Year.

BELL TO SELL STAKE IN CGI: BCE is pulling out of CGI, the Quebec-based IT services company it first bought into 10 years ago. CGI will pay $859 million to buy back 100 million shares, and Bell will sell its remaining 28.3 million "in an orderly fashion." The two companies have extended their mutual "preferred supplier" agreements to June 2016.

** This deal, combined with the Globemedia sale announced last week, gives Bell well over $2 billion in cash. Asked what the company would do with the money, Bell EVP Lawson Hunter told analysts that more would be revealed at Bell's annual Business Review Conference on February 1.

CRTC COMBINES BROADCAST AND TELECOM GROUPS: This week, the CRTC announced an internal reorganization:

** The Broadcasting and Telecommunications units are now part of an integrated branch, reporting to Len Katz as Executive Director. A third unit, also reporting to Katz, will provide industry, market, and technology analysis for both telecom and broadcasting. Each of the three units will be headed by an Associate Executive Director.

** A new section, Regulatory Process Management and Monitoring, will report to Secretary General Diane Rheaume. It will be responsible for the Commission's monitoring reports on both broadcasting and telecommunications and will also handle enforcement, including the National Do-Not-Call List once it is established.

ROGERS PROMOTES LINTON, HIRES REYNOLDS: Two important executive changes at Rogers this week:

** Rogers Communications CFO Alan Horn will leave that post in April. His replacement will be Bill Linton, former CEO of Call-Net Enterprises, which Rogers acquired in July. (See Telecom Update #488)

** Randy Reynolds has been named President of Rogers Telecom, the group that sells voice, data, and wireless services to business customers. Reynolds was previously President of Bell Ontario, Bell Nexxia, and Bell West; he left Bell when the company's western operations were reorganized in July 2004. (see Telecom Update #418)

TELECOM POLICY REPORT DELAYED: The Telecom Policy Review Panel, originally expected to report by the end of 2005, now expects to finish its work in mid-January 2006. The report must then be translated and printed, so it is unlikely to be released publicly until after a new Cabinet is sworn in, following the federal election.

PRICE CAP RULES EXTENDED TO 2007: CRTC Decisions 2005-69 and 2005-70 extend the incumbent telcos' price cap rules, without change, for one year -- to May 31, 2007, for Aliant, Bell Canada, MTS Allstream, SaskTel, and Telus, and to July 31, 2007, for Telebec and Telus Quebec. (See Telecom Update #481, 487)

** The Commission will begin a price cap review in the first half of 2006, after releasing its decision on local service forbearance (see Telecom Update #479, 499).

WADE OOSTERMAN LEAVES TELUS: Wade Oosterman, former Chief Marketing Officer of Telus, is leaving the company. Ossterman's post disappeared in a corporate reorganization last month, and Telus says no "suitable alternative role" has been found.

** Oosterman came to Telus as part of its Clearnet acquisition in 2000. He played a key role in developing and maintaining Telus's distinctive nature-themed marketing programs.

STUDY BLAMES CRTC FOR CELLPHONE LAG: A paper published this week by the C.D. Howe Institute says that "artificially low wireline prices" enforced by the CRTC are responsible for Canada being 28th among 30 OECD nations in cellphone adoption. The authors say the Commission should allow wireline phone rates to rise so that wireless service would be more attractive to consumers.

** One of the report's authors recently filed an expert report supporting Aliant's application to have local phone service deregulated in parts of Nova Scotia and PEI so that the telco could meet competition from EastLink by lowering wireline rates.

BELL MOBILITY OFFERS SINGLE-RATE GLOBAL ROAMING: Bell Canada now offers a Motorola handset that can access both CDMA and GSM networks worldwide, and a rate plan of $2.49/minute for all global calls.

NO DO-NOT-CALL LIST UNTIL 2007: The Do-Not-Call legislation that was rushed through Parliament just before the election was called (see Telecom Update #508) is unlikely to be implemented until mid-to-late

2007. This week Len St-Aubin of Industry Canada's telecommunications policy branch told the Ottawa Citizen that "it will take 19 months or so to get the list up and running."

** South of the border, DirecTV has been fined $5 million for violating U.S. Do-Not-Call rules. That's the largest civil penalty ever in a Federal Trade Commission consumer protection law case.

FORECAST 25% OF HOME LINES TO BE VoIP BY 2008: NBI/Michael Sone Associates predicts that Voice over IP services will account for 24% of residential lines and 15% of business lines by 2008, with incumbents holding a 72% share of the business VoIP sector.

** NBI estimates the incumbents' present share of the residential market at 69% in Halifax, 87% in Toronto, and over 90% in other centres.

SHAW POSTPONES TARGET FOR WIRELESS LAUNCH: Back in March, Shaw said it would launch cellular service in six months. Chairman J.R. Shaw now says the timeline has been shifted so the cableco can focus on building its home phone service.

RIM WINS ANOTHER PATENT RULING: On December 15, the U.S. Patent and Trademark Office rejected the second of five NTP patents involved in the ongoing patent war between Research in Motion and NTP. The rejections are not yet final.

NORTEL NAMES TORONTO LAWYER AS CHIEF COUNSEL: Nortel Networks has appointed David Drinkwater as Chief Legal Officer. Drinkwater previously held senior posts at Ontario Power Generation, Bell Canada, and Osler, Hoskin & Harcourt.

OTTAWA OPTICAL DEVELOPER FOLDS: Metrophotonics, an Ottawa-based developer of optical networking gear, is going out of business. It raised more than $70 million over the last five years and had 80 employees at its peak.

COM DEV REVENUE STEADY: Satellite components maker Com Dev International reports revenue of $123.6 million for the year ended October 31, a 4% increase from the previous year. Net income was $5.2 million, about the same as the year before.

WI-LAN BOOKS LARGE LOSS: Calgary-based Wi-LAN reports a net loss of $25.8 million, including about $14 million in one-time charges, for the year ended October 31. Revenue rose 2% to 25.7 million.

CONSULTANTS CALL FOR SPEAKERS: The Canadian Telecommunications Consultants Association will hold its Spring 2006 Conference in Toronto on April 6-8. Proposals for presentations at the conference are due by January 6. For information, write snipped-for-privacy@ctca.ca, or visit

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