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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 week.
** 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."
** 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 time frame.** 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 wireless towers.
** 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" of ICT.
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 recommendations."** 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 companies."
** 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 information society."
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 reasonable."
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 (
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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