Telecom Update #523, March 31, 2006

************************************************************ TELECOM UPDATE ************************************************************ published weekly by Angus TeleManagement Group Number 523: March 31, 2006

Publication of Telecom Update is made possible by generous financial support from:

** AVAYA: ** BELL CANADA: ** CISCO SYSTEMS CANADA: ** ERICSSON: ** MICROSOFT CANADA: ** MITEL NETWORKS: ** NEC UNIFIED SOLUTIONS: ** ROGERS TELECOM: ** VONAGE CANADA:

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IN THIS ISSUE:

** Bell and Rogers Offer Nomadic Broadband in 20 Cities ** Local Competition Allowed in Small-Telco Territories ** Cutback of Bell Work Causes Layoffs at CGI ** Ten-Digit Dialing Push Starts in Five Areas ** Phone Retailers Sue BCE ** New Spectrum Auction Planned ** Aliant Offers Businesses Wi-Fi Hotspots ** Bell High-Speed Metro Service Gets Final Approval ** Virgin Offers "Video Ringtones" ** Nortel Expands Services Business ** Cablecos May Take 27% of Home Phones ** Ballet School Adopts IP Telephony ** Four Arrested in Telemarketing Scam ** Rural Newfoundland to Get High-Speed Access ** Cygnal Records "Disappointing" Year ** SR Telecom to Outsource Manufacturing

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BELL AND ROGERS OFFER NOMADIC BROADBAND IN 20 CITIES: Bell Canada and Rogers Communications have both begun offering wireless broadband Internet service in 20 cities across Canada, using "pre-WiMAX" technology developed by NextNet, a U.S. company owned by Craig McCaw. The underlying wireless network is owned by Inukshuk Wireless, a Bell-Rogers joint venture formed last year. (See Telecom Update #497)

** The services are "nomadic," meaning the modem can be easily moved from place to place within the coverage areas.

** Bell's "Sympatico High Speed Unplugged" offers up to 512 Kbps download and 128 Kbps upload for $45/month, or up to 3 Mbps download and 384 Kbps upload for $60/month. The modem is $99 on a 24-month contract.

** Rogers' "Portable Internet" offers up to 1.5 Mbps download and 256 Kbps upload for $49.95/month. The modem is $99.95 on a one-year contract.

** Service is available now in Vancouver, Victoria, Red Deer, Calgary, Edmonton, Whitehorse, Toronto, Barrie, London, Windsor, Kitchener-Waterloo, Hamilton, Ottawa, Gatineau, Quebec City, Montreal, Charlottetown, Halifax, Fredericton, and St. John's. Inukshuk says it will extend service to 45 cities and 100 rural and remote communities by the end of 2008.

LOCAL COMPETITION ALLOWED IN SMALL-TELCO TERRITORIES: CRTC Telecom Decision 2006-14 allows local competition in the territories served by Canada's 38 independent telephone companies, and renews their price cap regime, with modifications, for another four years. (See Telecom Update #494)

** Resale of small-ILEC local services is now permitted.

** Small ILECs must file tariffs for competitor services, including unbundled local loops, but only when they receive a valid request from a competitor. They must support "porting out" of phone numbers to competitors, but may choose whether to also support "porting in."

** Their local rates are frozen for four years, except for unused credits from the past price cap period. Rate increases based on such credits are limited to $4 in any 12-month period.

CUTBACK OF BELL WORK CAUSES LAYOFFS AT CGI: CGI Group says it will eliminate 1,000 jobs this year, with "more than half" the cuts due to lower-than-expected BCE work volumes.

** When CGI agreed to buy back part of BCE's stake in December, BCE promised that CGI would remain its "preferred IS/IT supplier" until 2016. (See Telecom Update #510)

TEN-DIGIT DIALING PUSH STARTS IN FIVE AREAS: Local phone carriers have begun urging customers in area codes 450, 514, and 819 in Quebec and

519 and 613 in Ontario to reprogram fax machines, modems, and other autodialing gear to include the area code for all local calls. Beginning June 17, calls dialed with 7 digits will receive a recorded message advising them to dial 10 digits in future.

** Use of 10 digits will become mandatory in all five areas between October 14 and November 4.

** Ten-digit dialing will also be required for local calls from 418 to 819, and from 705 to 519, 613, and 819.

PHONE RETAILERS SUE BCE: Seventy-nine Bell Canada retailers are suing BCE for $135 million, saying that BCE reneged on a verbal agreement to permit the store owners to transform their properties into an income trust. BCE says the company will "vigorously defend our position."

NEW SPECTRUM AUCTION PLANNED: Gazette Notice DGTP-002-06 says Industry Canada will shortly open consultation on an auction of wireless spectrum in the 2500 MHz band. Unlike previous licenses in this band, these would allow mobile services.

** Existing MCS licensees (the key one is Inukshuk) are reminded that their licence conditions allow them to offer only fixed services. (see Telecom Update #226)

** MDS broadband licensees (including Look and Skycable), currently authorized to provide "wireless cable" broadcasting service, may now apply to offer fixed Internet service as well.

** Current MCS or MDS licensees that want to offer mobile service in this band must apply for new licences and return part of their spectrum for the auction.

ALIANT OFFERS BUSINESSES WI-FI HOTSPOTS: Aliant will now install Wi-Fi hotspots for businesses that want to provide Internet access to customers. The service, which uses infrastructure and software from Halifax-based SolutionInc, is already operational in 19 hotels.

BELL HIGH-SPEED METRO SERVICE GETS FINAL APPROVAL: CRTC Telecom Order

2006-65 gives final approval to Bell's High Speed Metro service (see Telecom Update #388, 435).

** The Commission denies an MTS Allstream request that Bell be ordered to offer a wholesale version, but notes that Bell said it would propose such a service if competitor demand actually materialized.

VIRGIN OFFERS "VIDEO RINGTONES": Virgin Mobile is now selling video clips that play on a cellphone when the phone rings. The clips, marketed with cellphone screensavers as "the Groove," cost from $1.50 to $4.95 each.

NORTEL EXPANDS SERVICES BUSINESS: Nortel Networks says it is expanding its services business and has announced four new offerings in this area. It is also simplifying this business into five areas where it has "unique strengths and expertise."

CABLECOS MAY TAKE 27% OF HOME PHONES: The new edition of "The Battle for the North American Couch Potato," published by Convergence Consulting, predicts that Canadian cablecos will have 12% of the residential telephone market this year and 27% by 2009.

BALLET SCHOOL ADOPTS IP TELEPHONY: The National Ballet School in Toronto is installing a customized NEC Univerge IP-PBX to serve 1,100 users. Special services include digital signage, channels for emergency response, wireless VoIP, and customized call-home facilities.

FOUR ARRESTED IN TELEMARKETING SCAM: The Competition Bureau says four people have been charged with deceptive telemarketing related to a Quebec-based office-supplies scam that brought in $7.8 million between

2000 and 2004. The Bureau received 619 complaints about this operation.

RURAL NEWFOUNDLAND TO GET HIGH-SPEED ACCESS: Industry Canada's BRAND program, which funds high-speed Internet access in remote regions, has pledged $542,723 toward a Kittiwake Economic Development Corporation project to provide broadband access in 18 communities along the northeast coast of Newfoundland.

CYGNAL RECORDS "DISAPPOINTING" YEAR: Cygnal Technologies lost $27.6 million last year compared to a loss of $7.2 million in 2004. Revenues fell 10% to $126 million. CEO Jos Winterman said the results are "obviously disappointing, but I believe the difficulties are largely behind us."

SR TELECOM TO OUTSOURCE MANUFACTURING: SR Telecom, which supplies fixed wireless equipment, is outsourcing its manufacturing operations. The transition, to be completed by the end of May, will eliminate 70 staff positions.

** Revenues for 2005 were $76 million, down 23% from the previous year. The net loss rose 6% to $91 million. ============================================================

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