Telecom Update #528, May 5, 2006

************************************************************ TELECOM UPDATE ************************************************************ published weekly by Angus TeleManagement Group Number 528: May 5, 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:

************************************************************

IN THIS ISSUE:

** Decline of Legacy Services Squeezes Telcos Telus Leads in Telco Revenue Gains ** CRTC Chair Responds to Telecom Policy Report ** VoIP Drives Primus Canada Revenue ** RIM Offers Free Small Business Server ** Avaya Adds Mid-Sized IP Systems ** Bell to VoIP Customers: Switch Back for Free ** Former CEO Sues Nortel ** Nortel Completes Restatement ** CRTC Hears Do-Not-Call Views ** Internet Registrar Seeks Board Members ** Credit Union Plans Video Kiosks ** Canadian Chip Maker to Work With Nokia ** RIM in New Patent Fight ** Five Million U.S. Households Use VoIP

============================================================

DECLINE OF LEGACY SERVICES SQUEEZES TELCOS: First quarter financial results of Canada's four leading telcos show that all are suffering a decline of local and long distance revenues. Compared to a year ago, the change in these two categories totalled: MTS -7.4%; BCE -7.3%; Aliant -3.9%; Telus -1.8% (includes data).

** In 2005, all of the telcos lost local lines, mainly to competitors: MTS -6.5% (residential only); BCE -3.2%; Telus -2.7%; Aliant -0.6%.

** Long distance now comprises less than 10% of total revenues for Telus and BCE. BCE's LD revenue fell 15.2%.

TELUS LEADS IN TELCO REVENUE GAINS: Total revenue of the four telcos changed as follows: Telus +5.4%; Aliant +3.9%; BCE +2.2%; MTS -0.5%. Wireless revenue grew by 13% to 17%. Both Aliant and Telus report that monthly disconnects on postpaid wireless accounts are now under 1%.

** Changes in operating income: Aliant +11.1%; MTS +6.0%; Telus +1.2%; BCE -3.0%.

** Changes in net income: MTS +3.5%; BCE no change; Aliant -7.8%; Telus -13.3%. Aliant and Telus results were affected by significant one-time events.

CRTC CHAIR RESPONDS TO TELECOM POLICY REPORT: In a speech to an industry forum on April 30, CRTC Chair Charles Dalfen said the Commission is assessing the Telecom Policy Review panel's recommendations and will likely implement a number of them on its own initiative.

** Dalfen says he agrees with the principle of "after the fact" regulation, but only if the Commission is empowered to impose meaningful penalties.

** His talk mentioned the interview published in Telecom Update #525b, in which he predicted that business services in most major cities will be deregulated in 18 months. Dalfen also expects residential service in Halifax, Montreal, Toronto, and some major western markets to qualify soon.

VoIP DRIVES PRIMUS CANADA REVENUE: Primus Canada took in $78.6 million in the first quarter of 2006, "driven by growth in local and VoIP products." The company has about 73,000 local lines in service.

** Virginia-based Primus Telecommunications Group reports a US$4 million loss in the quarter; Primus Canada accounted for 26% of its parent company's revenue.

RIM OFFERS FREE SMALL BUSINESS SERVER: RIM has announced BlackBerry Enterprise Server Express, enabling small businesses to connect BlackBerry devices to their office email system. The free software includes a licence for one Blackberry, and licences can be purchased for up to 14 more. Businesses that expand beyond 15 devices can convert the software to a full Enterprise Server by purchasing an Unlock Code.

AVAYA ADDS MID-SIZED IP SYSTEMS: Avaya this week introduced three telecom systems for businesses with 100-500 employees. MultiVantage Express is an all-in-one IP PBX server, Avaya On Demand provides IP-PBX and contact centre features on a per-month subscription basis, and the S8400 Media Server allows customers with older Avaya systems to migrate to IP telephony.

BELL TO VOIP CUSTOMERS - SWITCH BACK FOR FREE: CRTC Telecom Order

2006-103 says Bell Canada can waive reconnection charges for its Digital Voice customers who want to return to Bell's wireline local service. Bell told the Commission in November that some customers resist migrating to its VoIP service without this assurance.

** Commissioner Langford dissented, saying this violates the promotion rules and gives a preference to Bell's VoIP customers over those of competitors.

FORMER CEO SUES NORTEL: Frank Dunn, the Nortel CEO who was fired "for cause" in April 2004, is suing the company for wrongful dismissal, defamation, and mental distress. The suit seeks unspecified punitive, exemplary, and aggravated damages.

** Meanwhile, the Ontario Superior Court has ruled that Dunn must testify in the Ontario Securities Commission's investigation of Nortel. Dunn had said his testimony might be used against him in a U.S. criminal case, but the judge ruled that Ontario law protects him.

NORTEL COMPLETES RESTATEMENT: Nortel Networks has filed its 2005 annual report, including revenue "restatements" for 2003, 2004, and the first nine months of 2005. The changes involve US$1.5 billion.

CRTC HEARS DO-NOT-CALL VIEWS: The CRTC's public consultation on how a Canadian Do-Not-Call list should operate was held this week. Transcripts of the hearing are posted on the Commission's website.

INTERNET REGISTRAR SEEKS BOARD MEMBERS: The Canadian Internet Registration Authority has appointed a Nomination Committee to find candidates to fill three positions on its Board of Directors. Proposals must be received by June 3. For information, see

CREDIT UNION PLANS VIDEO KIOSKS: Vantis, a Manitoba Credit Union with

22,000 members, is installing video kiosks in all of its branches to allow customers to consult face-to-face with service reps. The system, the first of its kind in a Canadian financial institution, is being deployed by MTS Allstream, using Nortel's SIP multimedia platform.

CANADIAN CHIP MAKER TO WORK WITH NOKIA: Markham-based ATI Technologies, a developer of video chips, has entered a long-term strategic relationship with Nokia to develop mobile multimedia devices.

RIM IN NEW PATENT FIGHT: Visto, a California-based developer of wireless email products, is suing Research in Motion, alleging that its BlackBerry product infringes on of four Visto patents. RIM has countersued, asking a Dallas court to rule that no patent infringement has taken place.

FIVE MILLION U.S. HOUSEHOLDS USE VoIP: TeleGeography reports that 5.4 million U.S. households now subscribe to a Voice over IP service, twice the number one year ago. The research firm predicts that one-fifth of U.S. households will use VoIP in 2010.

============================================================

HOW TO SUBMIT ITEMS FOR TELECOM UPDATE

E-mail snipped-for-privacy@angustel.ca and snipped-for-privacy@angustel.ca

===========================================================

HOW TO SUBSCRIBE (OR UNSUBSCRIBE)

TELECOM UPDATE is provided in electronic form only. There are two formats available:

1. The fully-formatted edition is posted on the World Wide Web late Friday afternoon each week at
   formatting link
2. The e-mail edition is distributed free of charge. To subscribe, send an e-mail message to: join-telecom snipped-for-privacy@nova.sparklist.com To stop receiving the e-mail edition, send an e-mail message to: leave-telecom snipped-for-privacy@nova.sparklist.com Sending e-mail to these addresses will automatically add or remove the sender's e-mail address from the list. Leave subject line and message area blank.

We do not give Telecom Update subscribers' e-mail addresses to any third party. For more information, see

===========================================================

COPYRIGHT AND CONDITIONS OF USE: All contents copyright 2006 Angus TeleManagement Group Inc. All rights reserved. For further information, including permission to reprint or reproduce, please e-mail snipped-for-privacy@angustel.ca.

The information and data included has been obtained from sources which we believe to be reliable, but Angus TeleManagement makes no warranties or representations whatsoever regarding accuracy, completeness, or adequacy. Opinions expressed are based on interpretation of available information, and are subject to change. If expert advice on the subject matter is required, the services of a competent professional should be obtained.

============================================================