Telecom Update #531, May 26, 2006

************************************************************ TELECOM UPDATE ************************************************************ published weekly by Angus TeleManagement Group
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Number 531: May 26, 2006

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** 96 Arrests in Telemarketing Fraud Crackdown ** World Broadband Total Passes 200 Million ** Vonage IPO Raises Over Half-Billion ** Bell Intros PC-Controlled Communications ** Glitch Hits Telus Voice Mail ** Aastra Sharpens Focus on Enterprise Telephony ** EVDO Reaches Cottage Country ** MSAT Carriers Plan Next-Gen Satellites ** Northwestel to Pay $1.4M to Central Fund ** Bell Wants Final LD Constraints Lifted ** CRTC Backs TBayTel in Roaming Dispute ** Telus Expands Digital Wireless in Rural Quebec ** Moody's Cuts BCE Rating ** Bell: Pay for Wireline WNP from Deferral Account ** Zarlink Reports Profit Gain ** Ascalade Expanding Production of Phones ** Hummingbird Finds U.S. Buyer ** U.S. to Repeal Telecom Tax ** Consultants Call for Speakers


96 ARRESTS IN TELEMARKETING FRAUD CRACKDOWN: Canadian authorities have arrested 96 people as part of a 15-month international crackdown on telemarketing scams that defrauded 2.8 million U.S. residents of an estimated US$1 billion. In total, 565 people were arrested in five countries.

** As part of this operation, the Competition Bureau has charged five Canadians and three companies for alleged involvement in a business directory scam which is said to have taken in $150 million over 10 years.

WORLD BROADBAND TOTAL PASSES 200 MILLION: TeleGeography reports that the number of high-speed Internet subscribers worldwide reached 221 million at the end of 2005, a 37% increase from a year earlier. Fewer than a quarter of the lines were in North America; DSL lines made up

65% of the world total.

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VONAGE IPO RAISES OVER HALF-BILLION: VoIP provider Vonage Holdings went public on Wednesday. Shares initially sold at US$17, raising US$531 million, but then fell 12.6% over the day, closing at $14.85.

BELL INTROS PC-CONTROLLED COMMUNICATIONS: Bell Canada has begun selling Personal Communication Manager, a PC-based soft-client that provides mobile access to a user's office phone service and voicemail from a laptop computer. In the office, the same software provides PC control of a Centrex set, including presence, click-to-call from Outlook, and other features.

** PCM, which was developed by Ottawa-based NewHeights Software, works with either the on-premise or off-premise version of Nortel's Multimedia Communications Server.

GLITCH HITS TELUS VOICE MAIL: About 250,000 Telus voice mail customers in Alberta and B.C. were unable to retrieve messages from 3:30pm to

10pm on Tuesday, and again from 11am Wednesday until 2am Thursday. Telus technicians reinitialized several systems and replaced some components to restore service. The company says it is still investigating to determine the failure's cause.

AASTRA SHARPENS FOCUS ON ENTERPRISE TELEPHONY: Aastra Technologies has agreed to sell its digital video business unit for about US$35 million. The Toronto-based manufacturer, which makes Intecom PBXs and other telecom equipment, says it is "increasingly focused on Enterprise Communications." (See Telecom Update #490)

EVDO REACHES COTTAGE COUNTRY: Hoping to "get away from it all" at the cottage? Think again. Just in time for your vacation, Bell Canada has extended 2.4 Mbps EVDO wireless service to Ontario's traditional cottage country: Lake Muskoka, Lake Joseph, western Lake Rosseau, Bala, Port Carling and Gamebridge, Ontario.

** Since Telus and Bell share network facilities, we assume that both companies will encourage you to use corporate data nets from your dock or canoe.

MSAT CARRIERS PLAN NEXT-GEN SATELLITES: MSV Canada and Virginia-based Mobile Satellite Ventures will launch a new U.S. satellite in mid-2009 and a new Canadian satellite early in 2010. The companies, which already provide mobile satellite communications across North America, say the new satellites will provide integrated satellite/cellular service to handsets similar in size and cost to conventional cellphones.

NORTHWESTEL TO PAY $1.4M TO CENTRAL FUND: The CRTC has directed Northwestel to pay $1.38 million back to the Central Fund from which it receives a subsidy to support affordable services in the North. This is the amount by which the northern telco exceeded its forecast long distance revenue in 2005.

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BELL WANTS FINAL LD CONSTRAINTS LIFTED: Bell Canada has asked the CRTC to eliminate remaining regulation of its "basic toll" schedules. When the incumbent telcos' long distance services were deregulated in 1997, the Commission retained some controls on basic toll service.

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CRTC BACKS TBAYTEL IN ROAMING DISPUTE: CRTC Telecom Decision 2006-33 says that Superior Wireless's use of digital roaming to provide service within Thunder Bay Telephone's territory was not contemplated in the two companies' roaming agreement, so TBayTel was justified in cutting digital service to Superior's wireless customers last December (see Telecom Update #511).

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TELUS EXPANDS DIGITAL WIRELESS IN RURAL QUEBEC: Telus says it will spend $10 million this year to expand its IX digital wireless network in the Mauricie, Gaspe, and Lower Saint-Laurence regions.

MOODY'S CUTS BCE RATING: Moody's Investors Service has cut its ratings of about $10 billion of BCE and Bell Canada debt. BCE's senior unsecured debt is now rated Baa2, two notches above non-investment ("junk") level. Moody's cited concern over BCE's plan to buy back stock rather than reducing debt.

BELL -- PAY FOR WIRELINE WNP FROM DEFERRAL ACCOUNT: Bell Canada has asked the CRTC to allow it to recover $9.6 million per year, for six years, to pay for the wireline component of implementing wireless number portability. Bell wants to take the money from its deferral account.

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ZARLINK REPORTS PROFIT GAIN: Ottawa-based Zarlink Semiconductors, which makes chips for the telecom industry, reports net income of US$49 million for the year ended March 31, compared with a loss of $21 million the previous year. Revenue fell 10% to $145 million.

** Zarlink has bought the Arizona-based optical communications business of Primarion, Inc. for US$7 million.

ASCALADE EXPANDING PRODUCTION OF PHONES: Vancouver-based Ascalade Communications, which designs and manufactures digital wireless and VoIP phones, is building a new factory in China that will increase its production capacity by 40%.

** Ascalade reports first quarter revenues of $22.7 million, a 33% increase over a year ago, and a net loss of $723,000.

HUMMINGBIRD FINDS U.S. BUYER: Hummingbird Ltd, whose 125 Ottawa employees make network connectivity and content management software, is being acquired by California-based Symphony Technology Group for US$465 million.

U.S. TO REPEAL TELECOM TAX: After years of litigation, the U.S. Treasury Department has agreed to end a 3% excise tax on long-distance service and to refund $13 billion to taxpayers. It was originally imposed as a short-term luxury tax in 1898 to help fund the U.S. invasion of Cuba, Puerto Rico, and the Philippines.

CONSULTANTS CALL FOR SPEAKERS: The Canadian Telecommunications Consultants Association will hold its Fall 2006 Conference in Ottawa on September 29-30. Proposals for presentations are due by June

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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.

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