Telecom Update #536, June 20, 2006

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TELECOM UPDATE

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published weekly by Angus TeleManagement Group

Number 536: June 30, 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:

** Telecom Update Takes a Summer Break ** Microsoft to Expand Business Telephony Portfolio ** Feds Invite Comment on Direction to CRTC ** Bell Buys Executive Communications ** Nortel to Lay Off 1,900 ** Rogers Makes All New Brunswick Calls Local ** RIM Adds 680,000 Subscribers ** Launch Date Set for Bell-Aliant Income Trust ** CRTC Reports New Media Stats ** Drivers on Cellphones as Bad as Drunks ** Telcos Rank High in Profit Report ** New Brunswick Completes Broadband Extension ** CLECs Slam Telcos for "We Miss You" Cards ** Telcos' Broadband Proposals Now Due September 1 ** Northwestel Hearing July 10 ** Yak for Sale ** Minacs Finds a Buyer ** Aliant Launches Hotspots ** SaskTel, Alcatel Plan Combined Research ** Glentel Buys Ontario Wireless Dealer ** In Memoriam: Jim McDaniel

TELECOM UPDATE TAKES A SUMMER BREAK: Telecom Update is taking a week off. The next issue will be published Friday, July 14.

MICROSOFT TO EXPAND BUSINESS TELEPHONY PORTFOLIO: Microsoft says the

2007 edition of MS Office will offer presence-based VoIP call management along with conferencing and messaging functions. Microsoft's Communications Server 2007 will support a unified communications client available in desktop, browser-based, and mobile versions, and desk phones supplied by Nortel Networks and other providers.

** Microsoft has postponed the release of Office 2007, originally scheduled for year-end, until early next year.

FEDS INVITE COMMENT ON DIRECTION TO CRTC: Cabinet's proposed policy direction to the CRTC has been published in the Canada Gazette. The proposed text would direct the CRTC to rely on market forces "to the maximum extent feasible" under the Telecommunications Act (see Telecom Update #534). Public comments are due by August 16.

** An accompanying Regulatory Impact statement, which is not part of the proposed policy direction, says that "maintaining the current regulatory framework is not a viable option."

BELL BUYS EXECUTIVE COMMUNICATIONS: Bell Canada has acquired Executive Communications Ltd, a Toronto-area provider of business telecommunications systems, for an undisclosed amount. ECL is one of the longest-surviving competitive telecom equipment providers in Canada: founded in 1973 to sell intercoms, it installed its first "interconnect" PBX in the fall of 1979.

** This follows Bell's acquisition of Kitchener-based J&D Systems in January.

NORTEL TO LAY OFF 1,900: Nortel Networks plans to eliminate 1,900 jobs worldwide, while creating 800 positions in Mexico and Turkey. The company says it will also reduce pension benefits by US$100 million a year.

** At this week's AGM, CEO Mike Zafirovski said he is "not interested in selling or merging Nortel with somebody else."

ROGERS MAKES ALL NEW BRUNSWICK CALLS LOCAL: New Brunswick users of Rogers Home Phone service can call anywhere in the province by dialing seven digits: no long distance charges will apply. The cableco begins offering service in Moncton, Fredericton, and Saint John on July 1; more areas will be added in the fall.

RIM ADDS 680,000 SUBSCRIBERS: Research In Motion reports sales of US$613 million for the quarter ended June 3, 35% more than the same period a year ago. RIM added 680,000 subscribers, 5,000 more than its previous forecast. Net income: $129.8 million.

LAUNCH DATE SET FOR BELL-ALIANT INCOME TRUST: BCE and Aliant say they expect to complete arrangements for creation of the Bell Aliant Regional Communications Income Fund on July 7, and will officially launch it on July 10. The trust will own Aliant's wireline operations, Bell's wireline operations in smaller cities and rural areas, and Bell's share of Bell Nordiq.

CRTC REPORTS NEW MEDIA STATS: The CRTC's latest Broadcasting Policy Monitoring Report includes these statistics on "new media" in 2005:

** 74% of Canadian households had computers, and 78% of Canadians accessed the Internet.

** 59% of Canadians used cellphones, 3% used a Blackberry, 7% used PDAs, 12% an MP3 player, 4% iPod, and 8% a Web camera.

** 2% of cellphone, Blackberry, and PDA owners used them for watching TV, 3% for taking pictures or videos, 7% to obtain news or weather, and 4% to get sports scores.

DRIVERS ON CELLPHONES AS BAD AS DRUNKS: Frank Drewes, co-author of a University of Utah study published in the current issue of the journal Human Factors, says they found that "people are as impaired when they drive and talk on a cellphone as they are when they drive intoxicated at the legal blood-alcohol limit."

** The study found no significant difference between use of handsfree and handheld phones.

TELCOS RANK HIGH IN PROFIT REPORT: Canada's four largest incumbent phone companies make the top 100 in the Globe & Mail's latest report on Canada's 1,000 largest companies. Ranked by 2005 profits, Bell Canada ($2.1 billion) is in eighth place. Telus ($700 million) is number 42, Manitoba Tel ($213 million) is number 76, and Aliant ($199 million) is number 81.

** The only cableco to make the top 100 is Shaw, which is number 96 with profits of $160 million.

NEW BRUNSWICK COMPLETES BROADBAND EXTENSION: The New Brunswick Broadband Initiative, extending broadband access to health care centres, business parks, First Nations Communities, and most residences and businesses in

327 rural communities, has been completed six months ahead of schedule (see Telecom Update #474).

** Funding was provided by the federal government ($16.5 million from the Canada Strategic Infrastructure Fund), the New Brunswick government ($12.5 million), and Aliant ($15.6 million.)

CLECs SLAM TELCOS FOR "WE MISS YOU" CARDS: Two cablecos have complained to the CRTC that "customer appreciation" cards sent by incumbent phone companies to their former local service customers are violating the winback rules.

** Quebecor says that though Bell Canada's new cards don't include a phone number for customers to call, the practice is still a violation of the rules set out in Telecom Decision 2006-17 (see Telecom Update #524). Bell says the new cards comply with the rules.

** Shaw says that Telus's "we miss you" cards, which do provide a phone number for customers to call, are "in all material respects identical" to the original Bell cards outlawed by the CRTC. Telus says it has stopped sending the cards.

TELCOS' BROADBAND PROPOSALS NOW DUE SEPTEMBER 1: Responding to a request by the CNIB and 11 other national disability organizations, the CRTC has extended to September 1 the deadline for the incumbent telcos to file proposals for spending accumulated deferral account funds on expanding rural broadband coverage and improving accessibility for disabled persons. (See Telecom Update #517)

NORTHWESTEL HEARING JULY 10: A public hearing on the regulatory framework for Northwestel (see Telecom Update #513) will begin in Whitehorse on July 10 and is scheduled to end by July 21. Comments from the general public will be heard on the first day of the hearing, in person or by teleconference from Fort Nelson, Yellowknife, and Iqaluit.

YAK FOR SALE: Dialaround long distance specialist Yak Communications says it has engaged Orion Securities "to advise the Company with regard to its various strategic alternatives, including the potential sale of the Company." Yak says it has 850,000 customers and $10 million in cash.

MINACS FINDS A BUYER: Call centre outsourcer Minacs Worldwide has agreed to be purchased by TransWorks Information Services of India, which is offering about $120 million. Minacs CEO Bruce Simmonds says that the takeover will not lead to a shift of jobs out of Canada. (See Telecom Update #530)

ALIANT LAUNCHES HOTSPOTS: Aliant now offers Wi-Fi based Internet access in airports and marine terminals and a casino in seven Atlantic communities, in collaboration with Halifax-based SolutionInc Ltd.

SASKTEL, ALCATEL PLAN COMBINED RESEARCH: SaskTel and Alcatel have signed a Memorandum of Understanding to set up a 20-person joint R&D centre in Saskatchewan. The centre's software products will be marketed internationally by both partners.

GLENTEL BUYS ONTARIO WIRELESS DEALER: Glentel has agreed to buy Digital Mobile Systems, a wireless systems dealer with six locations in southwest Ontario, for $2.5 million.

IN MEMORIAM: JIM McDANIEL: Jim McDaniel, one of the best-known figures in Canadian business telecommunications, died of cancer on June 18, at the age of 88. He was a strong advocate for telecom competition, and a consistent supporter of the interests of business telecom users.

Jim was one of the last of the generation of telecom executives who rose from the ranks: he started as a telegram delivery boy in the 1930s, and eventually rose to top positions in sales and marketing at CNCP Telecommunications, Unitel, and AT&T Canada. He remained active in telecommunications well into the 1990s.

Angus TeleManagement Group enjoyed many opportunities to work with Jim over the years, and we were always impressed with his passionate dedication to business telecommunications. We extend our sympathy to his family.

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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.