Telecom Update #540, August 4, 2006




published weekly by Angus TeleManagement Group

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Number 540: August 4, 2006

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

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** BCE Profits Dip 15% ** Telus Net Income Up 88% ** Rogers Profits Climb ** Oosterman Joins Bell ** New President for Bell Enterprise Sales ** Rogers Joins the Bandwidth War ** Consumer Safeguards Extended to All 900 Services ** Quebec ISPs Rebuffed on ADSL Complaints ** Aliant-Owned Call Centre Slashes Staff ** Aliant, Northwestel Expand Satellite Internet ** U.S. Tries to Stop AT&T Suit ** Nortel Sales Rise 5% ** Cable Cut Interrupts NW Ontario Phone Service ** New President at Axia ** Telus Chair Honoured ** AOL in Freefall ** Whatever Happened to Convergence?

BCE PROFITS DIP 15%: BCE reports second quarter revenue of $4.80 billion, 1% more than the same period a year ago. Net income declined

15% to $476 million; EBITDA was flat at $1.97 billion. In the business segment, revenue rose 2.1%, but operating income was down 10%.

** Capital expenditure of $875 million was 3.3% lower than a year ago.

** Subscriber net activations in the quarter: access lines: -134,000; high-speed Internet: +47,000; wireless: +90,000; video: +19,000.

TELUS NET INCOME UP 88%: Telus operating revenues of $2.14 billion in the second quarter were 5.8% higher than the same period a year ago. EBITDA increased 3.7%; net income rose 88% to $357 million. Telus's wireless division accounted for 44% of total sales.

** Capital expenditure of $311 million was 5.9% higher than a year ago.

** Subscriber net activations: access lines: -44,000; high- speed Internet: +29,200; wireless: +123,900.

ROGERS PROFITS CLIMB: Rogers Communications had second quarter operating revenues of $2.24 billion, an increase of 29% over a year ago, or 15% if the effects of the Call-Net purchase are disregarded. Net income was $277.5 million, compared to $14.9 million the previous quarter and $19.2 million in the second quarter of last year.

** Subscriber net activations: cable connections: +38,900; cable phone: +68,000; Internet: +21,600; wireless: +130,000.

OOSTERMAN JOINS BELL: As expected (see Telecom Update #537), Wade Oosterman has joined BCE, replacing Robert Odendaal as President of Bell Mobility and Bell Distribution. Oosterman, who is widely credited with leading very successful branding campaigns at Clearnet and Telus, has also been named as Chief Brand Officer of Bell Canada.

NEW PRESIDENT FOR BELL ENTERPRISE SALES: Stephane Boisvert, former Senior Vice-President of Global Client Solutions Sales for Sun Microsystems, has been named President of Bell Canada's Enterprise division.

** Boisvert replaces Isabelle Courville, who has held the post since July 2003. Bell says it has offered Courville "an opportunity in advanced management development this fall at a leading international business school."

ROGERS JOINS THE BANDWIDTH WAR: Following announcements from Bell (16 Mbps) and Videotron (20 Mbps), Rogers Cable now says it will offer 18 Mbps Internet access by the end of the year. The $99.95/month service will be available in areas where Rogers currently offers 6 Mbps service. (See Telecom Update #537, 538)

CONSUMER SAFEGUARDS EXTENDED TO ALL 900 SERVICES: CRTC Telecom Decision 2006-48 requires all 900 service providers and 900 service content providers to comply with the consumer safeguards set out in Decision 2005-19 (see Telecom Update #475).

** To enforce this ruling, the Commission is requiring all regulated carriers to include consumer safeguard compliance in their contracts with 900 service providers.

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QUEBEC ISPs REBUFFED ON ADSL COMPLAINTS: CRTC Telecom Decision 2006-49 rejects all points of last November's application by a coalition of Quebec ISPs against Bell Canada. The ISPs had argued that Bell Canada's wholesale ADSL rates were too high, and that its retail ADSL offers were anticompetitive. (see Telecom Update #507)

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ALIANT-OWNED CALL CENTRE SLASHES STAFF: Salesbridge, a New Brunswick call centre service bureau launched in 2003 by Aliant and Maryland-based Marketbridge, laid off 270 of its 310 employees this week. The company says its only major client, Ikon Office Solutions, decided not to renew its contract.

ALIANT, NORTHWESTEL EXPAND SATELLITE INTERNET: Two BCE companies are using Telesat's Anik F2 satellite to expand their high-speed Internet footprints. Northwestel now offers the service to customers in Alberta and Aliant is offering it throughout Atlantic Canada. Both provide download speeds from 512 Kbps to 2 Mbps, at prices ranging from $59.95 to $199.95 a month.

U.S. TRIES TO STOP AT&T SUIT: The U.S. Justice Department has asked a federal court to stop the Electronic Frontier Foundation's lawsuit against AT&T. The civil liberties group accuses AT&T of illegally allowing the National Security Agency to tap calls; the Bush administration says that allowing the suit to proceed would endanger national security.

NORTEL SALES RISE 5%: Nortel Networks' second quarter sales of US$2.74 billion were up 15.1% on the quarter and 4.8% on the year. Gross margin was 39%, 1% higher than the previous quarter but down from 43% a year ago. Net earnings of $366 million included a $510 million accounting adjustment. With one-time items excluded, the operating loss was $96 million.

** Sales of the enterprise and packet networks division were up 23% on the quarter and down 1% on the year. Sales of $139 million in Canada were 17% less than a year ago.

** CEO Mike Zafirovsky said that Nortel is considering selling its UMTS wireless unit, which has sales of about $350 million a year.

CABLE CUT INTERRUPTS NW ONTARIO PHONE SERVICE: Thousands of homes and businesses in Sault Ste. Marie, Algoma, and surrounding areas lost

9-1-1, LD, and Internet access for five and a half hours on Wednesday, when a highway construction crew cut a fibre optic cable near Echo Bay, Ontario.

NEW PRESIDENT AT AXIA: Geoff Thompson, former CEO and President of Control-F1 Corporation, has been named President of Calgary-based Axia NetMedia, which was a principal contractor for Alberta SuperNet. He replaces Murray Wallace.

TELUS CHAIR HONOURED: Brian Canfield, the long-time BC Tel and Telus executive who is currently chair of Telus's Board of Directors, has been named to the Order of Canada.

AOL IN FREEFALL: America Online, once the biggest Internet provider in the world, lost three million subscribers and 11% of its subscriber revenue in the second quarter of 2006. The company is cutting 5,000 jobs, eliminating charges for many services, and is in talks to sell its European Internet access business.

WHATEVER HAPPENED TO CONVERGENCE? It's rude to say "we told you so," but we can't resist. AOL's latest news reminded us of three editorials that appeared early in 2000, just after the AOL and Time-Warner merger was announced.

** The Globe and Mail wrote that "historians will look back on this day as a defining moment for media." The National Post said the merger "could radically transform huge chunks of our economy."

** And we wrote in Telemanagement: "To compete in the Internet age, companies must be nimble, able to make decisions quickly, and turn on a dime when necessary. That is not a good description of the lumbering giant this deal will create.... Change the world? Not a chance. The whole idea is just so twentieth century."


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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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John Riddell
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