Telecom Update #557, December 1, 2006

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557: December 1, 2006

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** Wireless Profits Surpass Wireline ** CRTC Chair -- Belisle vs Addy? ** Telus Drops Income Trust Plan ** GPS Tracking May Violate Privacy Rights ** Aliant Lets Parents Monitor Cell Use ** Deferral Account Proposals to Be Reviewed ** Alcatel, Lucent Complete Merger ** Skype Takes 4% of World Calling ** Telecom Magazine Folds ** Layoffs Follow Sitel Expansion Plan ** Vonage Expands Montreal-Area Coverage ** Montreal Messaging Developer Wins Financing ** Milne Leaves White Radio ** Celestica Names New CEO

WIRELESS PROFITS SURPASS WIRELINE: Statistics Canada reports that in the qarter ending June 30, 2006, Canadian wireless carriers had profits of $996 million, a 36% increase from 2005. This is the first time that wireless profits have exceeded the incumbent telcos' wireline profits, which were $822 million, down from $1.2 billion a year earlier.

** Wireless subscribers at the end of June were 17.2 million, up 10.9% from a year earlier. Wireless revenues were $3.1 billion, about 35% of the industry's total revenues of $8.9 billion.

** The incumbent wireline telcos lost 706,000 residential lines in the preceding 12 months, and a total of 1.2 million residential lines in the past five years. Their business line counts grew by 36,000 in the past year, partially reversing a three-year decline (2002-2005).

** Cablecos had 750,000 telephone subscribers at the end of June 2006, six times more than a year earlier.

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CRTC CHAIR -- BELISLE VS ADDY? The Globe and Mail says that there are two leading contenders to replace Charles Dalfen as CRTC Chair. Fernand Belisle (former Vice-Chair Broadcasting at the Commission) is said to be favoured by Heritage Minister Bev Oda and leading broadcasters, while George Addy (former head of the Competition Bureau) is preferred by Industry Minister Maxime Bernier and the large telcos.

TELUS DROPS INCOME TRUST PLAN: As expected, Telus has decided not to convert to an income trust. The company says its Board of Directors unanimously decided that Ottawa's plan to increase tax on trusts means that "it is no longer in the best interests of the Company and its shareholders to proceed." (See Telecom Update #553, 554)

** We expect a similar announcement from Bell, at or before the company's annual Business Review Conference on December 12.

GPS TRACKING MAY VIOLATE PRIVACY RIGHTS: The Office of the Privacy Commissioner (OPC) says that GPS tracking may violate employees' privacy rights. Responding to a complaint by drivers working for an unnamed telecom company, the Commission said that employers may use tracking devices to monitor vehicles, but they should not be used to evaluate employee performance.

** A summary of the OPC's investigation and conclusions is available online at
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ALIANT LETS PARENTS MONITOR CELL USE: For $4.95/month, subscribers to Aliant Mobility Family Plans can now monitor and control their children's cellphone use. Cellular Manager lets parents control when a child's cellphone can be used, and limit which phone numbers can call the phone or be called from it.

DEFERRAL ACCOUNT PROPOSALS TO BE REVIEWED: Further in the apparently never-ending process to determine how the incumbent telcos' deferral accounts will be spent, CRTC Telecom Public Notice 2006-15 opens a review of the telcos' proposals. (See Telecom Update #545) To participate, notify the Commission by December 15.

** Alternative broadband providers that are, or will soon be, serving any of the communities proposed for broadband funding from the deferral accounts must notify the CRTC by January 19, 2007.

** The Commission is still considering Barrett Xplore's application to review and vary the original deferral account order (see Telecom Update #533), as well as other proceedings that could affect the amounts in the deferral accounts.

** The deferral account issue won't be decided anytime soon. The Commission will still be receiving comments in June 2007, and the Federal Court will hear appeals of the original decision next year as well. (See Telecom Update #548)

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ALCATEL, LUCENT COMPLETE MERGER: Alcatel and Lucent begin operations today as a merged company. Alcatel-Lucent has 89,000 employees and annual revenues of about $28 billion. Lucent CEO Pat Russo assumes that post for the merged company; Alcatel CEO Serge Tchuruk becomes Chairman. (See Telecom Update #524)

SKYPE TAKES 4% OF WORLD CALLING: TeleGeography says that Skype computer-to-computer calls is equivalent to 4.4% of international carrier traffic this year, compared to 2.9% in 2005. The number of Skype users online "now regularly exceeds eight million."

TELECOM MAGAZINE FOLDS: Communications & Networking magazine will cease publishing this month. Publisher Transcontinental Media says its ITBusiness Group will continue to offer information on networking and telecom in Computing Canada magazine.

LAYOFFS FOLLOW SITEL EXPANSION PLAN: On October 24, Sitel said it plans to hire 500 people for its Kanata call centre. This week the company announced that in April it will close its 550-person call centre in nearby Bell's Corners.

VONAGE EXPANDS MONTREAL-AREA COVERAGE: Vonage Canada now offers local numbers in 19 additional communities in the Greater Montreal area, including Lachine, Laval, and Longueuil.

MONTREAL MESSAGING DEVELOPER WINS FINANCING: Montreal-based Oz Communications, a maker of software for email and Instant Messaging on cellphones, has raised US$34 million in financing. Oz has 230 employees, up from 60 two years ago.

MILNE LEAVES WHITE RADIO: John Milne, President and General Manager of telecom distributor White Radio, has resigned "to pursue other interests." White is a subsidiary of Cygnal Technologies.

CELESTICA NAMES NEW CEO: Celestica, the Toronto-based electronics manufacturer, has given president Craig Muhlhauser the additional position of CEO. Former CEO Stephen Delaney has resigned "to pursue other business interests."

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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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