Bell Canada asks FCC to be removed from American list of dominant carriers

Bell Canada may control most of the local and long distance service in six provinces but it still wants the Federal Communications Commission (FCC) in Washington to take it off the list of foreign dominant carriers. In a petition filed in November, the huge Canadian telco maintained that "Bell Canada does not possess 50 percent market share in the international transport of intercity markets in Canada". David Kidd, Bell's VP of regulatory law, told Network Letter the requirement to provide the FCC with connecting agreements with American carriers permitted "AT&T and other competitors perusing the public file in Washington to obtain copies of agreements which in a competitive environment is there only for mischief." Bell, he maintains, just wants to be able to compete on a level playing field. Bell's lawyers tell the FCC the request was filed "to reduce the ability of incumbent carriers, such as AT&T, to use the FCC's processes to gain access to the operating agreements that Bell Canada may execute with other carriers." But AT&T accuses Bell of playing fast and loose with the numbers. It says the established telco uses figures for all of Canada, rather than merely the areas which are prime Bell territory. "The evidence rather shows that Bell Canada continues to possess market power in Canada as the largest local service provider with at least 95 percent of the local access lines in its service area," the company said in its January 19 intervention to the U.S. regulatory body. AT&T is basing its position on the fact that until fairly recently, Bell operated primarily in Ontario and Quebec. Only those markets should be considered when determining market share. The company further points out that those two provinces account for 11.8 million local access lines out of 19.2 million local access lines in all of Canada. Bell provides 11 million of the 11.8 million in Central Canada. Add the firm's majority interest in Northwestel, Telebec and its minority stake in other incumbent telcos, and Bell is definitely a dominant carrier, AT&T maintains.Bell counters that it is a national company and therefore all of the country should be taken into account. "The relevant market share to examine is Bell Canada's share of the national market in Canada, not just certain Canadian provinces," the firm responded on February 3. "The Commission's test in section 43.51 pertains to local market share ‘on the foreign end of the route', not merely in certain regions of the country at issue. In this regard, AT&T misstates Commission precedent." Both may be right, according to one industry observer. "Bell's argument would be that the market is getting more competitive and we are going to continue to lose market share. That's valid," Michael Sone of NBI Consultants explains to Network Letter. "And AT&T's argument saying so far share loss is only single digits, percentage wise; there's validity there as well." Each firm cites studies done by NBI/Michael Sone Associates in their filings to the FCC on Bell's request for de-listing. The reports were off-the-shelf documents available to all NBI clients. Bell's submission may come under even closer scrutiny south of the border, since it was filed before it assumed majority interest of Aliant, raising its stake in the alliance of Maritime telcos from 41 per cent to 51 per cent. As part of its spending spree during the past month, Bell also purchased the outstanding shares in Teleglobe Canada. "Reflecting the monopoly that Teleglobe Canada held on all overseas facilities until October 1998, Bell Canada does not currently own overseas facilities;" the company told the FCC in November. "Rather, it relied on leased lines and the resale of the switched services of Teleglobe Canada and U.S. or other foreign carriers to carry its non-U.S. international traffic." Sone doubts the FCC would be interested in the takeover of the telco in Atlantic Canada, but the purchase of the international carrier may warrant review. "Teleglobe's market share was declining anyway and that's the argument I think Bell would put forward," Sone theorizes. "It's one thing if Bell had purchased Teleglobe when it had a monopoly and was controlling all the traffic but it's controlling far less traffic than it used to. That would be a consideration; I'm not sure if it would tip the balance one way or the other." Bell's connections with the large American LEC could also raise some eyebrows with the FCC. Ameritech, a subsidiary of SBC, owns 20 percent of BCE. The American regulator may look askance at the largest Canadian telco, which is partnered with a huge US company, claiming not to be dominant. But Bell could argue that Ameritech's investment should permit it to act in kind south of the border. And SBC will be deposed as the largest LEC if the merger between Bell Atlantic and GTE proceeds. (GTE also has substantial Canadian holdings in Telus and QuebecTel.) The fact that local competition is still in its very early stages in Canada could also draw the attention of the FCC commissioners. AT&T accuses Bell of quoting a Michael Sone study selectively. The full paragraph, the competitor claims, says the new CLECs provide only five per cent of business lines. Even then, very few have their own switches. Of an approximate 340,000 business lines, nearly 265,000 are resold Centrex lines. Bell replies that "AT&T has provided no evidence of its own to challenge the adequacy of Canada's legal and regulatory framework for competition." Besides relying on the CRTC, the telco lists recent history to bolster its case. "But even before the local market in Canada was opened to competitive entry in 1997, U.S. carriers have enjoyed an abundance of options for terminating their Canadian traffic. They have been able to conclude agreements with any one of dozens of competing Canadian interexchange carriers, including AT&T Canada, which can terminate traffic on Bell Canada's local facilities on exactly the same basis as Bell Canada's own long distance business.

Bell Canada asks FCC to be removed from American list of dominant carriers

News | 03/08/2000 5:00 am EST

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