Is bigger better?Jean Monty downplays fears that consolidation in cable and telecom will hurt consumers

Competition and consolidation in Canada's service sector appears to be the next major battleground for communications companies. Jean Monty, BCE Inc's president/CEO, drove this point home in a March 23 speech before the Canadian Club in Ottawa. Monty's message was a familiar one: Canada needs large, consolidated industries to compete internationally, and to accomplish that, he said Canadian companies need to benefit from economies of scale. He suggested that current regulations prevent service industries from achieving that scale. "The service sector is the bellwether sector," he said. "As it fares, so will the nation's economy. Our service sector must have the scale to be competitive in a world without borders." Following his speech, Monty elaborated on this and other issues during a discussion with reporters. An edited transcript of that conversation follows: JM: "All of the time I was at Nortel everybody loved Nortel to be big. They loved Bombar-dier to be big. But when you get into the service side, it's not the same reaction. What we have to do is start thinking that the service sector is the next growth area of our economy. It has started already. In that sector we also have to be big. The flip side of that is by being big you serve a lot of Canadians. If you have one railway instead of two or if you have four banks instead of seven or whatever the number, it scares people. So how do we bring the balance in those relationships between government policy, customer protection and size that's increasingly required to make the investments (required to grow and compete internationally)." Q: Are you concerned that the federal government might intervene in the telecommunications industry the way it did with the banking industry? JM: "The competitive environment in Canada is one of the most competitive in the world. It's not because we're large, it's because we've been successful even with the policy framework that we've had- The concern is, now that we've adapted and we're starting to be successful again at building new things and doing great stuff, there's this idea of ‘oh, let's take them down again, they can take it'. That, to me, would be very wasteful of our resources as a corporation." Q: So are you playing up your competition? JM: "I think in the end we have a very competitive framework. What has been announced this morning (the alliance between Rogers Communications and ShawCommunications Inc) and (last month's deal between Rogers and Vidéotron) is quite natural. For the last few years in our planning framework inside the company we've been expecting the consolidation process... They (the cable companies) are becoming big as well and they should. I think it's the right thing that they're doing. We have expected the cable companies to be the main prime competitor of the phone companies for the last few years and it's happening. So for me the issue is really not fear in advance of something but making sure that the balance is always there when government sets policy." Q: With Sprint getting out of the residential market and Telus going with a poison pill, could we end up seeing Bell becoming remonopolized through the market? JM: It is now impossible for that to happen for two reasons. One, there is a lot of competition. The cable companies are investing massively to be a voice service provider (using voice over IP) as well as an entertainment service provider and a data provider, the same type of approach that we have... The issue is who wants to play in the bundle and who wants to offer what. I think what Sprint is saying to everybody is ‘we'll focus on the business market, we'll offer the bundle on the business market but we don't think we want to do the residential stuff. We'll leave that to the cable companies, to the telcos, the Primuses of this world and a lot of others.'- But voice over IP and the other competition in the business today is really the situation that will prevent us from ever remonopolizing the industry.Q: Is this clearly your key competition, this new team of Rogers and Shaw? JM: The cable companies by themselves and all of them together, because they have the facilities to transmit most of the communications services that we think are going to be part of that bundle I was referring to. It is really going to be the competition to us, like it is in the US. And then there's AT&T, which is really Rogers' partner in this. AT&T's support of the cable companies is what it's doing in the United States with TCI, Media One, and the relationship they're trying to establish with TimeWarner-AOL. All of that is part of that camp and we represent another large camp. Telus is part of the game too.

Is bigger better?Jean Monty downplays fears that consolidation in cable and telecom will hurt consumers

News | March 27, 2000

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