Bell Canada defends right to compete more freely, and with less red tape, in U.S. market

Bell Canada may still be the largest and most dominant local telco in this country, but it’s not powerful enough to stifle competition in the U.S. market, according to new evidence filed with the Federal Communications Commission. The 13-page document, filed September 1 by Washington lawyers Vinson & Elkins on behalf of Bell, argues that its client’s recent purchases of Aliant Inc and Teleglobe Inc are irrelevant to a 10-month-old application to have the Canadian telecom giant removed from the FCC’s list of foreign dominant carriers. While not blacklisted from competing in the U.S. market, foreign telcos that fall within this category are required to publicly disclose connecting agreements with American carriers. Homegrown competitors like AT&T Corp have no such obligation, but obviously benefit from knowing the particulars of such agreements. As such, AT&T is the only company opposing Bell’s bid to compete on an equal footing with other U.S. carriers. Bell’s application hit a snag earlier this year when it announced plans to increase its domestic market share even further through its acquisitions of the Maritime telco alliance, Aliant, and overseas carrier Teleglobe. Under the FCC’s rules, a foreign carrier is deemed to not possess market power on the foreign end of a U.S. international route if it possesses less than 50 per cent market share in each of the three relevant foreign product markets: international transport facilities, including cable landing station access and backhaul facilities, inter-city facilities and services, and local access facilities and services on the foreign end. For the first two criteria, Bell appears safe in its assertion that it falls below the 50 per cent threshold. The same cannot be said of the local exchange market, where it clearly exceeds 50 per cent market share in its licensed territories. But is it powerful enough to bully its competitors south of the border? Proving it isn’t could become Bell’s strongest argument in its bid to win unfettered access to the U.S. "Bell Canada’s petition is based solely on the second prong of the test, i.e., it lacks sufficient market power to adversely affect competition in the U.S. market," it writes in its most recent submission. Competing for border traffic A major issue for the FCC will be deciding if Bell has enough power in its home market to hinder competitors that move traffic between Canada and the U.S. Bell points to a variety of regulatory safeguards designed to protect competitors doing business on the U.S.-Canada transit route. For example, the telco notes that its local termination charges are approved by the CRTC, are applied equally to all IXCs, and are among the lowest in the world. "The mere fact that access charges and settlement rates are so low in Canada also shows that there simply is no excess settlement or local access revenues which Bell Canada could use to gain a cost advantage over its U.S. IX competitors or to increase the end-to-end termination costs of U.S. carriers vis-à-vis Bell Canada’s own long distance service or that of its IX affiliates," Bell writes. As evidence, it notes that AT&T’s share of U.S.-Canada traffic has increased from about 51 per cent to 55 per cent, although corresponding revenues are down, from 49.5 per cent to 43.9 per cent. "As such, whatever AT&T may claim about the regulatory situation in Canada, there is no evidence that it has adversely affected its ability to compete on the U.S.-Canada route," Bell maintains. "AT&T remains by far the largest carrier on this route and its market share is growing, not shrinking." As for Teleglobe, Bell says its primary focus is on off-shore call routing, and not U.S.-Canada. "Teleglobe continues to have a very small share of revenues on this route and has no ability to whipsaw U.S. carriers or to use settlement revenues in the Canadian market to subsidize its U.S. affiliates." Teleglobe has already been removed from the FCC’s dominant carrier list.

Bell Canada defends right to compete more freely, and with less red tape, in U.S. market

News | 09/11/2000 4:00 am EDT

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