Hoping for price cap relief, Call-Net moves into Ottawa residential market

The preliminary move into the competitive residential market has been so successful for one CLEC that it is now expanding into Ottawa. Sprint Canada will begin offering local and LD voice bundles to individuals at rates slightly below that of incumbent Bell Canada. William Linton, president/CEO of Sprint parent Call-Net Enterprises Inc., made the announcement in a speech in the nation’s capital last week. He said the company will offer basic local service, plus one add-on, for $30. Bell charges $33 for basic service plus call answering. As in other cities where Sprint is providing local residential service, customers will receive a special introductory package featuring $10 savings for each of the first three months. Sprint is in the residential market in Montreal, Toronto, Calgary, and Vancouver. Late last week, it announced plans to offer residential high-speed Internet service in Toronto. Expansion into other centres was always part of the business plan. When Call-Net first announced it was moving into the residential market (NL, June 18/01), Jean Brazeau, senior VP regulatory affairs, told Network Letter the company was hoping to find other locations to serve. "That certainly is in the plan. But first we want to see how successful we can be in areas that we have already spent the capital and already have the collocation," he stated. Last week, Brazeau reiterated that expansion into other cities is in the works.LD, the base on which Sprint was launched, has been gradually decreasing as a percentage of the company’s business. Last year, Linton told the CRTC it now represents less than a third of the company’s revenue. Two years ago, Call-Net weighed the possibility of exiting the residential market altogether. But a series of regulatory changes, most notably on contribution and on local loops and rebanding, helped improve the outlook for Sprint and other new entrants.Linton praised those changes in his speech to the National Press Club of Canada, but emphasized that more is needed. "There’s no two ways about it," he told the audience. "The current regulatory system threatens our ability to sustain a competitive market for telecom – one that offers Canadians a choice." He hopes the price cap decision, expected from the CRTC next month, will also improve the outlook for residential service. During the price cap hearings, Call-Net offered a proposal for establishing rates that was a compromise between what the ILECs were offering and what AT&T Canada was suggesting (NL, Oct. 22/01). "The price we pay for access must be set at a level that enables us to compete," Linton said. "That means the real, incremental cost – not some complicated formula that looks like the blackboard in Good Will Hunting." He warned that having no regulatory relief could cause the end of competition in the Canadian telecom market. He branded this the "most pressing of the short-term regulatory issues" currently facing telcos. The longer term is concerned with the establishment of alternative facilities-based competitors. Currently, service is provided through affiliations between cable, wireless, energy, and competitive telcos, Linton noted. There must be economic last mile alternatives arrived at soon, he warned. Linton read off a list of former CLECs that have collapsed in the past few months. He conceded that many of them made strategic errors as they entered the marketplace. But the former monopoly firms also made blunders, he added, citing BCE Inc.’s takeover of Teleglobe and Telus Corp. overpaying for Clearnet Communications. Those companies were cushioned, as the new entrants were not, by having had decades of being in the capital markets.

Hoping for price cap relief, Call-Net moves into Ottawa residential market

News | 03/25/2002 5:00 am EST

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