Top Bell Canada officials say there’s no reason for the CRTC to consider its recent proposed 360networks Corp. acquisition as an anti-competitive move. BCE Inc. head Michael Sabia has been vocal recently about the need for the telecom regulator to back off its restrictions on Bell’s business, but industry eyebrows have been raised about the elimination of 360networks from the western market. The relative ease with which Bell seems able to swallow the company has some sources saying that Bell’s calls for a level playing field are only so many "crocodile tears." On May 26, Bell announced the acquisition of 360’s Canadian business for $275 million, and at the same time noted that the deal would come with approximately $1.5 billion of unused tax losses. Bell says it will use those losses by the end of 2005, and it doesn’t expect the acquisition to have any impact on parent company BCE’s financial performance targets for this year or much impact on earnings beginning next year. Bell will hive off 360’s operations in Ontario, Quebec and Atlantic Canada to Call-Net Enterprises Inc., and provide support services to the CLEC for two years. In the west, where Bell has been competing with its Bell West initiative, the company hopes the acquisition will give it access to roughly double the number of buildings than it can reach now, and to save significant capital expenditures building up its operations to compete with incumbent TELUS Corp. Responding to a reporter’s questions during a media call, Sabia said of the proposed transaction:"I don’t think there is any great magic in the timing here. It is just these things develop as they do. But, with respect to your observation about dissatisfaction with Bell West, I think…that actually it is quite the contrary. The more we are here in Western Canada, the more convinced we are of the extent of the opportunity that exists here and therefore, the greater our appetite to accelerate our expansion.  "We have invested in British Columbia $500 million so far, more in a combination of Alberta and British Columbia, well in excess of $1 billion and we will be ramping that level of investment up. We will continue to make large investments. This transaction on 360networks is another piece of that and it is a continuing program of further investment. This acquisition will help us avoid some of the capital involved, some of the capex involved in building our own network. 360 has a state-of-the-art network here already." Working in the hypersensitive regulatory arena, however, not everyone sees the move as a simple consolidation. Particularly as Voice over IP (VoIP) becomes a more important technology for voice communications, critics are painting the deal with an anti-competitive brush. By swallowing 360networks, Bell has eliminated a competitor for the provision of fibre in the west, especially for the enterprise market, and observers note that the CRTC should exercise caution in giving Bell greater regulatory freedom so long as deals such as these continue to occur.  Asked by Network Letter whether a deal such as this would come into play during discussions of regulation on the ILEC by the CRTC, commissioner and vice-chair of telecommunications David Colville says he will consider the broader competitive environment in which Bell is working – even if a specific application for forbearance comes to him in a limited context. He says the CRTC will have to grapple with the loss of a competitive provider in the west, even if that player was active primarily in the unregulated provision of business services. "We will consider the total environment," Colville says. It is widely expected that a raft of recent statements by Sabia and others are a precursor to a local competition forbearance application to come.But, says BCE and Bell Canada executive vice president Lawson Hunter, the deal is small enough that the CRTC shouldn’t give it too much play when making decisions based on competitive considerations. He notes that 360’s revenues represent less than 1% of Canada’s national telecom revenues. "(The acquisition) does remove a facilities-based competitor from the market, I guess. (360) were going to go anyway, as you probably know. They shopped this business around so it wasn’t like we went in and unilaterally decided to do this. They made the decision to exit the market and did an option to achieve the results they got. But, you know, it has that sort of impact. They are not a major player in the local market, so it was really just on the business enterprise side of things where, obviously you have to look at the facts, but there are other competitors there and so I don’t think it should have a significant impact. It’s just the fact that when you get around to it the commission will take (the overall market) into account in deciding whether there’s sufficient competition." He adds that the effect of removing one option for interconnection by VoIP players is real, but downplays its effect."Even on Voice over IP, for example, it’s certainly not going to have an impact on the cable guys and they’re likely to be the most vigorous and the largest provider in that space. The others will probably try to differentiate themselves on business applications, or whatever." Rather than talk about the elimination of a competitor to Bell West, TELUS Corp. and Allstream, BCE officials are keen to emphasize the fact that Bell will now be a stronger competitor to the incumbent in the west.  Asked whether Bell West would have grown to become a stronger competitor on its own, Hunter responds:"One of the points we’re making about it is that it means we don’t have to spend the capex that we otherwise would have had to spend to do this. We’ll get the network and the access to those buildings without having to spend it in a greenfield capital expenditure way, which is obviously good. We get it at a reasonable price and we get it now as opposed to having to build it out… "You can always make those points that more is better than less. The question is how much is enough to have a competitive market? And, just because you have five players as opposed to three does not necessarily mean that the consumer gets any better price or any better quality, which is what you’re really looking for. And so, it’s not just a simple how-many-are-there-game. You can’t automatically make that correlation." Bell expects the transaction to close by September 2004.