NL Short Takes

Bell performing better on traditional business Bell Canada has improved the performance of its traditional local telephony and long distance businesses, the company reported in its third quarter financial results conference call on November 1. George Cope, president and COO of the incumbent telephone company, said during the call that local line erosion was down considerably in the third quarter compared to line losses in the second quarter. He noted that while a lot of the improved performance has to do with the seasonality of the business, there are signs that erosion may be stabilizing. In the third quarter Bell reported local line losses of 71,000 compared to 134,000 in the second quarter. Cope also highlighted the financial benefits of returning customers who are generating an incremental $10 more per month in revenue. "What’s clearly happening here is clients who are dissatisfied with the service they moved to are coming back and bringing other services with them," he said. "And so our focus on the execution of winbacks becomes critical going forward and we are encouraged by the ARPU we’re seeing off those clients who are returning." Michael Sabia, CEO of BCE Inc., was also bullish on the growing number of customers taking multiple services. Household ARPU increased by $2.70 to nearly $87.50, and Sabia credits this to the company’s push to increase the number of three-product households. Triple-play households were up 3% in the quarter and this brings the total number of three-product households to 24.4%. On long distance services, Cope noted that revenue erosion was 10.7% in the third quarter of 2006 compared to 13.4% in last year’s Q3. That’s consistent with the strategy of making sure the repricing of Bell’s traditional business is managed very carefully, he said. Cope reported that Bell is doing well with higher-speed Internet service Optimax. While he wouldn’t release details of subscriber uptake of the new faster Internet service, Cope noted there have been some positive results. "It’s early days to start to reporting the results other than what is clear is we’re seeing churn declining in our base, so clearly an acceptance of our product improvement." Bundles help service providers not customers: Vonage Vonage Canada has released the results of a survey that show most Canadians believe bundling the Internet, home phone, wireless and TV services together benefits the cable companies and telephone operators more than consumers. The survey, conducted by Decima Research, also reveals that two-third of Canadians think they have to pay more for services they want or need just to receive a package discount. "Customers are breaking through the marketing hype and starting to see the truth behind the bundle: no real savings and no real choice," Bill Rainey, president of Vonage Canada, said in a news release. "To save on one service, you often have to purchase another and another, while committing to a long-term contract, ultimately driving up the total price -- what kind of savings is that?" Other key findings include: 59% of Maritimers would consider de-bundling their home phone from their current service provider for lower prices and more features; 71% of Ontarians believe bundles benefit service providers more than consumers; and 70% of Albertans feel forced into paying for services they don’t need in order to get a discount on cable, Internet, mobile or home phone service.Shift introduces new VoIP business services Shift Networks Inc. has introduced what it dubs Shift 2.0, the company’s next-generation VoIP network for Canadian businesses. The service is immediately available in Toronto, Ottawa, Calgary, Edmonton, Vancouver and Victoria. Shift CEO Trent Johnsen said in a news release that Shift 2.0 offers features and functionality previously not available to small and medium-sized businesses. "It is enterprise class business communications delivered on a subscription basis for a low monthly fee. It enables Shift customers to save time and money, and increase productivity in a market segment that drives the Canadian economy. Some of the features include desktop phone integration with cell phones and mobile devices; integration of the phone and the PC and control of the phone system from a Web browser. Bell winback controversy with Vidéotron settled The CRTC has ruled that Bell Canada’s use of customer appreciation cards doesn’t violate the commission’s winback rules (Telecom Decision 2006-69). Québécor Media Inc. (QMI) had filed a Part VII in June 2006 requesting the CRTC to order Bell to immediately stop sending the cards as they violated Telecom Decision 2006-17, a prior decision that indicated Bell’s customer appreciation cards were in violation of the winback restrictions. In the first decision, the commission ruled that the first iteration of Bell’s customer appreciation card combined with a follow-up survey constituted a winback attempt. In addition, the CRTC noted that there was a toll-free number on the card and an invitation to call Bell. In Decision 2006-69, the commission ruled that the new card "does not contain a specific direct invitation to the former customer to call Bell Canada, nor does it contain any offer or inducement to former customers." Three-month no-winback period upheld by CRTC Primus Telecommunications Canada Inc. has been unsuccessful in convincing the CRTC that it should return the no-winback period to 12 months (Telecom Decision 2006-72). Primus Canada had filed the Part VII application on June 6, 2006 (NL, June 22/06), arguing that it was inconsistent with provisions in the forbearance ruling to reduce the no-winback period on a national basis. Shaw Communications supported Primus’ application, noting that the CRTC failed to consider competition in relevant local markets. The commission’s decision to reduce the period from 12 to three months "was based on a view that the longer period was no longer necessary to prevent undue preference and unjust discrimination and involved an assessment only of the winback rule." Primus had also argued that 12 months was required because it would suffer greater harm than ILECs having to wait 12 months to winback customers due to the costs associated with connecting customers to its network. The CRTC discounted the argument noting that "the purpose of the winback rule is not to protect the financial viability of competitors." Vidéotron wants content companies’ money Vidéotron ltée president Robert Dépatie recently said at the Canadian Telecommunications Forum last month in Ottawa that content companies such as Google, Amazon, Apple and the television networks should have to pay to have their services or products purchased over the Internet. He suggested that if a movie studio were to mail a DVD purchased by a consumer, it would have to pay postage or courier fees, the same should hold true in the Internet age. "What is missing in this model is a way for the provider of content to share part of the content revenue stream for the use of the network," he said. "We merely think that the burden of the costs of the provision of high-speed access should be shouldered by all who benefit that includes companies whose services flow along the network." Skype unveils new capabilities Skype has introduced a new set of features for its online communications software. Skype 3.0 Beta for Windows offers a number of enhancements including click-to-call which allows users to make calls to conventional telephone numbers when they are online. "With every release of our software, we want to give people the freedom to explore the boundaries of conversations and make Internet calling and live online discussions the most natural thing in the world," Skype chief marketing officer and director of worldwide operations Henry Gomez said in a news release. Income trust changes affect telecom industry The federal government’s recent announcement that it would begin taxing income trusts threw a wrench into plans from BCE Inc. and Telus Corp. to convert to trusts. Both companies are currently considering their options, but some speculate that BCE won’t proceed. Telus has asked the government for an exemption, but Finance Minister Jim Flaherty has indicated that he won’t change the rules or grant exemptions.

NL Short Takes

News | November 9, 2006

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