Regulation & Policy: BCE in the spotlight

Telecommunications and competition authorities are already wondering what the acquisition of BCE Inc. will mean to them. They are also probably drawing up scenarios of what might need to be done if Telus Corp. and BCE combine.On April 17, BCE announced that it was indeed talking to a group of pension funds about taking the communications company private. Late last month the firm vehemently denied that any such discussions were taking place.But the rumour mill also had it that Bell was considering combining forces with Telus to create a massive east-west juggernaut of a communications service provider.Before any deal - acquisition by private equity group, merger or other - could be finalized, the government would almost certainly want to look at the details. If it's an acquisition by private equity, the government would have to make sure the result of the transaction didn't contravene provisions in the Investment Canada Act. As well, if a merger between Telus and Bell took place, the Competition Bureau of Canada would have to make a determination as to whether the benefits would outweigh the potential anti-competitive effects. This is commonly referred to as "efficiency" in competition law.We should say that these are early days. As of deadline, BCE was "reviewing all strategic alternatives with a view to further enhancing shareholder value," according to a press release. But as this process continues - and any other strategic process that may come BCE's way - you can be sure certain government authorities are already looking at the situation.Forbearance for realCheers of joy probably rang throughout the boardrooms of the country's major incumbent telephone companies on April 4 as Maxime Bernier, the minister of Industry Canada, decreed a new regime governing local telecom services for the residential and business markets. The new rules allow any ILEC to apply for forbearance in the business services market if there are at least two facilities-based carriers in a particular area. Since Bell Canada, Telus Corp. and MTS Allstream Inc. compete against each other across the country, the incumbents face few barriers to forbearance in major cities in BC, Alberta, Manitoba, Ontario and Quebec. While Canadian consumers probably won't see major rate reductions over the long term, it's unclear what the decision holds for business customers. Each one of the enterprise service providers has seen some loss of business to competitors in the past, and there are already concerns that aggressive pricing in the enterprise segment is affecting every carrier. Forbearance, or deregulation, will certainly level the playing field for the big three providers: they will all now operate under the same rules across all the major markets in the country. By mid April, Bell, Telus and Bell Aliant Regional Communications had all filed forbearance applications. The CRTC has six months to make rulings, but based on the rules set by the minister, it appears as though the commission could simply be rubber-stamping these applications.Rights-of-way rears headThe issue of access to municipal rights-of-way is again in front of the commission. This time Shaw Communications Inc. wants the CRTC to order the District of Maple Ridge in BC to allow Shaw access to the municipality's highways and other public places according to the principles laid out in the landmark and controversial Ledcor ruling (Telecom Decision 2001-23). Shaw states in its application filed at the end of March that despite progress in setting some of the agreement's terms and conditions, the District's decision to request special compensation in the form of fibre-optic bandwidth has derailed the process. "The District's refusal to even enter into good-faith negotiations in the absence of special compensation constitutes a barrier to competitive entry and is contrary to the commission's policy of favouring facilities-based competition," Shaw writes in its Part VII.As the commission continues to deliberate on the Shaw application, it has denied interim relief requested by Xittel Telecommunications Inc. regarding access to the road side of Bell Aliant Regional Communications support structures. The CRTC ruled that it wouldn't make any determination with respect to this matter until it had completed a review of the entire situation. In brief...Telecom Public Notice 2007-5 kicked off a consultation on determining how quality-of-service (QoS) indicators should be excluded from forbearance calculations when the failure to meet QoS indicators is beyond the ILEC's control. Incumbent phone companies are allowed to seek relief from QoS indicators if the reason they failed to meet them was the result of a forest fire, for example. Telecom Decision 2007-23 made it easier for competitive telecom providers to enter a new market. Responding to an application from Rogers Wireless, the CRTC ruled that competitive local exchange carriers only require a central office code and local routing number in the local interconnection region as opposed to the much smaller local exchange. This will certainly decrease the cost for CLECs to enter a new market.

Regulation & Policy: BCE in the spotlight

News | April 19, 2007

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