When BCE is unhappy ….

When BCE Inc. is unhappy about a regulatory policy, you’ll know. Here’s today’s release about the 700 MHz spectrum auction rules, and below that, last year’s release about the CRTC decision that denied BCE’s acquisition of Astral (which the regulator approved this year in a follow-up decision).

Transmitted by CNW Group on : July 25, 2013 07:00

Bell Canada urges Ottawa to close loopholes that favour big US wireless carriers
Bell is ready to compete with any wireless carrier on a level playing field
But 3 loopholes in federal regulations give special benefits designed for wireless startups to major US wireless players like Verizon
Advantages include special access to Canadian infrastructure and our national airwaves
All Canadians will be paying to help a giant American carrier – 4x bigger than Canada’s wireless sector combined – get benefits denied to Canadian companies
Ottawa gets nothing in return – Canadian companies can’t get the same subsidized access in the US or any other country
MONTREAL, July 25, 2013 /CNW Telbec/ – Bell Canada today called on the federal government to immediately close loopholes in its wireless policy framework that favour major US wireless carriers at the expense of Canadians and our country’s world-class wireless industry and network infrastructure.

“Federal wireless policies intended to help small startup competitors unintentionally give the same advantages to major US wireless companies that want to enter Canada – advantages paid for by Canadians and denied to the country’s major wireless carriers. With the potential impact on the country’s airwaves and infrastructure, it’s an unprecedented situation that affects all Canadians,” said George Cope, President and CEO of Bell Canada and BCE.

“Bell is ready to compete with any wireless company. Our national team takes pride in delivering world-leading networks, the best mobile devices and competitive pricing to customers in cities, small towns and rural locations throughout Canada. We can succeed against US giants in a fair marketplace, because we’ll invest more in Canada. But our federal government is unintentionally underwriting the success of US companies in Canada. We ask that Ottawa allow Canadian wireless companies a fair chance to compete by closing these loopholes.”

3 loopholes in the rules
US giant Verizon Communications has already indicated it is poised to exploit the federal regulations originally designed to assist competitive startups. These 3 loopholes in the rules would allow Verizon to:

Buy twice as much new wireless spectrum in the upcoming auction of Canada’s 700 MHz airwaves as Canadian carriers at a lower overall price.
Canada is getting ready to auction 700 MHz spectrum – the best airwaves for carrying your future mobile calls and data. Able to operate equally well in both rural and urban areas, 700 MHz is the most technologically advanced spectrum ever auctioned by the Canadian government. There are 4 prime blocks of this spectrum available. Canadian carriers like Bell can only buy 1 each – but big US carriers like Verizon can actually buy 2. The way the auction is structured, American companies would pay less and get more spectrum, reducing the government’s auction revenues at the expense of Canadians. As well, one of Canada’s own major wireless carriers could be shut out of the auction for our country’s airwaves entirely.

Get a free ride on the world-leading networks funded and built by Canadians.
Government rules give a company like Verizon the option to offer wireless service simply by riding on the networks of Canadian carriers, world-class wireless infrastructure funded by Canadian investors and built by Canadian workers over the last 30 years. Verizon would not need to build its own network throughout Canada, invest in rural communities or support job growth as Canadian companies do. Verizon can easily afford to build its own networks and should do so if it wants access to Canada’s airwaves.

Acquire smaller Canadian wireless companies at fire-sale prices.
If wireless start-ups are financially distressed and looking for buyers, government rules prohibit them from being sold to Canadian carriers large enough to buy them like Bell, Rogers or TELUS. That depresses the value of the startups – and lets a US company like Verizon acquire them at cut-rate prices and gain all their assets, including their existing wireless spectrum already subsidized by Canadians.
Verizon Wireless is part of the $120-billion Verizon Communications conglomerate – in comparison, Bell Canada, the country’s largest communications company, has annual revenue of approximately $18 billion. Verizon is not a company that needs special advantages or subsidies to compete.

Even Verizon doesn’t agree with these kinds of handouts – at least in its home country of the United States. Last March, Verizon told the US Federal Communications Commission “there is no basis for the Commission to give certain large companies a regulatory hand-out so they can acquire spectrum… at a substantial discount over the price that would otherwise be received.”

In May, Verizon also said “The industry should be concerned about kind of picking winners and losers in something like that [US spectrum auction]. We have been very vocal in a responsible way with everyone in Washington about the importance of a level playing field.”

No reciprocity: Canadians denied similar access in the US
It’s important to note that Canadian carriers are not being given any kind of similar special access to the US wireless market – which means Ottawa would be giving US companies these advantages and getting nothing for Canada in return.

“With the loopholes in the rules, Canadian companies cannot even try to acquire startup wireless companies at any price, but American companies can. And they can bid for more of our country’s airwaves and at a lower price. Favouring US companies over Canadians threatens our national communications industry and its place in Canada’s future growth, productivity and prosperity,” said Mirko Bibic, Bell’s Chief Legal and Regulatory Officer. “These special rules were intended to help new competitive start-ups. We ask how the federal government could now hand over Canadian spectrum, infrastructure and capital to US corporations – especially when Canadians do not have similar rights south of the border.”

Impact on Canadians
Industry experts predict that US operators like Verizon would use the lower capital and operational costs enabled by the loopholes to target Canada’s largest and most profitable urban markets. Not only would they be free to ignore small town, rural and remote Canada, the network access loophole discourages them from investing in infrastructure by guaranteeing them the right to use the networks of Canadian companies.

Analysts further predict that Canadian carriers would be required to concentrate their own efforts in the very largest cities, while cutting costs and investment in order to compete. Canadian telecom industry employment would be adversely affected, and entire regions of the country would be left out of new waves of wireless innovation and access to the digital economy.

Canada’s wireless industry is now one of the most vibrant in the world. Our world-leading networks serve 99% of the population, thanks to annual investments of almost $3 billion by the Canadian carriers (Canadian companies invest more per capita in telecommunications than any other country in the G8). Pricing is competitive with developed countries, and according to an independent report prepared for the CRTC, up to 40% lower than in the much larger US market. Smartphone penetration is also higher in Canada than the US.

A fair and straightforward solution
To ensure all Canadians can continue to benefit from a world-class wireless industry, Bell is urging the government to support a fair and open marketplace by closing the loopholes:

If Ottawa is allowing US carriers access to Canadian airwaves, promote head-to-head competition by permitting any carrier to bid on two blocks of prime spectrum in the upcoming 700 MHz auction – not just US carriers.

Require US carriers that enter Canada to build out to the entire country, as Canadian companies have done, rather than allowing them to simply enjoy access to the world-leading networks built by Canadians.

Allow major Canadian carriers the opportunity to bid against the big US companies to acquire wireless start-ups seeking buyers, with full review by the Competition Bureau.
To learn more about this situation, please visit Bell.ca/PlayFair.

About Bell
Headquartered in Montréal since its founding in 1880, BCE (TSX, NYSE: BCE) is Canada’s largest communications company, providing leading wireless, TV, Internet, home phone, and business communications services from Bell Canada and Bell Aliant. Bell Media is Canada’s premier multimedia company with leading assets in television, radio and digital media. For more information, please visit Bell.ca.

The Bell Let’s Talk mental health initiative is a national charitable program that promotes Canadian mental health across Canada with the Bell Let’s Talk Day anti-stigma campaign and significant funding for community care, research and workplace best practices. To learn more, please visit Bell.ca/LetsTalk.

SOURCE Bell Canada

Bell shocked by CRTC rejection of Astral transaction, requests Cabinet intervention

  • Bell will ask federal Cabinet to issue direction to CRTC to follow its own regulatory policy
  • Decision a breach of the CRTC’s Diversity of Voices policy, and protects cable conglomerates and rewards their extraordinary and obstructive lobbying efforts
  • CRTC decision denies Canadians hundreds of millions in new content funding, innovative new broadcast services, enhanced programming choice and competition

MONTREAL, Oct. 18, 2012 /CNW Telbec/ – BCE Inc. (Bell) today announced it will request that the federal Cabinet intervene in the CRTC’s decision to reject Bell’s acquisition of Astral Media. Bell is appalled that the CRTC would come to a decision that so negatively impacts Canadian consumers and the national broadcast industry, contravenes its own policy and is tainted by behind-the-scenes lobbying by Bell’s cable rivals.

“This is a decision that should not stand. Canadian consumers were told today by the CRTC that they don’t deserve more – more choice, more competition, more Canadian content funding – all of which Bell and Astral committed to with this transaction,” said George Cope, President and CEO of Bell Canada and BCE Inc. “We met all the CRTC’s rules, indeed our acquisition of Astral was based directly on the CRTC’s currently in-place Diversity of Voices policy. The wide-ranging benefits to Canadians of the transaction are clear, but the CRTC has told consumers that they and the rules in place just don’t matter.”

In its 2008 Diversity of Voices regulatory policy, the CRTC confirmed that it would approve broadcasting transactions resulting in a company controlling less than 35% of total TV audience share. Bell and Astral combined would have an English-language TV market share of 33.5% and just 24.4% of the French-language TV market, both well within the rules (it is worth noting that this would put Bell-Astral on par with cable company Shaw/Corus, which has a 30.2% share of English-language TV, and well behind cable company Quebecor’s existing 30% share of French-language TV).

With this CRTC policy in place, and which Bell logically used as its guide in acquiring Astral, the CRTC instead quotes a working paper from 1978, a single application from 1986 and a 1989 public notice to justify its rejection of the Bell-Astral transaction in 2012.

“The CRTC’s decision reflects a bygone era, based on antiquated working papers from the 1970s and 1980s that have little bearing on modern Canadian broadcasting, and completely ignores its own most recent policy. Canadian broadcasting needs significant new investment, fresh ideas and increased choice in a time of cable company dominance in media and accelerating competition from foreign giants who invest little to nothing in the Canadian broadcasting system,” said Mirko Bibic, Bell’s Chief Legal and Regulatory Officer. “Considering the dire impact the CRTC’s decision will have on consumers in communities small and large, the blow it delivers to confidence in Canada’s regulatory system, and the fact that the CRTC worked so closely with cable companies to arrive at its conclusions, Bell is compelled to launch its request to the federal Cabinet to direct the CRTC to actually follow its own in-place policy.”

Bell has confirmed that senior CRTC officials met privately with Bell’s cable competitors multiple times in the days and weeks before the commission began its public hearings into the Bell-Astral transaction, while denying Bell the opportunity for any such consultations – calling into question the impartiality of the entire process.

“That the CRTC was not guided by its own rules is a grave concern. In fact, this is just the latest in a series of decisions where the commission held hearings, established rules… and then inexplicably ignored them when Bell moved forward with a strategic investment. This sends a strong message that Canadian broadcasting regulation is impetuous and unreliable, ” said Kevin Crull, President of Bell Media.

Bell’s acquisition of Astral was supported by independent producers, advertisers, media companies, community and arts groups – and by 99.84% of Astral shareholders. In rejecting the transaction, the CRTC sent a clear message to the broadcasting industry, investors and the corporate sector that its own rules don’t matter – to the detriment of consumers across Canada.

“A combined Bell-Astral would grow the entire Canadian broadcasting industry to the benefit of consumers and content creators. Instead, the CRTC has decided to favour the interests of unregulated U.S. broadcast channels and Internet television providers, while blatantly protecting the interests of cable companies, such as Québecor, which continues to dominate the French-language media market” said Mr. Crull.

If the CRTC’s decision is allowed to stand, the Astral-Bell transaction will not be allowed to close and the negative outcomes are clear:

    • It cuts off more than $240 million in new funding for Canadian content, including greatly expanded Canadian news and entertainment programming in both official languages.
    • French-language consumers have been robbed of a planned national French-language news service based in Québec; Québec consumers, content creators and its broadcasting industry remain at the mercy of Québecor, the integrated cable-broadcaster that has long dominated Québec media with a French-language TV market share of 30%, far higher than the combined Bell-Astral share of 24.4%.
    • Consumers across the country are denied a stronger homegrown voice able to compete with unregulated U.S. TV channels and Internet OTT broadcasters – including with Bell’s planned all-Canadian service featuring Astral’s Canadian and international movies and Bell Media news, sports and entertainment programming to compete with cross-border services like Netflix and Apple TV.
    • It forces a review of Bell’s commitment to continue to operate money-losing TV stations in small communities across Canada as part of the Bell-Astral investment plan.
    • Canadians in the North are denied significant new broadband communications infrastructure planned as part of the Bell-Astral benefits package.

Rather than welcome these clear benefits to consumers of the Bell-Astral plan to invest heavily in Canadian programming and broadcasting services, the CRTC chose instead to serve cable companies focused on protecting their profit margins, already the highest in North America. These same corporations dedicated their vast TV, print and other media holdings to an aggressive and blatantly misleading campaign aimed at subverting due process and quashing enhanced competition. In combination with private meetings with the cablecos, the CRTC fell head over heels for their carefully orchestrated and well-funded propaganda effort that made a mockery of the entire process.

If the CRTC’s decision stands, one of the closing conditions for Bell’s $3.38 billion acquisition of Astral Media will not be met and the transaction will not proceed. The transaction also remains subject to approval by the federal Competition Bureau.

About Bell
Headquartered in Montréal since its founding in 1880, Bell is Canada’s largest communications company, providing consumers and business with solutions to all their communications needs. Bell Media is Canada’s premier multimedia company with leading assets in television, radio and digital media. Bell is wholly owned by Montréal’s BCE Inc. (TSX, NYSE: BCE). For Bell product and service information, please visit Bell.ca. For Bell Media, please visit BellMedia.ca. For BCE corporate information, please visit BCE.ca.

The Bell Mental Health Initiative is a multi-year charitable program that promotes mental health across Canada via the Bell Let’s Talk anti-stigma campaign and support for community care, research and workplace best practices. To learn more, please visit Bell.ca/LetsTalk.

Caution Concerning Forward-Looking Statements

Certain statements made in this news release, including, but not limited to, statements relating to the proposed acquisition by BCE Inc. of Astral Media Inc. and other statements that are not historical facts, are forward-looking. Forward-looking statements, by their very nature, are subject to inherent risks, uncertainties and assumptions which give rise to the possibility that actual results or events could differ materially from our expectations expressed in or implied by such forward-looking statements. As a result, we cannot guarantee that any forward-looking statement will materialize and you are cautioned not to place undue reliance on these forward-looking statements.

The forward-looking statements contained in this news release describe our expectations at the date of this news release and, accordingly, are subject to change after such date. Except as may be required by Canadian securities laws, we do not undertake any obligation to update or revise any forward-looking statements contained in this news release, whether as a result of new information, future events or otherwise. Forward-looking statements are provided herein for the purpose of giving information about the proposed transaction referred to above. Readers are cautioned that such information may not be appropriate for other purposes. For additional information with respect to certain of these and other assumptions and risks, please refer to BCE Inc.’s 2012 First Quarter MD&A dated May 2, 2012, filed by BCE Inc. with the Canadian securities commissions (available at www.sedar.com) and with the U.S. Securities and Exchange Commission (available at www.sec.gov). This document is also available on BCE Inc.’s website at www.bce.ca.


James Moore: Deliverer of the digital economy strategy?

Tony Clement ran out of time when an election seemingly cut his plans short. Christian Paradis never finished the job, either.

Now, tech, telecom and media industry people are wondering whether new Industry Minister James Moore will be the one to release Canada’s elusive digital economy strategy.

More than four years after Tony Clement first promised Canadians a national digital strategy—which would lay down a national plan and roadmap toward making Canada’s digital economy more competitive—Canadians and the companies that work in all things digital are still waiting.

Moore may represent their best hope.

Young and tech-savvy, Moore is credited with pushing through a key digital economy bill: the government’s copyright Bill C-11, which passed into law last summer after three similar bills had fallen by the wayside over the previous seven years.

Now he’ll face the same questions Clement and Paradis faced before him. Where’s the strategy going? What will be included in it? When will it be released?

Clement first promised the strategy in 2009, rejecting at the time former CRTC chair Konrad von Finckenstein’s idea of holding a royal commission to determine the strategy’s scope and direction. A royal commission, Clement said, would add “three more years of delay” to the strategy’s release.

The government’s 2011 federal budget, released in March 2011, introduced measures to help the adoption of new technologies, claiming to set “the stage for the release of Canada’s Digital Economy Strategy later this spring.”

Later that month, opposition MPs toppled the minority Conservative government, triggering an election, and the strategy was never released.

When Parliament returned that fall, Paradis said the strategy remained a high priority. In June 2012, he said the government was conducting “final consultations” before releasing the strategy “by the end of the year.”

Thirteen months later, we haven’t seen it.

Whether Moore will roll out a formal digital economy strategy is, of course, guesswork. You could in fact cobble together a lot of the Conservative government’s existing or past measures—from copyright reform and visas for entrepreneurs to venture capital funding and a rural broadband program—into a national strategy.

Still, industry has been expecting a national strategy document. If that’s still the plan, Moore has two years to get it done before the next election, barring another cabinet shuffle.

Canadian consumers, their wallets, and paper bills

CRTC Chair Jean-Pierre Blais has made it no secret that he wants to increase the commission’s focus on how its policies and decisions impact Canadian consumers—and their wallets.

Last September, he blocked BCE’s first attempt to acquire Astral Media, stating that the deal was not in the public interest and because it would give Bell too much market power.

Then, in April, he warned broadcasters that TV subscribers are “more and more concerned with the affordability of television services” at the outset of a commission hearing into those broadcasters’ applications to secure mandatory distribution of their channels. “This is why we consider mandatory distribution … to be an exception,” he said at the time.

More recently, in June, he released the commission’s new “Wireless Code,” which caps how much wireless providers can charge subscribers who exceed their monthly data limits and restricts carriers’ use of cancellation fees for subscribers who exit their contracts early.

Now, it appears Blais’ next target may be the fees telecom providers charge for consumers that receive paper bills, which can be in the range of $1 to $2 per bill.

The Wire Report reported Monday on a letter sent out to 52 telecom providers. In the letter sent last week, Barbara Motzney—the CRTC’s first chief consumer officer who was appointed last August after Blais started leading the commission—asked providers to respond to questions about what charges they apply, if any, to subscribers who receive paper billing.

The letter did not say that the commission will take action on the file, but it may be a good bet that those fees will be banned by this time next year.

John Lawford from the Public Interest Advocacy Centre noted in an interview with The Wire Report last week that the commission considered addressing paper billing charges as part of its wireless code, but left it out of the code when it was released last month.

Now, it seems, the commission will look at how companies apply the fees to all of their subscribers, not just those receiving mobile services.

Name that data

Jacques Latour, IT director at the Canadian Internet Registration Authority, is something of a realist when it comes to a research project called Named Data Networking (NDN), which would overhaul our Internet architecture with a new, more efficient model.

“You would need a lot of beer,” Latour told me jokingly when asked what it would take to implement the new model.

The new architecture would replace today’s Internet address-based system (TCP/IP) with one based on unique, authenticated data packets that the network finds by name instead of a server location. The system would save on a lot of signal travelling by enabling devices to talk to each other directly and share the closest piece of data.

In other words, leave it up to the network to find the closest available location for the data your device requests, which could be stored in a nearby cache (with another user or a network node) or on an original server.

In a recent interview with The Wire Report, Latour said the NDN model could be possible within about 40 years, though that would require creating new standards, defining new protocols, getting the Internet community and global governing bodies to agree to it, ensuring vendors adopt it, and getting support from Internet service providers.

“Even then, I don’t know if it’s feasible. It’s assigning a name to a chunk of data, and in 40 years we’re going to have so many chunks of data, it might not be the right way to [be] naming stuff. It might be flawed,” he said.

He said although it’s an interesting academic exercise, he doesn’t see it as the future of the Internet.

“If you start from scratch, it’s a good idea. When you already have a billion users connected, to migrate to that is not an easy challenge,” Latour said.

He noted that other research projects are also looking at superior Internet code and architecture, such as the OpenDaylight project for an industry-supported open source networking platform called Software-Defined Networking.

Lixia Zhang, a professor of computer science at the University of California at Los Angeles (UCLA), one of the researchers leading the NDN project, told me the proposed system would create a lot of room on the Internet for new new networking applications.

“Today, devices next to each other often have to communicate via a centralized server hundreds of miles away. The NDN architecture will enable nearby devices to talk to each other directly,” Zhang told me the other day. “We hope it gets deployed on the Internet.”

The NDN model offers a more efficient approach to the Internet as traffic grows exponentially and more connected devices come online, including automatic devices engaged in machine-to-machine communications. Global data centre traffic will rise fourfold between 2012 and 2016, reaching a total of 6.6 zettabytes annually, Cisco Systems Inc. forecasted in a report released last October.

Zhang said the existing TCP/IP design of the Internet didn’t really have security built into it, whereas this new architecture has embedded security, with every data packet carrying a signature that authenticates it.

There appears to be global interest in the NDN project, which has about 15 participating researchers. The Institute of Electrical and Electronics Engineers’ InfoCom conference last year in Orlando, Fla., held two workshops on named-oriented networking, Zhang pointed out, while the Association for Computing Machinery’s SigComm conference in Hong Kong in August will hold another workshop, and Cisco has a team building an NDN router prototype.

“NDN aims to solve real problems. When NDN can help people solve real problems, people will want to deploy it. I don’t believe in government push to deploy new technology. A good new architecture must be able to solve problems that TCP/IP cannot,” Zhang said. “That problem, number one, is security. We’ve been working so hard to address security on the Internet.”