Tyco is paying $50M in civil penalties to the SEC for its previous management’s cooking of the books. Nortel settled a shareholder class action suit for $2.5B in February. What do these events have in common?

In both cases, shareholders are paying the price for management misdeeds. Notice that there aren’t payments from the Board of Directors. These aren’t payments from the management teams that misbehaved. The audit firms haven’t refunded their fees.

Instead, in some warped sense of justice, shareholders are paying fines and settlements for the transgressions against themselves. Perhaps it is supposed to be a form of penance; self-flagellation to achieve a higher level of forgiveness in order to move forward.

Sorry – I don’t feel cleansed. I’d like to see the Boards and the auditors held accountable. If the Board fell asleep at the wheel, despite their tens of thousands of dollars in retainers and meeting fees, then hold them accountable for these fines and settlements. Individual shareholders rely on and pay handsomely to have auditors and the Board look after their interests.

Yet individual shareholders have again paid for the failure of both groups to do their jobs.

Andy Abramson writes about a concern that the EU has imposed new data retention rules that could have an immense impact on VoIP service providers. He suggests “Toss in a little port blocking, some packet shaping, add some IP address tracking and you have 1984 in 2006.”

I’m not sure that is fair. His concluding statement, “More importantly it shows that governments, telcos and likely the investment communities are all very interlaced” certainly doesn’t follow – at least not in my logical thought process.

What is the fuss about? The European Union is requiring that service providers retain “data necessary to trace and identify the source of a communication”. In the case of conventional or mobile telephony, that means having the calling number, name and address of the caller and called party and relevant cell sites or location information as well as equipment information such as the IMSI and IMEI. For email and internet telephony, IP address information will need to be retained.

Interestingly, “No data revealing the content of the communication may be retained pursuant to this Directive.” In other words, the EU directive does not ask to have the messages themselves retained, only the header type information. It is looking at the outside of the envelop only. Note that the clause says “pursuant to this Directive.” Presumably, another Directive, or an order by one of the National Regulatory Agencies, could require the retention of the content.

The latest EU directive is pretty clear in limiting how such data can be accessed:

In other words, it looks a lot like providing law enforcement officials with access to the same information they would have in a paper environment. Looking at the outside of the envelop. As I have suggested in other posts, the EU is removing a digital loophole in its application of law.

After 15 years of anarchistic rule (or lack thereof) in the internet world, isn’t it time for a little law and order?

With the coming merger of Aliant into Bell’s regional income trust, BCE has put forward the first indication of its management team. Jay Forbes, the current CEO of Aliant will be stepping aside on July 1 to make room for the return of Stephen Wetmore to Aliant. Wetmore has been a past president of Aliant and at NewTel – so this is a return to the Atlantic region for him, having grabbed a hold of much of the land mass of Ontario and Quebec as a prize to bring back with him.

By replacing Forbes with Wetmore, BCE keeps east coast credibility in the Aliant home base. In many cases, Aliant is seemingly inextricably linked with the provincial governments. With the level of competition coming from the cable companies in Aliant’s home turf, leadership is required who fully appreciate the way consumers, businesses and governments respond. His time at BCE has provided a base for assuming control of an integrated Bell / Aliant trust.

Stephen Wetmore was a keynote speaker at our very first Canadian Telecom Summit in 2002. We wish him luck trying to stem the tidewaters of competition – heading back home to Aliant.

I was visiting with family in the Kawarthas (about 2 hours east and north of Toronto) today and I couldn’t help but notice the signs advertising Wireless High Speed Internet along all of the major roads that I was on approaching this cottage and rural community.

But my cousin still uses dial-up access. One of their questions was whether the “free government broadband” would help them. That’s right, they are holding off in buying this service because they think that the government may have a freebie coming their way.

I actually hope it ain’t so. It seems to me that if there is an entrepreneur offering service in the area, then the last thing my tax dollars should be doing is competing against them! I’m not crazy about the idea of misguided Robin Hood entitlements – let’s be clear: this is not an impoverished region.

There is definitely a role for government assistance in completely unserved territory, but let’s not have government compete against the private sector. And let’s also make sure that there is sufficient public clarity about the government’s plans in order to remove any overhang that may be inhibiting demand in areas outside the traditional telco/cable duopoly.

I see Om Malik has picked up on a theme I raised last week – that access independent VoIP may just not be there in terms of acting as a replacement for the general public. Sure, it’s cheaper and gives virtual numbers, but, as Om summarized, users lose reliability, sound quality and emergency access.

I’ll note that these complaints do not apply to the digital voice products coming from the cable companies or the phone companies, such as Bell’s Digital Voice. But those services are access dependent – you buy the voice application from the same carrier as your access wiring – and lose the nomadic capability. That is how the carrier controls the quality, manages the reliability and gives accurate 911 address information. What these products lack is just some of the ‘cool’ factor and so far, there is no great price advantage.

At least in Canada, we seem to prefer an orderly market, allowing the cable companies to enter the voice business with healthy margins, but sacrificing some of the vigourous price competition that consumers might otherwise enjoy.

A year after the CRTC set in place its rules for VoIP, we’ll be looking at all aspects of the competitive marketplace – both access independent and dependent voice products – at The 2006 Canadian Telecom Summit on June 12-14.