Another important milestone has been reached on Bell’s journey toward privatization.
According to a press release, Bell has now filed all the required documentation with the CRTC to confirm the new ownership structure will comply with the provisions for board composition.
A number of risk factors are still potential deal breakers, any one of which could have a material impact on Bell’s share price (which climbed yesterday to break through $38 for the first time in a little while):
satisfaction of the conditions to the approvals of the Canadian Radio-television and Telecommunications Commission and the Minister of Industry,
resolution of the appeals filed by the debenture holders with regard to the plan of arrangement, and any related stay or injunction that would prevent closing pending resolution of such appeals, and
certain termination rights available to the parties under the definitive agreement dated June 29, 2007, as amended, governing the terms of the transaction. The conditions to these approvals may not be satisfied, the other conditions to the transaction may not be satisfied in accordance with their terms, and/or the parties to the definitive agreement may exercise their termination rights, in which case the proposed privatization transaction could be modified, restructured or terminated, as applicable.
Will the CRTC and Industry Canada confirm that Bell’s documentation is completely in order in order to remove the first of these risk factors?
to permit the Company to make calls to any of its customers subscribing to Non-Published Telephone Number service or Non-Listed Telephone Number service for the purposes of promoting products, services or discount plans, without the customer’s prior consent.
The Commission normally tries to dispose of tariff applications within 10 days of receipt (the application was filed on April 23). Last week’s letter informed TELUS that “Commission staff is in the process of analyzing the company’s proposal in light of the Commission’s determinations with respect to do not call lists.”
In other words, the CRTC recognized that there are some broader issues at stake here, which PIAC raises in a letter also sent last week. PIAC noted that privacy issues were among the matters to be dealt with later this year according to Decision 2008-34. The issue moves beyond simply the Do Not Call List, because it is unclear that subscribers to non-published service authorized the use of their phone number for telemarketing.
PIAC suggests that the implicit negative option of the DNCL is insufficient by the standards set by the Office of the Privacy Commissioner of Canada (OPCC) [see precedent case here and guidelines here]. Perhaps the CRTC will follow PIAC’s recommendation to hold onto this application until the broader privacy issues are given a full hearing.
Will the CRTC adopt a higher or a lower standard of privacy protections than those recommended by the Privacy Commissioner?
The last of the major wireless carriers released their first quarter results yesterday. We can now see what happened with wireless industry growth last quarter.
Bell has finally started to turn things around in its wireless division, but it still lags significantly behind its competitors. Bell added around 28,000 postpaid subscribers, compared to 97,000 at Rogers and 72,400 at TELUS, for a total of about 200,000 new postpaid subscribers. Contrast this with only 165,000 subscribers added a year ago. Last year, Bell had an abysmal first quarter with only 10,000 net postpaid additions.
Some of the media reports show TELUS having the most wireless additions this quarter, which is true if you include prepaid subscribers. Rogers had a net loss of 29,000 prepaid subscribers, pulling down their total net activations. But that was a good thing.
Why?
Because Rogers significantly raised its prepaid ARPU over the past year, so they seem to have shed the lower value subscribers to other service providers while increasing their total prepaid revenue.
The other numbers to watch in these quarterly reports are postpaid ARPU and postpaid churn, again led by Rogers with better than $72 and 1.1% respectively. Data is now more than 15% of Rogers’ revenue. TELUS also experienced a 50% increase in its wireless data revenues and its data represents about the same percentage of its wireless revenues.
MTS Allstream reports later today, providing some visibility into the performance of one of the most promising potential new national wireless players.
Today, Israel celebrates its 60th anniversary of nationhood.
The amount of news space that this small country occupies is somewhat remarkable, of which not enough is usually devoted to its contributions to business and industry. Those of us involved in telecommunications are likely more exposed to Israel than most other sectors of the economy – although bio-tech is another major source of exports.
In reading the National Post this past weekend, I noticed that Israel has now displaced Canada as the foreign country with the greatest number of NASDAQ listed companies.
Israel’s impact on information and communication technologies and services has been immense: if you have deployed VoIP or mobile services, you are using Israeli technology. Most of the world’s biggest carriers are using Israeli developed enhanced services platforms and most Canadians receive their phone or cable bills from an Israeli developed billing system.
Israeli firms will be represented on a number of panels at The 2008 Canadian Telecom Summit. In addition, there will be a contingent from Israel in attendance at the event.
On Tuesday June 17, we have a special international evening planned, featuring international recording artist Mosh Ben Ari performing at a reception for all delegates at The Canadian Telecom Summit.
Plan to linger that evening for some good music and international networking.
On Monday, the CRTC rejected an appeal by Bell Aliant / Bell Canada that had questioned the way the CRTC calculated competitor share of the business services access market.
The way the calculations go, the CRTC has the ILEC provide its number of buildings in a wire centre with at least one high speed connection and each competitor provides its number of buildings with at least one high speed connection. The CRTC rules, set up in Footnote 7 of Decision 2007-35, say that at least 30% of the buildings need to have a competitor presence, but the method of calculation is described as:
competitor network presence is the ratio of buildings connected to the competitors’ highspeed DNA capable network, divided by the total number of buildings connected to all service providers’ high speed DNA capable networks. Multiple competitor connections to a building are counted as one connection, while ILEC and competitor connections to a building are counted as two connections.
You can get some strange but consistent results from this formula. Let’s say there are 25 buildings in a wire centre and the ILEC is in all of them and there is a competitor in 10 of them. One might think that this surpasses the 30% threshold (10/25 = 40%) but that isn’t how CRTC arithmetic works. According to the CRTC, the competitor presence is 10/35 = 28.6%.
The CRTC’s rationale is that the calculation is the same without having to consider whether the competitors are in the same buildings as ILECs – an important potential labour saver in doing the calculations.
For example, in a wire centre in which the competitors’ high-speed DNA-capable network is connected to 10 buildings and the ILEC is connected to 30 buildings, adopting Bell Canada et al.’s approach would lead to an assessment of competitor network presence ranging from 25 percent to 33 percent – 25 percent under a scenario in which the buildings reached by the ILEC and the competitors are entirely exclusive of each other and 33 percent under a scenario in which the ILEC’s high-speed DNA network is connected in all buildings reached by the competitors.
However, the CRTC calculations do consider whether multiple competitors are in the same building (and counts them just once). Let’s say in this CRTC example there are two competitors, each connected to 5 buildings. The results will range from 14% to 33%, depending on whether the competitors are mutually exclusive of each other.
According to the CRTC in its rejection of the Bell / Bell Aliant appeal:
The Commission notes that from the perspective of market power analysis, an approach that provides a consistent assessment for an identical number of competitor network connections, regardless of the particular configuration of the networks of the ILEC and the competitors, is to be favoured over an approach that does not.
It is not clear to me that the CRTC’s math is any more consistent. The Commission’s methodology also needs to consider the configuration of the competitor networks.
