Where are the missing business services lines?

November 2, 2006
CRTCLast week, the CRTC provided a summary of market statistics for residential service. Yesterday, the CRTC released similar figures for business services. The data shows industry-wide figures for year-end 2004, 2005 and the first 8 months of 2006. Both sets of data were released as part of Public Notice 2006-12, the process to review the Local Forbearance.

For business services, the rate of ILEC losses has slowed, but perhapos the most interesting statistic is that the number of industry-wide business lines has fallen 0.5% in the first 8 months of 2006, as contrasted with 2% growth when looking at 2005 versus 2004. Where did the lines go?

As observed with the residential market, business service revenues are remaining relatively constant in 2004 and 2005 at about $3.0B. If anything, revenues appear to be increasing moderately.

Category 31 December 2004 31 December 2005 31 August 2006
ILEC NAS 5,216,005 5,163,714 5,080,403
non-ILEC NAS 705,569 884,123 935,276
Total Market 5,921,574 6,047,837 6,015,679
industry revenues ($M$) $3,084 $3,188 $2,182

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An unjust and unreasonable delay

November 1, 2006
TELUSThe Telecom Act requires that regulated rates be just and reasonable. These terms go back more than a century to the days when telecommunications was regulated under the Railway Act. What do you do when you believe that some decisions made by the CRTC are neither just nor reasonable?

You ask them to take another look.

Telus has filed a review and vary application, asking the CRTC to have a fresh look at the retroactive adjustment of rates for interconnection that were set out in Decisions 2006-22, 2006-23 and 2006-42.

The Decisions were issued in April and June of 2006, but apply to rates charged to competitors in the period as far back as 2000.

Many of these competitors don’t exist any more. Others have gone through corporate changes, like Call-Net being acquired by Rogers, Allstream (it was called AT&T; Canada at the time of the original filing) linking with MTS and GT hooking up with Bell. The fiscal books for the period in question have been closed and audited by all of the companies long, long ago.

Further, TELUS claims that after all this time, the CRTC got the rates wrong in any case. After all that time, the CRTC ignored TELUS-specific cost information and imposed the costs that were submitted by other ILECs.

This one will be interesting to watch.

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No trust in income trusts

January 25, 2017

Well, it looks like the telcos are going to have to go back to earning money the old fashioned way. After the markets closed, the Minister of Finance, Jim Flaherty, closed the door on income trusts and said that he does not think the BCE and TELUS conversions will go through.

Back in July, I said

I’m not crazy about the financial engineering itself – it seems like a lot of cost and effort being expended that could be rendered moot by a federal budget.

At least in the case of the TELUS plan, the corporate organization was left intact; the trust structure affected only the finance arrangements. With Bell, the whole company was turned inside out.

Fascinating timing.

Earlier today, Rogers had its stock go up by creating shareholder value – increasing revenue per customer, adding customers and successfully entering adjacent markets. Late in the day, the government didn’t even need the formal process of a budget to undo the corporate restructuring that drove BCE and TELUS shares over the past month.

What is next for the telcos?

Update: [Oct 31 8:50 pm]
Adding link to the official Department of Finance page announcing the Tax Fairness Plan.

Rogers beats the street

October 31, 2006
RogersRogers has released numbers on another ‘beat the street’ quarter. With confidence in continued future success, Rogers also announced a 2-for-1 stock split and an increase in the dividend.

Ted Rogers was quoted as saying:

While we have much work and investment in front of us and competition continues to be intense, the solid operating results from our businesses are combining to drive increasing levels of cash flow and are positioning us increasingly well for continued success.

Even basic cable subscribers increased in the quarter, perhaps indicating that Rogers’ residential phone offering may be helping to retain or even attract cable subscribers, a phenomena that we have observed with Videotron. With MTS so successful in its IP-TV product in Winnipeg, it begs the question of when will Bell respond?

The wireless results indicate that Rogers has been preparing for wireless number portability in the new year, through targeted programs to attract higher revenue customers on longer term contracts.

Retention spending, on both an absolute and a per subscriber basis, is expected to grow as wireless market penetration in Canada deepens and wireless number portability (“WNP”) becomes available in March 2007.

It sounds like there are more handset offers on the way as portability approaches.

As Ted Rogers likes to say as he closes off his speeches, the best is yet to come.

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Parliamentary committee hangs up on policy direction

January 25, 2017

The Industry Minister’s policy direction to the CRTC received a rocky reception in its review by parliamentary committee. The process of approving the policy direction is breaking new ground. Never before has Cabinet issued such a direction to the CRTC. The Minister announced the move in his keynote address to The Canadian Telecom Summit last June.

According to the Telecom Act, prior to proclaiming the policy direction, we require consultation with the provinces and relevant committees of the Houses of Parliament.

“Consultation with”, but does that mean “approval by” these groups?

Last week, the Standing Committee on Industry, Science and Technology voted to recommend

that the government impose a moratorium on implementing instructions respecting telecommunications policies recommended to the CRTC to allow the Committee to hear more witnesses in order to make a more thorough study and subsequently present a report to the House on the impact of the deregulation no later than March 1, 2007

The Conservative members of the Committee voted against the motion and were permitted to prepare a 2-page minority report. The Committee will present the resolution to the full House of Commons, which will create a delay, assuming the Governor in Council wants to operate with a view to the direction from the committee process.

The policy direction was seen to be an expedient way of pushing a market-force agenda without going through the pain of legislative changes to the Telecom Act. It is perhaps a foreshadowing of the challenges of effecting change with a minority government.

As we wrote a couple weeks ago, the very existence of the notice of policy direction has put the matter onto the CRTC’s agenda. Will we notice a change when the direction is actually proclaimed?

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