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?

Winning on winbacks

October 30, 2006
CRTCThe CRTC has rules about the type of contact that ILECs can have with former customers for the first 3 months after switching to a new service provider. These are called the Winback Rules and have been the cause for a Charter of Rights challenge.

In the meantime, little border skirmishes are helping clarify what is allowed and what isn’t. For example, in April the CRTC ruled that a card with the following was not permitted:

I’m writing to say that we are sorry to see you go. Even though you are no longer using Bell for your local phone service, we haven’t forgotten about you. You were a valued member of our Bell Family and we truly appreciate having been of service.

If there is anything we can assist you with in the future or anything you would like to discuss, please don’t hesitate to call my team directly at 1 888 603-8402.

On the other hand, on Monday, the CRTC ruled that the following wording is permitted:

I’m writing to say that we are sorry to see you go. Even though you are no longer using Bell for your Residential Phone service, we haven’t forgotten about you. You were a valued member of our Bell Family and we truly appreciate having been of service.

Unfortunately, industry regulations prevent us from contacting you in an effort to win back your Residential Phone service for a period of three months. We are counting down the days until we can talk to you again. These rules do not prevent you from contacting us if you are interested in more information about your local service.

What is the difference? The second card is considered informational and there is no phone number to make the card an obvious call to action.

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Time to protect children’s privacy

October 30, 2006
I had an opportunity to speak with my colleague and friend, Stewart Dresner, while he was in Canada for a variety of privacy meetings and conferences a couple weeks ago. Given my involvement with KINSA, he mentioned the Children’s Privacy Protection Network (CPPN), for which his firm, Privacy Laws and Business, provides the secretariate function.

He pointed out that many countries may have privacy laws, but woefully few are aimed at the specific needs of children. As a matter of law – or even public policy – can we expect a child, surfing on a TV network or toy manufacturer website, have informed consent to terms of service?

In the UK, companies such as the BBC, Nickelodeon UK, Turner Broadcasting, Microsoft, Vodaphone, Warner Brothers and Disney are members of the CPPN, concerned about developing and promoting best practices with regard to the protection of children’s privacy.

Is it time for Canadian firms to demonstrate some leadership in this area as well? Do we need legislative changes or will the private sector take the initiative?

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