MONTREAL – Rogers Communications founder and CEO Ted Rogers used a speech to the Canadian Club Monday in Montreal to blast Bell Canada’s lobbying efforts and predatory pricing ideas.
Just days after the local forbearance hearings in Ottawa and in the middle of the Telecom Review undertaken by Industry Canada, Rogers’ comments had serious purpose behind them.
Mentioning Videotron and its parent company, Quebecor, as well as iconic owner Pierre Karl Peladeau, Rogers outlined how Canadian cable companies are working hard to provide facilities-based local telephony competition in Canada. He said he’s pleased with the uptake on Rogers Home Phone thus far but that it’s a steep, uphill, battle.
While first calling Bell “the best run telephone company in North America,” Rogers went on to caution Canadian Clubbers that Bell is only concerned about Bell – and preserving its near-monopoly on local telephone service.
“The cable industry is determined to offer customers a choice of facility based suppliers for local telephony. The incumbent telcos have 95% of the market today,” said Rogers. “Obviously with such a monopolistic share there is a public need and benefit for strong customer service focused competition.”’
“Technology is knocking down the barriers and offering the potential for competition with Voice over Internet Protocol, phone service – delivered not over the public interference-prone Internet – but over quality service guaranteed over cable facilities,” he added – a not-so-veiled shot at third-party VOIP providers like Primus and Vonage.
But, he said, real competition is not yet established and until then, the regulator must hold the incumbents at bay for the time being. “Bell and the other telcos will do everything to choke off competition if the proper regulatory framework is not in place to nurture sustainable competition,” he said.
There are plenty of options available to Bell and the other incumbents to be able to compete with the newcomers. However, Bell has asked for changes in the regs so that it can target specific regions where newcomers have applied significant price pressure – like Videotron has in Montreal.
Currently, Bell must offer the same prices to customers in different regions, so if they slash prices in Montreal, they must do the same in Toronto.
“The telcos are now rate regulated for local phone service – as they should be with 95 per cent monopoly power. They have to charge the same rate to all municipalities within each rate band,” Rogers explained. “They are absolutely free to apply to the CRTC if they wish to lower the phone rate for the whole band and we can count on an application to lower rates to be swiftly approved. It would not take Bell long to lower rates as long as it’s to everyone within the band.
“But Bell wants to be able to do predatory pricing so it only lowers rates in those portions of the bands where they have a strong competitor. They could then weaken and crush competitors still-born before they have an opportunity to grow strong. Their objective is to keep their 95 per cent monopoly share or as close to it as possible.”
Rogers also slammed Bell’s money-losing attack on cable, too – Bell ExpressVu – calling it an “uneconomic competitor” which has cost $3 billion and provided “little if any return on capital.”
“Canada’s telephone companies have been waging a considerable regulatory battle, at the CRTC and in the media, arguing that the Canadian regulatory system should be scrapped and replaced with the systems used in some European countries and Australia,” continued Rogers.
“The problem is these countries basically leave their telephone monopolies alone and the customer gets higher prices and less innovation. No wonder our telephone monopolies think that’s a pretty good idea,” he added.
“To make its case, Bell uses three arguments, all of which are quite wrong.
“First, Bell says that local telephone competition is already vigorous and the CRTC can therefore deregulate phone service right now. The facts just do not bear this out.
“The CRTC’s official statistics show that the majority – 97 per cent of local residential lines are still provided by the incumbent telephone companies. This is eight years after the CRTC allowed local telephone competition and after many competitors have gone under,” explained Rogers.
“Second, Bell argues that Voice over IP cable telephone service is a completely different type of telephone service and, therefore, should not be regulated. The CRTC thinks otherwise. It’s the technology on cable’s own quality network – it’s not on the Internet.
“So Bell, along with its monopoly foot soldiers, have appealed to Cabinet to overturn the CRTC decision. Here’s the rub: Bell appeals to Cabinet saying Voice over IP is a computer application, not a phone service.
“But if you check Bell’s own web site, its marketers tell us that its Voice over IP service works just like another home phone line but with more features.
“That — as one of my friends likes to say — is sucking and blowing at the same time,” Rogers said.
‘Third, Bell argues that being regulated is a huge burden that gives cable companies, like Rogers and Videotron, an unfair advantage.
“But the CRTC does not prevent Bell from offering Voice over IP or any other service.
“It allows Bell to price VOIP lower than its regular phone service and allows Bell to change the price without CRTC approval if the new rates are within a range that was proposed by Bell itself,” he added.
“That sounds pretty flexible to me.”
