wheels@mks.UUCP (Gerry Wheeler) (04/21/89)
Well, it looks as though the Canadian phone system might be undergoing
the same upheaval as the US system has. The following item appeared in
the Kitchener-Waterloo Record on Thursday April 20. It is reprinted
without permission.
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Rogers, CNCP Will Challenge Bell Monopoly
By Karen Lewis
The Canadian Press
Toronto -- Long-distance telephone service will no longer be the
preserve of Bell Canada and the provincial phone companies if cable king
Ted Rogers and CNCP are successful in an alliance announced Wednesday.
"Soviet-style telecommunications monopolism is out of date," Rogers, a
colorful entrepreneur and president of Rogers Communications, told a
crowded news conference.
"Even in Russia they are allowing some competition, which improves
people's standard of living."
Rogers Communications and CNCP Telecommunications, both based in
Toronto, said they are joining forces to forge a new company. It will
fight to offer an alternative long-distance telephone network that would
lower costs and provide innovative services, they said.
Bell Canada and provincial phone companies like SaskTel -- through their
affiliation with Telecom Canada -- have a monopoly in the long-distance
business.
Under the deal announced Wednesday, Rogers Communications Inc. would
pay up to $275 million for 40 per cent of CNCP. A final agreement is
being negotiated and will be subject to regulatory approval, the
companies said. The new company will get a new name.
CNCP reiterated its intention to apply to the Canadian Radio-television
and Telecommunications Commission for permission to offer long-distance
services. The application will be made within six months, the company
said. CNCP's first application was denied in 1985.
At that time, CNCP had said the new service could result in average rate
reductions of 10 to 20 per cent from consumers' bills.
CNCP president George Harvey said he couldn't say how much comsumers
would benefit if the Rogers and CNCP alliance breaks the monopoly.
Rogers said there would be some lowering of cost "but the real thrust of
the application will be innovative new services."
But Bell Canada spokesman Linda Gervais reiterated the company's
argument that consumers will suffer because the any reduction in
long-distance revenues will result in larger bills for local service.
"We're not convinced it's in the interest of our customers," she said in
an interview.
A spokesman for the Consumers' Association of Canada also said it would
be bad news for consumers if the monopoly is broken.
"Some subscribers will not be able to afford phone service any more due
to the rise in local rates," David McKendry said from Ottawa. In the
United States, where there is competition, only 93 per cent of household
have telephones; 99 per cent have them in Canada.
In a fiery defence of the competition, Rogers said Bell's argument "is
preposterous. It's nonsense."
And Harvey said CNCP will try to "explode the myth that local rates
would have to rise if long-distance rates come down."
CNCP, which uses microwave and satellite technology to send voice and
data signals across Canada and around the world, is a wholly owned
subsidiary of Canadian Pacific Ltd.
"The sale will create a strategic alliance that will strengthen the base
on which CNCP intends to build a major second force in tthe Canadian
telecommunications industry," said William Stinson, president of
Canadian Pacific.
Rogers would become the chairman of the new venture with CNCP. Rogers
Communications owns the Cantel cellular telephone network as well as the
Rogers cable television service.
CNCP's application for a long-distance licence could take up to a year
to review, including hearings, said Pierre Pontbriand, a spokesman for
the CRTC in Ottawa. Rogers said a new long-distance service could be in
place two months after approval.
--
Gerry Wheeler Phone: (519)884-2251
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