I Am Canadian, A Reply to Bell’s Open Letter

Dear Mr. Cope,

Amongst your many traits as CEO of Bell Canada Enterprises (BCE), tenacity, enthusiasm for your trade, and perseverance top the list. Conspicuous in its absence from your letter, however, is your sense of irony.

You begin the “unusual step of writing to all Canadians” (Strange, isn’t it, that “Canada’s Top Communication Company” should find it unusual to communicate with its customers?) with a history lesson, ostensibly in the interest of helping us “understand a critical situation” now facing the wireless industry: the potential entrance of an American company into the Canadian market.

You inform us that, since Parliament granted Bell its charter in 1880, Bell has spent 133 years “investing in delivering world-class communications services to Canadians.” An impressive track record!

You must, however, be aware that Bell’s permission to operate in Canada was initially obtained by agents acting in the interest of the (American) National Bell Telephone Company and that, after securing a favourable charter, three top-level executives from National Bell were appointed to Bell Canada’s board of directors (Babe, 1990, pg 68-69). Or how about how American Bell initially owned 50% of your company, only fully divesting its interest 43 years ago, in 1970 (Winseck, 1998, pg 119)?

Bell began its life in Canada as a branch plant of an American company; in a strange twist of fate, it’s now a descendant of National Bell Telephone – Verizon – which is contemplating (re)entering the Canadian market. And they leveraged this relationship to get an early leg up on the competition – using patents owned by its American parent, Bell quickly monopolized the market for Canadian telephone services, a monopoly it used to funnel profits back to the States. (Smythe, 1981, pg 141)

You suggest that “US giants don’t need special help from the Canadian government,” but that’s exactly how Bell got to where it is today!

That’s all ancient history, however, and in the here and now, BCE is a Canadian company who “welcomes any competitor,” so long as they “compete on a level playing field.” Right?

You’re calling on the Federal government to close “loopholes” that are intended to promote competition in your industry – rules that your company has forced the government to create.

Regarding the three “loopholes” you want closed:

1. “Verizon would be able to buy twice as much of Canada’s airwaves as Canadian companies like Bell can in an upcoming auction of wireless spectrum – the airwaves that carry your calls and data.”

According to a recent article in the Financial Post, BCE currently holds license to 19% of Canadian radio frequencies designated for mobile use – that’s if you include the upcoming blocks of 700MHz in the total – or 29% if you don’t. Bell didn’t get most of that spectrum by paying market price, but through a ‘beauty contest’ – the government licensed mobile spectrum to Rogers, Bell, Telus and other regional providers such as MTS and SaskTel for pennies compared to market value.[1] You might call that “existing spectrum holdings previously subsidized by Canadian taxpayers,” something you’ve got in spades but would deny to your competition.

Even in the unlikely event that you don’t win a block of 700MHz in the upcoming auction, you’ll still be in control of 19% of all available mobile spectrum in Canada – more than twice as much as the set-aside provides for new entrants.[2]

The playing field looks pretty tilted from here.

2. “They get to piggyback on the networks of Canadian carriers wherever they don’t want to invest and build their own.”

At least you won’t have to worry about Verizon piggybacking on your network here in rural Manitoba – because you barely have one. Instead you’ve chosen to only cover the most densely populated (and most profitable) areas of the province while ignoring places like Thompson, Churchill and the Whiteshell – a practice that you reserve exclusively for Verizon. Where you do provide service – Ontario, Quebec, Vancouver, etc. (Winnipeg, Brandon, and immediately surrounding areas in MB) – you’re already sharing a network with TELUS. Since 2009, Bell and TELUS have been sharing their national 3G (HSPA) network infrastructure. You’ve needed help providing your services for years, why should we expect Verizon to go it alone?

Rogers also has similar agreements with regional providers such as MTS. In fact, all three national providers are already sharing their networks with their “competitors,” yet you actively campaign to exclude new entrants such as WIND and Verizon from the club. Not my idea of a level playing field.

3. “Verizon can acquire smaller Canadian competitors – but Bell and other Canadian wireless companies can’t even try.”

You note that “With Ottawa’s help, the new companies [WIND, Mobilicity, Public Mobile] have become part of the vigorously competitive Canadian wireless marketplace”. I have to point out that with your help, one of those companies is facing imminent financial insolvency, while the other two are actively courting buyers. Naguib Sawiris, WIND’s original backer, has frequently and publicly lamented his decision to test your waters. The previous contestants, (Clearnet and Microcell) I would add, met a similar fate when they were bought out by TELUS and Rogers in 2000 and 2004, respectively. Are we supposed to believe that TELUS is competing with Koodo, or Rogers with Fido?

After every challenger contesting your dominance of the wireless market has been bought out or squashed, is it any wonder that the government wants to act to promote real competition?

Mr. Cope, I am Canadian. Like virtually every other Canadian I know, I rely on my mobile phone in my personal life and for my livelihood on a daily basis. The “critical situation” I face comes every month, when I open my wireless bill wondering whether I’ll be able to afford to pay it. Your company, along with Canada’s other major wireless providers, have had 30 years to address this situation. But you’ve failed. Posting huge profits and paying dividends year after year might satisfy your shareholders, but individual Canadians and their families are being hung out to dry. It’s time for a change. Faced with a choice between an American company fighting to gain a foothold in a hostile market or a Canadian one who takes my hard earned money for granted, I’ll pick the lesser of two evils. And if you don’t know which that is by now, I’ll happily send you a copy of my monthly phone bill.

~

[1]According to a report Bell submitted to Industry Canada’s invite-only Wireless Roundtable in 2010, total fees paid by spectrum licensees to IC is $132M per year, your share of which (29%) is $38.28M per year by my estimate. Sounds like a lot, until you consider that you paid nearly that much at auction just to secure AWS spectrum for Toronto alone (Per year cost of winning bid for 10 year license.) It’s fair to say that most of the spectrum you’re holding (and have been for up to 30 years) has cost you significantly less than market value. Why should you have access to public subsidies for spectrum but not your competitors?

[2] This estimate excludes spectrum held by Bell et al for radio and television broadcasting, but includes the BRS spectrum – intended for mobile internet but out of use since early 2012 – currently being hoarded by Inukshuk Wireless, a joint venture between Bell and Rogers. Also, it assumes that Verizon will not have completed acquisition of Wind or other new entrants prior to the auction.

Sources Cited:

Babe, Robert E. Telecommunications in Canada. University of Toronto Press, Toronto. 1990.

Smythe, Dallas. Dependency Road: Communications, Capitalism, Consciousness, and Canada. Ablex Publishing, New Jersey. 1982.

Winseck, Dwayne. Reconvergence: A Political Economy of Telecommunications in Canada. Hampton Press, New Jersey. 1998.

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102 comments

  1. I heard these new radio ads and saw the print ads an immediatley thought “what a crock of isht.”

    Thanks for putting the actual facts and pieces together in this nice, concise article.

    I’m pretty sure I’ll be forwarding this article around a lot. I’ve just added it to my Hootsuite to send out a few times during the week.

    1. Thanks for the kind words, Laurent.

  2. Doug McMillan · ·

    CBC had an interesting article on a Canadian cellphone company that would love to compete, but apparently can’t buy wireless network bandwidth from the big three. It certainly shows they don’t want any competition, level field or not. (http://www.cbc.ca/news/canada/toronto/story/2013/07/31/video-ting-mobile-phone.html)

    1. Hi Doug,

      Peter Nowak has been writing about the need for structural separation for a couple years now. Check this out if you’ve got a moment:

      http://wordsbynowak.com/2013/06/04/telecom-separation/

  3. Seems to me all that Bell is asking for is a level playing field. How American ownership from a regulated monopoly era was somehow an advantage I can’t see. Back in those days, the government had to approve the rates Bell charged on landline telephones.

    1. The period in which Bell entered the Canadian market was a time of fierce competition; Canadian Bell used patents held by American Bell to drive out competitors. Eventually the Canadian patent commissioner (and brewmaster!) Sir John Carling voided Bell’s patent (in 1885), but not before Bell had gained an effective 5 year head start on any other major competitor.

      Rate regulation didn’t come into effect until well after Bell had established a de facto monopoly, during the period 1902-1920, and even then, Parliament played a passive role, with few exceptions ‘rubber stamping’ requests for rate increases.

      1. That was so long ago, how does that have any relevance today? Successful companies adapt and change and today’s Bell has absolutely no resemblance to the one you’re describing. How one could believe a company is anti-competitive in this hyper-connected and ever-scrutinized world is unbelievable. Seems the only ones who are snivelling at Bell for “anti-competitiveness” are stuffy academics talking fallaciously about the legendary history of a company of great technological and social change that has absolutely no relevance today. BTW, are you a Conservative Party of Canada supporter? Because your talking points seem to indicate that.

    2. When the so-called competitors in a market all band together to try to keep out foreign competition, it’s clear what this really is.

      The oligarchs are worried about someone who might not play along with their tidy gouging Canadians arrangement.

    3. Except they aren’t. Bell, Telus and Rogers want a playing field leveraged in benefit to them. They don’t want a level playing field because a level playing field would cut into their customer base and profits.

      If it were a single company behaving this way, the competition bureau would be all over them with fines and other such penalties.

      We, the customers, NEED a level playing field in Canada. Bell, Telus and Rogers won’t give us one.

  4. I found it rather ironic how Telus raised my (prepaid) per minute rate to $0.50, then turns around and wants me to feel bad for them about Verizon coming here.

    In a local newspaper ad, Bell had a thing about the big bad evil monopoly known as Verizon. Funny coming from Bell after they just purchased Astral and seemingly own everything now.

  5. I have also been a customer since Bell Mobility and yet to see a tower cover all of Halifax Regional Municipality. I don’t need to go to the backwoods of Manitoba, the service is spotty in our Capitol City Municipality, with nothing improved since I took on their service in about 1994. I’ve tried the competition, “Rogers” is a dirty curse word in Rural HRM and I carried no-contract Koodo for two months to compare, they really didn’t want me to leave, even though, they too, fail to provide connectivity. Landlines are required, and overpriced by Bell, even seasonal disconnect costs $140 per year for a dead phone, not worthy to call 911 and no cellular service to back it up. So, if they were making the basic requirements, I might ignore the higher price. When they tell me that it costs too much to put up one rural tower and add 7 city towers, methinks they have their priorities wrong. They are effectively keeping a potential population of Cellular consumers within city limits.
    Time to move on, introduce some competition. The Big Three have had long enough to prove their worth, and giving them more market share where they fail to meet consumer needs now, is a big mistake. Hurry up US Telcom.

  6. Jazzace · ·

    Koodo was always a brand of Telus. It was not a separate company that was acquired like Fido.

    Also, foreign competition or no foreign competition are not the only two options. Stronger regulation like seen in Europe would also be an option, but no one expects this Federal Government to consider such an efficient fix because the “market” didn’t create it.

    1. Actually, Koodo began its existence as Clearnet Communications, Inc, and was given license to 30MHz of PCS spectrum in 1995. It was later acquired by TELUS in 2000, when it was rebranded to Koodo.

      I agree that foreign competition or no foreign competition are not the only two options. I wrote a post about this topic last year:

      https://benklass.wordpress.com/2012/03/26/drunken-prime-minister-overturns-courts-allows-foreign-ownership/

      However, the scope of this article was necessarily limited to a discussion of the current rumblings about Verizon.

      Correction: Clearnet was an independent company, acquired by TELUS for $6.6 billion in 2000, who were forced to divest some of their spectrum licenses as a result of having exceeded their ‘spectrum cap’ (a mechanism by which government attempted to limit industry concentration). TELUS still operates Clearnet’s “Mike” brand, which is primarily marketed toward business and therefore is not worth much consideration as a competitive factor affecting consumers.

      1. Koodo was created internally by Telus in 2008. It is basically a total completely owned brain child project from Telus Management.

        Now, they may have allocated that spectrum to Koodo, but Koodo was created out of pure Telus (basically, Sr Management sat around and said.. “We need a discount brand that appeals to young people.. We’ll name it Koodo!”).

  7. As an Englishman who has lived in Canada and was a customer of Bell, Telus and Rogers at various points and is now back in the UK where we have Orange, T-Mobile, Vodafone and O2 along with multiple MVNOs both large (Virgin, Tesco) and small, Canada is FAR cheaper and competition drives the prices up in market. The industry needs regulating globally – Canada is not a special case.

  8. Whoa, Steve Thompson, are you SURE you were in Canada? I was in England for 12 days last February and the cheapest option for me was to buy two phones (one for me, one for my son) for £45, which included unlimited calls and texts between he and I and any other phone on my carrier and unlimited long distance calls to anyone back home in Canada or the US. And I could have topped it up for other local calls, which I didn’t need. I got a new deal with Telus shortly after coming home, and it was sweet compared to what it used to be, but believe me, it’s nothing compared to what I could find in the UK. Or the US. Also, about 20% of my outgoing calls result in the person on the other line not being able to hear me. On 4G. In a city of a quarter million people.

  9. […] I am Canadian, a reply to Bell’s open letter […]

  10. I love your letter. It addresses this situation very well. I am going to get it linked on realfairforcanada.ca

  11. […] I am Canadian, a reply to Bell’s open letter […]

  12. TinSoldier · ·

    Thanks for your reply, Verizon.

  13. W.M.Fullerton,CA · ·

    Mr Glass please do similar research on the Canadian banking system – the internet companies and/or wireless providers are as honest and caring as the day is long compared to the total rape of the consumer being perpitrared by the financial community!

  14. Truely Canadian · ·

    Nice Letter…where were bell, Rogers &Telus when Wind, Mobilicity were coming…They didnt let these carriers survive….now when Big Daddy is coming they are peeing in their pant….otherwise why dont they just SHUTUP and be nice & be competitive ….why havent they still come out with plans matching Wind or Mobilicity. What a crap information they have that USA has more expensive plans than Canada…..we all have tons of people known and we all know that it is cheaper in the south…..Mr Cope thinks he is the only intelligent person in Canada…but in honesty it is the opposite….He has only been in Bell to make it like NORTEL..GOOD IN BOOKS & shareholders…by laying off 35% staff & outsourcing Canadian jobs…what is he talking about Canadians loosing jobs when Verizon come…he is making fun of himself only. He has monopolised the market by buying ASTRAL….He has been laying off staff still very recently…..This ad in the radio should be stopped right away as it is making fun at us as Canadians….that we arent strong & intelligent enough to decide. SO LET THE PUBLIC DECIDE THIS TIME & not Government ( whom we elect) or CRTC…..Let us as PUBLIC use our Freedom to Decide.

  15. The reason Verizon is eying Canada is because they see the incredible numbers Telus, Rogers, Bell, and others are posting, even with horrible customer satisfaction. It is easy for the Canadian telcos to stop Verizon.. slash prices and improve service.

    1. PS. Your letter was a fantastic response to Bell’s open letter. Thanks for writing it.

      1. Thanks JJ. And I think you’re right on point. With such high ARPU across the board, it seems like there’s a lot of room for improvement.

  16. Lorex · ·

    The reason why Telus bought Clearnet in 2000 was to gain national wireless capabilities. By 2000, Telus was the product of the merging of several regional telephone companies called Telus (Alberta), Ed Tel (Edmonton), and BC Tel (BC). Telus, or AGT as it was called, was owned by the Alberta government until 1990 at which time a holding company called Telus was created. Ed Tel was owned by the Edmonton government until it merged with Telus in 1995. BC Tel was always a private company. These regional entities had a strong foundation of regional wireless assets (PCS, paging) and combined them to create a robust BC-Alberta network, but that wasn’t enough to compete with national providers like Cantel AT&T, which was the new expectation for consumers. So, as Telus watched minority shareholder GTE (which held a minority stake in BC Tel and now in Telus) merge with Bell Atlantic, merging wireless assets and creating a company called Verizon, it seemed a natural progression to buy Clearnet to become a national wireless company.

    In buying Clearnet, Telus was burdened with debt after the largest telecommunications acquisition in Canadian history and had to restructure, which sadly included laying off thousands of employees. A high performance culture had to be developed to survive in the intensely competitive world after deregulation, something not used to the old-timers. The road wasn’t easy as some critics like to suggest.

    Back in those days, Canadian telephone companies closely followed their U.S. counterparts. As
    a result, we Canadians have a similar wireless market structure. Traditionally landline and now
    wireless companies, Bell could be likened to Verizon (landline holdings concentrated on the East
    Coast). Telus could be likened to AT&T (landline holdings concentrated on the West Coast).
    Rogers, the market leader, is an oddity because no traditional cable company in the U.S. has
    wireless assets.

    Now in the U.S., there are also 2 national providers called Sprint and T-Mobile.They project an
    image of “cheaper than the other guys”, namely premium carriers AT&T and Verizon, in their
    marketing. They are not doing well financially (stock is in the dumps). That is why T-Mobile wanted to sell to AT&T. T-Mobile’s parent Deutsche Telekom wants to get rid of their US assets. Companies in bad financial position don’t provide competition.

    In Canada, we are lucky to have three national carriers in good financial shape, which provide
    even more competition than in the U.S.

    Like Bell, Verizon is a premium carrier. They have one of the two highest profit margins in the US
    wireless industry. They will compete on a VALUE (mostly brand) proposition, much like Target,
    not a PRICE proposition and at best for consumers shuffle market share away from the Big 3.
    Then they will gain as much ARPU out as they can suck out.

    To compete with a gigantic subsidized carrier, the Big 3 will have to lay off thousands of
    employees. And they will remain unemployed because they will have nowhere to work because
    Verizon won’t be hiring. Back office functions (accounting, billing, marketing) will be done of out
    of the U.S. (why duplicate costly functions in Canada?). The network build and maintenance will
    be done completely by CHEAP contractors like Nokia Siemens from out of country. I’m not
    talking about the equipment vendor, but the people who will do all the RF analysis, backhaul
    planning, IP routing, etc. will all be cheap contractors. Verizon Canada will truly be a branch company.

    See the picture, Ben? Care to rebut me, because please do!

  17. I’m not sure what picture you’re trying to paint – or what I’m supposed to rebut. I agree that Verizon will be a branch plant. I have made no positive statement about Verizon – my article simply points out that Bell’s appeal to Canadians’ nationalism is self-serving and hypocritical.

    You originally posted as “Mike”, and asserted that “Seems the only ones who are snivelling at Bell for “anti-competitiveness” are stuffy academics talking fallaciously…” Why should I be expected to spend my time responding to someone who so quickly resorts to personal attacks?

  18. Lorex · ·

    OK, those criticisms of Bell are valid. This only fuels, however, the public sentiment that somehow Verizon is the Canadian consumer saviour and will lower prices. This is simply not true. Verizon will NOT lower prices for the consumer and will cause mass layoffs in the Canadian industry. So, my question to you is, why do you keep making comments that fuel this FALSE sentiment?

    1. I think you may be reading a bit too much into my letter.

      You may be interested in this post that I wrote last year: https://benklass.wordpress.com/2012/03/26/drunken-prime-minister-overturns-courts-allows-foreign-ownership/

      I too am skeptical of relying on foreign investors whose modus operandi is strikingly similar to our current carriers. However, I, like many Canadians, am unsatisfied by the status quo; my criticism of Bell is not an endorsement of Verizon. Anyway, at this point anything said positively about Verizon’s entry into Canada is speculation; we’ll have to see if their purported intentions are real on September 17 (the deadline for participation in the auction).

      I disagree that Verizon, if it shows up, will only be competing on “value” as you suggest. Peter Nowak published a post last night that addresses this concern: http://wordsbynowak.com/2013/08/05/telus-verizon/
      As far as Verizon “causing” mass layoffs: economic rationalization and striving towards efficiency of operations by minimizing labour expenses is a tactic already employed liberally by Canadian carriers.

      Is there a solution that will satisfy Canadian individuals and families (socially and as workers), according to the policy objectives set out in the Telecommunications Act of 1993 as well as provide jobs and other economic benefits? What might this approach look like? These are some questions that I examine in my research.

      It’s not my intention to “fuel” anything; I was simply moved to write this letter in response to what I feel is a disingenuous PR campaign by Bell.

    2. Who’s to say that there wont be mass layoffs either if the cartels buy Windcity? If any of the cartels buys Windcity, we’d be back to $80/month. At least with VZ there will be REAL competition. Either it’ll stay the same or get better. It wont go back to pre-2008 rates until VZ and the cartels become the Big4. With VZ, Canadians would be saving money for at least a few years. The reaming would at least ease for a few years.
      Should millions of Canadians pay more for the thousands of workers employed by the cartels? Would the cartel’s CEO/upper management/shareholders take a paycut to reduce job loss from thousands to hundreds?
      It’s quite infuriating for the cartels to play the sympathy card when they had decades to present themselves better.

      1. Good point. Rogers, Bell, etc have themselves been cutting jobs, rather than profits.

  19. Lorex · ·

    I’m actually in favour of the removal of foreign ownership restrictions on ALL telecom companies in Canada, REGARDLESS of market share. Telus has asked for that and it would seem from your 2012 post you would agree with that. Only then would we have an OPEN MARKET.

    This is hypothetical, but if we did have an open market, perhaps Telus would merge with Bell and Shaw would merge with Rogers, and then Vodafone and O2 would open for business in Canada. BUT, however, the same people who advocate for “competition” now, would then oppose these mergers, contradicting themselves. Aren’t mergers and acquisitions a normal part of open market life, though?

    A lot of what Peter Nowak, Michael Geist advocate is very contradictory. For example, when Bell wanted to merge with Telus in 2007, Geist said “NO!”. And now he advocates for free markets and letting Verizon come.

    Can you see the hypocrisy for your contemporaries?

    1. I don’t see the hypocrisy in what someone like Geist advocates.

      Bell would have bought Telus to consolidate control. It was one step closer to a monopoly (or at least a US-style duopoly, where only two carriers really matter). It would have only hurt market choices.

      Verizon helping Wind would improve competition by turning a struggling carrier into a viable fourth option. It wouldn’t be a white knight, but it’s a lot better than watching the Canadian incumbents swoop in on smaller carriers the very second that spectrum transfer limits expire (and it’s likely that they will). Heck, Telus tried that with Mobilicity this year, while it was still against the rules.

  20. Nancy · ·

    You lost me at “Amongst.”

  21. Lorax · ·

    It`s funny Ben, you have nostalgia for when MTS was a crown corporation because they had lower rates. And yet now, in the free market, you abandon MTS, a company based in Winnipeg, for Shaw (I read your review on DSLreports) to feed the Shaw family clan. One would think you would support a company that has a history of being a crown corporation and provides the most benefits to Manitoba.

    Why are you so nostalgic for crown corporations like MTS, but when times comes to choose an internet providers, you abandon them and go to Shaw cable. MTS can`t win as a crown corporation OR a private corporation.

    1. My family have been customers of MTS without interruption for 100 years. At times I have subscribed to services from both Shaw and MTS. Time to come out from whatever bridge you’re under, Lorex, Lorax, or Mike, whatever I should call you.

  22. Time to start a PROTEST petition. Many Canadian sites offer this service. I for one, would sign your petition of protest.

  23. Bell is not far from being an organized crime syndicate. Most educated consumers intuitively (or through hard experience) understand this. History proves that any initiative of Mr. Cope’s is entirely self-motivated and may in cold hard fact be in the best interests of his corporation but not in the best interests of the Canadian consumer or the average Canadian on any level. Not saying that foreign companies would or could do any better but they couldn’t do any worse than what Bell has been getting away with unchecked for years. Sounds like they are running scared with much reason to do so.

  24. I have been watching the media coverage around this and shaking my head. Any time that Rogers, BCE, and Telus agree on something, we should all be scared.

    I think it’s worth pointing out that even with Verizon joining the mix, they would still be capped at 10% of the market. We’re not talking about a massive takeover here – are we really to believe that these three corporations would not survive the scenario of losing an average of 3.3% of their customer case?

    As a side note, I find the “Big Bad American Company” innuendo to be insulting. Sadly, most Canadians don’t fully appreciate how “UnCanadian” our new wireless providers really are. If people only knew Wind’s Egyptian roots.

    I’m tired of hearing about incumbents having insufficient spectrum. If this were really the case, why are several still sitting on huge blocks that they purchased just to keep competition out. This is certainly the case in Manitoba where Telus has been hoarding spectrum for over 10 years without a provincial rollout.

    I understand that the 700mhz spectrum is very attractive. So let’s call it what it is guys. Yes, it’s unfortunate that the big three have invested heavily in other bands and now wants access to the holy grail of radio waves. Why don’t I offer up a solution. Bell, Rogers, Telus, you guys can have the 700mhz blocks, but you have to give up parts of your 800 and 1900 blocks to new entrants. [Insert gasp here]. We cannot talk about new entrants being on a level playing field until they have access to prime spectrum like other established providers.

    Incumbents need to be careful when they say “we welcome competition”. They’re forgetting the other part of that sentence, “as long as they’re owned by us”. We’ve seen enough Solo’s, Microcells, Fidos, Koodos, Virgins. And we’ve certainly seen enough the reactionary likes of Chatr. Competition only really comes when there’s a threat.

    For the first time in the history of Canadian wireless communications, there’s finally a threat. Canadians should be standing up and cheering that the incumbents are scared.

  25. I’m sorry for hijacking your Wireless discussion, but I think it is important to raise awareness to this important issue as well. If not, I’m sure you have the power to delete it…

    The double standard is that that as much as Bell doesn’t want to share it’s wireless customers with the US, it’s more than happy to send an enormous portion of it’s customer’s Internet traffic to the US, even if that traffic destined for your next door neighbor’s house.

    Millions of Canadian home and business Internet users and content providers are left out to dry due to Bell’s Internet traffic distribution practices. There is a method of Internet traffic distribution called “Peering”. See http://www.youtube.com/watch?v=a5837LcDHfE

    As you can glean from the short video above, to Canadians, the benefits of peering are vast, not the least of which being that Canadian Internet traffic stays in Canada. With all the PRiSM stuff surfacing of late, it’s probably important for Canadian consumers, businesses and regulators alike to be aware of Bell’s peering practices (Telus is just as guilty, but that’s another story) –

    Currently, Bell uses a method of peering called “Private Peering” to exchange traffic with other large networks of residential, business or mobile Internet subscribers (aka. eyeballs) and content providers. There are currently thousands of companies providing Internet services to Canadian eyeballs all across the country. Unless these many thousands of Internet access alternatives purchase their upstream Internet access from a company that Bell has a private peering agreement with, traffic between these companies and Bell travels all the way to the US before it returns to Canada. What this means is that a) Your data is subject to US “Lawful Intercept” legislation once it is exchanged with the American middleman before it is returned to Canada b) Your data has to travel hundred, if not thousands of kilometres, round-trip, even if it’s destination is to your neighbor next door, just because you, or they, aren’t a customer of Bell.

    For example, a quick check shows that some traffic from Bell destined for the CBC as well as the Government Canada website is sent to Chicago before it makes it’s way back to Canada.

    Canada has a rich Peering infrastructure. One of the largest Internet Exchange points in North America and among the top 25 largest in the world (and the largest in Canada) sits in our own back yard in downtown Toronto; TorIX. Internet Exchange points are located in every major metropolitan centre across the country, yet Bell is not connected to any of them, nor is Telus. Rogers and Shaw can be found at TorIX, so at least they are playing nice.

    This has been a challenge for over 15 years. Bell’s position is why would they give their traffic away for free by peering when there is potential for a Canadian company to pay for it. Because they can’t do business in the US, they will happily send it there and exchange it for free. While I agree that Bell should make money, there should be a middle ground that regulators should enforce where Canadian traffic is kept in Canada and the destination for this traffic is kept as close to the source as possible.

    Sources:
    http://en.wikipedia.org/wiki/Internet_exchange_point

    http://www.peeringdb.com/view.php?asn=577
    http://en.wikipedia.org/wiki/Internet_exchange_point
    http://en.wikipedia.org/wiki/List_of_Internet_exchange_points#North_America
    http://en.wikipedia.org/wiki/List_of_Internet_exchange_points_by_size
    http://www.torix.ca/peers.php

  26. Bell & Rogers complaining about monopolies when they literally own the majority of media outlets in this country. Someone please tell me where the logic is in that…

  27. […] you read Bell’s open letter to Canada regarding Verizon coming into Canada? You might like to read this response to Bell. As a former Bell customer who exited my contract this year with the glee of a bird released from […]

  28. […] Ben Klass, a graduate student from the University of Manitoba, has taken the time to formulate a reply to Mr. Cope and has done so with a bit more clarification on the history involved, responding to the letter […]

  29. I was in Souris, Manitoba a few weeks ago. Not a single bar there. Barely got one in Brandon. Also just paid over $500 to buy out my plan, even though my phone was broken and was moving overseas. Nice to hear an educated and researched reply to this. Thanks for sharing.

    1. Thanks for the comment. I agree, I once had to buy out a Telus feature phone cause the service was so bad where I live. They charged me $480 to buy out my contract even though my phone was only worth $139. It’s a rip off.

  30. Not sure how it’s possible that ClearNET, a company I last used in 2000, famous for its ads featuring high-resolution video photography of flowers and nature, and the slogan “the future is friendly” e.g. http://files.coloribus.com/files/adsarchive/part_102/1027705/file/clearnet-pcs-phone-network-fish-small-99867.jpg was repurposed as Koodo, an entirely separate brand launched 8 years later to compete with Bell’s Solo and Rogers’ repositioning of Fido/Microcell.

    Perhaps Telus’ branding of nature on white and “the future is friendly” is what you meant by their purchase of ClearNET, and not Koodo? As an FYI, if I recall correctly, Telus missed out on the nation-wide mobility craze that Bell and Rogers lept on and so had to buy-in later, in 2000. This moved them from a regional Western Canada telecom into a national competitor to Bell, as Rogers and Bell did from Eastern Canada.

    That all said, very glad to see this write up, especially the history lesson. I hope this letter, corrected, gets printed as an editorial in national papers! 🙂

    1. Thanks for your comments, Louis. I think you are mainly responding to something I said in the comments section, but I have reworded the part in my main piece about TELUS competing with Koodo to reflect your concern.

      I think your point highlights the tactics of obfuscation employed by Canadian carriers, such as the use of “flanker brands” to apply a patina of competitiveness to a market that is in fact highly concentrated.

      While the evolutionary line from Clearnet to Koodo may not, as you suggest, be completely direct, Koodo is now operated on frequencies previously held by Clearnet, and I stand by my original point that TELUS et al have gobbled up their previous competitors in an attempt to maintain their dominance of the market – a practice, I might add, that would be ongoing (TELUS-Mobilicity) were it not for regulatory intervention in the interest of promoting competition (and, of course, of attracting votes).

  31. thedudesnotin · ·

    I am not an economist by any stretch of the imagination, so admittedly this may sound like I am talking out of my rectum, but, why do we as customer continue to use these companies for cell phone and internet usage? I have heard it is because we do not have any other choice. Okay hence the letter here towards Bell and George Cope.

    But if we went further into the debate, I would ask anybody who has responded here, and even to the Original Author of the letter, how many dollars have you invested in Mutual Fund or stocks or whatever that may go directly to the same companies that we now and have been trying to fight for so long?

    I don’t expect an answer, I just wanted to point out, even though yes this is a country wide issue, there are many people who also sink their dollars and cents into these corporations sports teams like the Blue Jays, Canadiens (minority share) and MLSE (fully owned) and then wonder why they charge such exhorbitant fees..How do you tell a room full of shareholders we lost money because we wanted to make ordinary Canadians happy? I am guessing you wouldn’t be the CEO much longer after that.

    Just my nickels worth….pennies do not exist any longer…

    P.S. I do not work for any Telecom companies, I just wanted people to take a breath and remember all the variables at play.

    1. The short answer: because these carriers have the spectrum, phone deals and cash to offer good service. Wind, Mobilicity and their kind can’t use most of the airwaves the bigger carriers have, and they certainly don’t have the cash to build out their coverage and handset deals the way Bell, Rogers or Telus can.

      That’s part of why I see a possible Verizon intervention, and the current spectrum auction rules, as necessary. Shopping for cell service isn’t like choosing restaurants, where you can almost always go to a similar restaurant with better food. If you don’t like any of the big three Canadian carriers, you’re either relegated to sub-par service (with little chance that it will get better) or no service at all.

    2. A good mutual fund advisor would’ve already advised you to consider selling shares of the cartels. A good investor would’ve already been informed of the on-goings of their shares without being told by their advisor.
      Or just sold them and bought VZ’s shares.

      Yes, the CEO is merely doing their job of twisting words and doing a fancy PR stunt. We get that. What we dont get is that they have the audacity to claim that the cartels are getting bullied when they’ve been bullying other startups. Their incessant whining on the radio and newspaper ads are annoying at best. Why are they complaining about a level playing field when they were more or less given everything they have? And that’s in addition to being protected from foreign companies.

  32. Some great historical arguments – thanks for making them!

  33. As a fellow Canadian currently supporting those small guys(with mobilicity) from collapsing. I appreciate your piece. My friend usually come and ask why I would stick with those guys when big 3 have pretty competitive plan but way better coverage, I answered, if not those these guys getting some market share, you won’t have those good plans, thanks to people like me you have a monthly bill that starting from 2 digits instead of 3.

    Cheers~

  34. I don’t keep up on all the “politics” of big business BUT I was under the impression that Telus is owned by Rogers?AND as for the out-sourcing of Canadian jobs….I recently moved and on March 12,… I arranged for a disconnect on May 31 and requested a re-connect asap. They said June 2. I said okay. On June 10 I was still waiting for the re-connect and on a call I made to see when I might get Bell service again, I was told that “You may not be aware that the Winters get very cold in Canada and the ground freezes very hard>(Hello! I have been breathing this Canadian air for 68 years now!) Well we have to wait for the frost to leave the ground before we can lay you a new cable”! I told the person on the other end of the phone that the temp that day had been in the high 80’sF. That person was in El Salvador! PLEASE Mr. Suit at Bell…..IF you must out-source Canadian jobs……..inform the people slaughtering the English language we are forced to attempt communications with……about the way things are…..at least hook them up to the local weather network!

  35. I used to be with Rogers then I moved to Bell… they are both same shit! they are just screwing us up and just after our money with high cost on Home phone/Internet/mobile. Early this year I have disconnected all my service with Bell and moved to a smaller company Tecksavvy and I have been very happy with the service. If a small company can offer same services with the same quality how come big companies such as Bell and Rogers can’t? I hope Verizon makes it to Canada so we get a really good competition that will bring the prices down.. I hope.

  36. […] I Am Canadian, A Reply to Bell’s Open Letter. […]

  37. No sympathy for Bell’s ‘plight’ over ‘unfair competition’, I reckon with Verizon moving in perhaps finally CANADIANS will be provided with REAL competitive pricing, plans and service! As far as Bell ‘running the flag up the pole’ bit, makes me laugh they use this when it’s convenient to remind us all how CANADIAN they are….you know, the same ‘CANADIAN’ company that outsources what should be CANADIAN jobs to foreign countries for their own convenience while only adding to the public’s frustration when dealing with very ‘NON-CANADIAN’ support!! TEKSAVVY for great quality and 24/7 support where you actually get to talk with a CANADIAN!! I say welcome Verizon!

  38. Excellent letter. Well done. Talking of irony…..

    It’s curious to see Canadian companies objecting to foreign ownership of companies in Canada. I don’t hear the same voice objective to Canadian corporations owning all those mines throughout the world. I’ll speculate that Canada owns far money companies outside Canada than there are foreign-owned companies here.

  39. Great letter thank you for sharing.

  40. When I heard the commercial with a Bell “employee” talking about Canadian jobs, I couldn’t help but wonder if it would have the same effect if they’d used one of their outsourced employees to do that commercial. Bell is one of the largest outsourcing companies – just try calling tech support. So, Canadian jobs are not the issue here.

    This was a fantastic blog, well researched and written. Thanks!

  41. The saddest point being missed in all this jockeying among the Goliaths of the industry is how all of these companies are outsourcing their customer service, costing thousands of Canadian jobs. Bell closed most of its domestic call centre operations, contracting with despicable third-party companies who barely pay above minimum wage and have huge turnover of employees. More and more Bell is using off-shore companies where agents can barely speak English.

    I had the great misfortune to work for one of these horrible companies and their only goal was to spend as little time “helping” customers as possible. Mr. Cope, in particular, states he wanted to create an “exceptional customer service experience”. Mr. Cope, how is this possible when you layoff all your knowledgeable people and contract with these incompetent call centres?

    Why the toothless CRTC just keeps rubber stamping Bell’s attempts to take over the entire industry, when thousands of customers have clearly told them how horrific it is to deal with their customer service, is beyond me. The CRTC should be refusing to pay any attention to all the whining from these companies until they all clean up their acts. Insist they have domestic customer service agents who are well-trained, well paid and genuinely empowered to actually help customers. After I left the call centre I submitted a nineteen page report directly to Mr. Cope, detailing just some of the horror stories I experienced. He paid no attention and did nothing.

    If another company can enter the market and do a better job then I’m all for it. The existing “big boys” all show an utter contempt for customers and it would be nice to see someone strike fear in their hearts and bring them to their knees. They might just wake up and need to actually compete. What a refreshing change that would be. Remember that famous line, “we’re mad as hell and we aren’t going to take it anymore!” That pretty well sums it up.

  42. The matter of the fact is, The big 3 in Canada will still be “the big 3”. I have family that runs the towers and knows the ins and outs (not specifically with any of the big 3 either). The ONLY areas of coverage Verizon would have is Toronto and Ottawa. They can’t build their own towers due to laws and they can only rent out servers from Bell in the area’s and bell will make sure they see there profits back on the rental fee’s if proven to much a loss in those couple areas. Despite this, what happens when customers go onto Verizon and they wonder out of the Toronto or Ottawa coverage zones? Nothing, you will be no service and won’t even be able to roam because the other phone companies run off different servers and radio waves.

  43. Reblogged this on The Hitch Hiker's Guide to Learning and commented:
    While not specific to learning, the stance of Rogers and Bell has an impact on the ability of Canadians to harness high-speed wireless networks for anywhere-anytime learning. We already pay exorbitant rates. Lets get some competition in here.

  44. Rogers is posting almost 17 percent profit after tax from revenue, and I dont know about the other 2 but I am sure it is similar. That doesn’t seem like it’s super competitive if you ask me. That profit should be cut in half and then I might consider the market to be competitive. Rogers is extremely dishonest, regularly screwing me with legal loopholes. Like using more data than what my plan allows and they charge me 62$/GB. When I change my plan it went up 10 dollars and I received an additional GBs of data and a better plan. In a competitive market a company would never be able to try and screw you like this. They also lock you into these contracts and as soon as you are locked in they begin screwing you in every possible way they can imagine and they hide behind these one-sided contracts.

    My coverage is also spotty (the LTE network is nothing like they portray in their commercials) and connectivity is nonexistent once out of city limits. In fact, my connection hardly even works in half my house but they charge me a ridiculous amount for my phone plan.

    I will be the first to give Verizon a call and see if they can end my nightmare. I dont have my hopes up but when these companies cry foul and air these ridiculous ads I get upset b/c its such a load of malarkey. When they start treating customers properly I may be able to support them, but until then I hope you go out of business b/c your businesses gauge us with no sympathy.

  45. I have been in competition against a BIG 3 since 1980 when I entered the two way radio industry. Back then it was AGT, General Electric and Motorola. AGT even stated that “there is no room in Alberta for private radio companies” and succeeded for many years in preventing us from doing so.

    All 3 had a system of radio shops throughout the province and the little providers had to compete against that while having access to very few radio manufacturers. The ONLY way the smaller two way shops succeeded was to provide superior local service. The equipment they could purchase were not as well advertised as GE or Motorola. Nor did they have the variety of ancillary equipment to go with them. And when we did go up against one of the 3, they just cut their prices.

    Eventually, AGT sold to Telus and and General Electric and Motorola had to downsize and some of the independents became dealers of GE and Motorola equipment. But this would not have happened with out a GAME CHANGER. That person who facilitated that is a fellow by the name of John Simmonds who brought in, by the container load, Midland radios from Japan that sold for under $500.00. Up until then, the average radio was selling for well over $1,500.00 putting it out of reach for smaller companies. This is 1980 dollars!!

    In the end, the smaller shops took over the sale of equipment and the interface with the end user. Motorola and GE then were able to focus on building equipment. More companies got into making two way radio hardware and we now have a thriving world wide industry that was previously held by very few companies. Motorola, GE, Marconi being the worlds top three. Telus got out of the two way radio business entirely to focus on wireless phones.

    I have faith that eventually, the Canadian big 3 will be giving up their control of the billing system to move on towards more a carrier based venture. No longer will they be doing the sale of equipment to the consumer or the billing. New enterprises purchasing wholesale blocks of local, regional and national airtime from the carriers and then making their own deals with the end user and equipment manufacturers will appear on the scene. This will allow the big three to get out of the call center business and having to deal with the end user. The carriers will in effect become “carriers” and they will build and maintain the networks and other companies will deal with the end user. Then we can have other CARRIERS come on to the marketplace. After all, its all about profit!! BUT they need to see this and start lobbying the feds to change the rules and this requires another GAME CHANGER.

    20 years ago, I thought maybe satellite would be a GAME CHANGER, but its not. Too costly and QOS sucks. I can see a standardization of networks being a great cost leveler. As long as we have the different systems in play, there will always be additional costs in rolling out the networks as well as new handhelds required. (think VHS vs BETA, Rogers VS Bell)). It will always be next to impossible for a small company to create the next iphone since no sooner does he design one then a new set of standards and protocols are rolled out. So when all cell phones work on the same band utilizing the same protocols, cost will drop. However, technology changes rapidly and its going to be awhile until then and hopefully never!

    The GAME CHANGER I can see in the immediate future is VOIP based hand held phones, which we already have, BUT we need the feds to allow ME or YOU to BILL out to an end user. Think of it, if I can make a deal with lets say Tim Horton’s, to allow my customer to make VOIP based phone calls while in the store and by pass the carrier, then as long as my costs are less expensive than making a cell call, I can sell it. If I can make a deal with countless of internet users to allow me access to some of their bandwidth so that MY customers can make a phone call while near their wireless router, and I can do this for less than the cost of cellular airtime, then I have a business model that works. Once the regulations are in play allowing more private companies to be innovative in their approach to connecting others to the GLOBAL communications system, then we will see more hardware, more players, more access AND LOWER RATES. Of course, I would need a few million dollars to pay for lobbyists to the government to change the rules. POP goes my bubble!! ☺

    This is what will drive the costs down, not by giving us a “BIG 4” but by allowing smaller companies to thrive by changing the rules and regulations. Opening up the FREE marketplace is whats needed.

    Go ahead, bring on Verizon but don’t expect it to be of any help to the end user except for the short term but do expect a serious drop in RRSP values for many Canadians who are about to retire.

    1. Great points, thanks for making them. Very informative. I think it’s easy to forget that there are many different avenues for competition, as you point out, end user equipment is a good example. It’s about lowering barriers to entry. I think Canadians are fed up with Bell et all crying wolf constantly while meanwhile posting huge profits, etc.

  46. Well said Ben,
    Its no different than trying to watch a TV show on an American Tv network (CBS, NBC, ABC). Sure you can get the bits of the show that Bell (CTV) wants to jam in between their commercials. If Canadians wanted to watch the Canadian commercials we would tune to the Canadian feed. Try watching the Super Bowl for the American commercials.
    Not sure what the CRTC is protecting by allowing the Canadian Feed to supercede the American. Obviously Bell.
    Joe

  47. I am especially like when they discuss the jobs portion of their radio rants…with all the profits the Triads make, why do they continue to outsource jobs in favour of more profits? It would be interesting to see how many jobs are outsourced to other countries and or have been contracted out to cheaper service providers that have to go and hire former Triad employees that were let go and get paid less. Bring it Verizon…do it smart and millions of Canadians will thank you

  48. This is one of the best blog posts I’ve read. Ever. Great job.

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