Bell Canada urges Ottawa to close loopholes that favour big US wireless carriers

Bell Canada urges Ottawa to close loopholes that favour big US wireless carriers


-- Bell is ready to compete with any wireless carrier on a level
playing field
-- But 3 loopholes in federal regulations give special benefits
designed for wireless startups to major US wireless players
like Verizon
-- Advantages include special access to Canadian infrastructure
and our national airwaves
-- All Canadians will be paying to help a giant American carrier -
4x bigger than Canada's wireless sector combined - get benefits
denied to Canadian companies
-- Ottawa gets nothing in return - Canadian companies can't get
the same subsidized access in the US or any other country


MONTREAL, July 25, 2013 /CNW Telbec/ - Bell Canada today called on the
federal government to immediately close loopholes in its wireless
policy framework that favour major US wireless carriers at the expense
of Canadians and our country's world-class wireless industry and
network infrastructure.



"Federal wireless policies intended to help small startup competitors
unintentionally give the same advantages to major US wireless companies
that want to enter Canada - advantages paid for by Canadians and denied
to the country's major wireless carriers. With the potential impact on
the country's airwaves and infrastructure, it's an unprecedented
situation that affects all Canadians," said George Cope, President and
CEO of Bell Canada and BCE.



"Bell is ready to compete with any wireless company. Our national team
takes pride in delivering world-leading networks, the best mobile
devices and competitive pricing to customers in cities, small towns and
rural locations throughout Canada. We can succeed against US giants in
a fair marketplace, because we'll invest more in Canada. But our
federal government is unintentionally underwriting the success of US
companies in Canada. We ask that Ottawa allow Canadian wireless
companies a fair chance to compete by closing these loopholes."


3 loopholes in the rules

US giant Verizon Communications has already indicated it is poised to
exploit the federal regulations originally designed to assist
competitive startups. These 3 loopholes in the rules would allow
Verizon to:



1. Buy twice as much new wireless spectrum in the upcoming auction of
Canada's 700 MHz airwaves as Canadian carriers at a lower overall
price.
Canada is getting ready to auction 700 MHz spectrum - the best
airwaves for carrying your future mobile calls and data. Able to
operate equally well in both rural and urban areas, 700 MHz is the
most technologically advanced spectrum ever auctioned by the
Canadian government. There are 4 prime blocks of this spectrum
available. Canadian carriers like Bell can only buy 1 each - but
big US carriers like Verizon can actually buy 2. The way the
auction is structured, American companies would pay less and get
more spectrum, reducing the government's auction revenues at the
expense of Canadians. As well, one of Canada's own major wireless
carriers could be shut out of the auction for our country's
airwaves entirely.

2. Get a free ride on the world-leading networks funded and built by
Canadians.
Government rules give a company like Verizon the option to offer
wireless service simply by riding on the networks of Canadian
carriers, world-class wireless infrastructure funded by Canadian
investors and built by Canadian workers over the last 30 years.
Verizon would not need to build its own network throughout Canada,
invest in rural communities or support job growth as Canadian
companies do. Verizon can easily afford to build its own networks
and should do so if it wants access to Canada's airwaves.

3. Acquire smaller Canadian wireless companies at fire-sale prices.
If wireless start-ups are financially distressed and looking for
buyers, government rules prohibit them from being sold to Canadian
carriers large enough to buy them like Bell, Rogers or TELUS. That
depresses the value of the startups - and lets a US company like
Verizon acquire them at cut-rate prices and gain all their assets,
including their existing wireless spectrum already subsidized by
Canadians.


Verizon Wireless is part of the $120-billion Verizon Communications
conglomerate - in comparison, Bell Canada, the country's largest
communications company, has annual revenue of approximately $18
billion. Verizon is not a company that needs special advantages or
subsidies to compete.



Even Verizon doesn't agree with these kinds of handouts - at least in
its home country of the United States. Last March, Verizon told the US
Federal Communications Commission "there is no basis for the Commission
to give certain large companies a regulatory hand-out so they can
acquire spectrum... at a substantial discount over the price that would
otherwise be received."



In May, Verizon also said "The industry should be concerned about kind
of picking winners and losers in something like that [US spectrum
auction]. We have been very vocal in a responsible way with everyone in
Washington about the importance of a level playing field."


No reciprocity: Canadians denied similar access in the US

It's important to note that Canadian carriers are not being given any
kind of similar special access to the US wireless market - which means
Ottawa would be giving US companies these advantages and getting
nothing for Canada in return.



"With the loopholes in the rules, Canadian companies cannot even try to
acquire startup wireless companies at any price, but American companies
can. And they can bid for more of our country's airwaves and at a lower
price. Favouring US companies over Canadians threatens our national
communications industry and its place in Canada's future growth,
productivity and prosperity," said Mirko Bibic, Bell's Chief Legal and
Regulatory Officer. "These special rules were intended to help new
competitive start-ups. We ask how the federal government could now hand
over Canadian spectrum, infrastructure and capital to US corporations -
especially when Canadians do not have similar rights south of the
border."


Impact on Canadians

Industry experts predict that US operators like Verizon would use the
lower capital and operational costs enabled by the loopholes to target
Canada's largest and most profitable urban markets. Not only would they
be free to ignore small town, rural and remote Canada, the network
access loophole discourages them from investing in infrastructure by
guaranteeing them the right to use the networks of Canadian companies.



Analysts further predict that Canadian carriers would be required to
concentrate their own efforts in the very largest cities, while cutting
costs and investment in order to compete. Canadian telecom industry
employment would be adversely affected, and entire regions of the
country would be left out of new waves of wireless innovation and
access to the digital economy.



Canada's wireless industry is now one of the most vibrant in the world.
Our world-leading networks serve 99% of the population, thanks to
annual investments of almost $3 billion by the Canadian carriers
(Canadian companies invest more per capita in telecommunications than
any other country in the G8). Pricing is competitive with developed
countries, and according to an independent report prepared for the
CRTC, up to 40% lower than in the much larger US market. Smartphone
penetration is also higher in Canada than the US.


A fair and straightforward solution

To ensure all Canadians can continue to benefit from a world-class
wireless industry, Bell is urging the government to support a fair and
open marketplace by closing the loopholes:



-- If Ottawa is allowing US carriers access to Canadian airwaves,
promote head-to-head competition by permitting any carrier to
bid on two blocks of prime spectrum in the upcoming 700 MHz
auction - not just US carriers.

-- Require US carriers that enter Canada to build out to the
entire country, as Canadian companies have done, rather than
allowing them to simply enjoy access to the world-leading
networks built by Canadians.

-- Allow major Canadian carriers the opportunity to bid against
the big US companies to acquire wireless start-ups seeking
buyers, with full review by the Competition Bureau.




To learn more about this situation, please visit Bell.ca/PlayFair.



About Bell

Headquartered in Montréal since its founding in 1880, BCE (TSX, NYSE:
BCE) is Canada's largest communications company, providing leading
wireless, TV, Internet, home phone, and business communications
services from Bell Canada and Bell Aliant. Bell Media is Canada's
premier multimedia company with leading assets in television, radio and
digital media. For more information, please visit Bell.ca.



The Bell Let's Talk mental health initiative is a national charitable
program that promotes Canadian mental health across Canada with the
Bell Let's Talk Day anti-stigma campaign and significant funding for
community care, research and workplace best practices. To learn more,
please visit Bell.ca/LetsTalk.


SOURCE Bell Canada

Bell Canada

CONTACT: Media inquiries:
Jean Charles Robillard
Bell Communications
(514) 870-4739
jean_charles.robillard@bell.caInvestor inquiries:
Thane Fotopoulos
BCE Investor Relations
(514) 870-4619
thane.fotopoulos@bell.ca


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