TUCoPS :: Cyber Law :: filing.txt

BC Tel files evidence opposing entry of Unitel and BCRL into long distance market

The following was received from BCTel Feb. 20 1991. It's original
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-JC- Feb 20 1991

DATE:       NOVEMBER 30, 1990
            4322661 (OFFICE)  7370044 (HOME)  2909724 (PAGER)

B.C. Tel today filed evidence with the Canadian Radio-television
and Telecommunications Commission opposing bids by Unitel
Communications and B.C. Rail/Lightel (BCRL) to enter the long
distance market.

"B.C. Tel is in favour of competition where it makes sense.
However, we do not believe applications by either Unitel or BCRL
are in the best interests of the Canadian public,"  B.C. Tel
president and CEO Brian Canfield told reporters at a Vancouver
news conference this morning.

"Canada already has one of the best telephone systems in the
world.  Entry by either applicant would jeopardize this without
providing the advantages generally associated with
competition,"said Canfield.

Canada ranks second only to Sweden for the highest levels of
universal service in the world.  Canadians also enjoy overall
telephone prices that are among the world's lowest.

In the past four years, productivity increases have allowed
B.C.Tel to reduce long distance rates by an average of 37 percent.
Over the next decade providing the existing system remains
unchanged. Canfield said the company would implement the following
additional reductions:

        35 percent off calls to provinces east of Alberta
        20 percent off calls to Alberta
        35 percent off calls to the U.S.

B.C. Tel also plans to introduce further discounts of up to 50
percent for high volume long distance calling.  "All of these
reductions would be accomplished the need for local rate increases
which accompanied long distance competition in the U.S.," said


With modest increases in local rates, the company would be able to
slash the price of long distance service even further over the
same period.  If local rates were increased at the rate of
inflation for one year, and at half the rate of inflation for the
next seven years, Canfield said B.C. Tel could instead implement
the following reductions:

        47 percent off calls to provinces east of Alberta
        33 percent off calls to Alberta
        47 percent off calls to the U.S.
        18 percent off overseas calls

B.C. Tel would also introduce further discounts of up to 50
percent for high volume long distance calling.

B.C. Tel's evidence shows the following risks of entry by either

        significantly higher local rates
        higher telecommunication industry costs
        duplication of resources
        increased regulation

Unitel and BCRL have also made a variety of assertions regarding
the benefits that competition would bring.  "Their claims are not
supported by any solid evidence," said Canfield.

Myth #1  Local rates will not increase as a result of competition.

"If competition is introduced, local rates WILL increase.  The
only question is by how much," Canfield told reporters.

Depending on the terms of entry and the number of entrants, local
rates would increase by at least 20 to 44 percent over ten years,
he said.

Canada has adopted a pricing structure which uses revenues from
overpriced long distance service to subsidize under priced basic
local telephone service.  About 60 percent of long distance
revenues are currently used to subsidize basic local service.

But both Unitel and BCRL are proposing to pay significantly less
contribution toward maintaining affordable local rates than
B.C.Tel.  "In effect, the two applicants are asking B.C. Tel's
customers to subsidize their entry into the marketplace," Canfield


Myth #2  Competition will increase productivity.

Studies have shown that Canadian telephone companies have
productivity growth rates that are significantly greater than
those of their American counterparts this despite the introduction
of competition in that country more than a decade ago.

Myth #3  Competition will stimulate demand for long distance

If this were true, the U.S. market would have grown more rapidly
than the Canadian market.  This has not been the case.  Analysis
indicates that growth in the demand for long distance services in
the Canadian market has matched that in the U.S.

Myth #4  The U.S. and Britain have benefited from the introduction
        of long distance competition.

Canada has both higher rates of universal service and lower
overall prices than either the U.S. or Britain.  It also has one
of the most technologically advanced systems in the world.
"Canadians have certainly benefited more from their existing
telecommunications system than the British or Americans have
through the introduction of competition," concluded Canfield.
The CRTC will consider applications by Unitel and BCRL in hearings
scheduled to begin April 15, 1991 in Hull, Quebec.

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