Source : Globe & Mail

Allowed to deliver TV over phone lines

BCE Inc.'s Bell Canada, the nation's largest telephone company, has won regulatory approval to deliver television over phone lines, opening the field for a full-scale battle with cable operators for control of the converged communication line into Ontario and Quebec homes.

The Canadian Radio-television and Telecommunications Commission yesterday approved both of Bell's applications for broadcast licences to serve 11 urban centres in Ontario and Quebec, including Toronto, Ottawa, Montreal and Quebec City.

The carrier said it plans to send television programming down the same fibre and copper lines it uses to offer Internet service to residences, known as a Very High Speed Digital Subscriber Line.

In making its decision, the CRTC dismissed concerns of the cable industry that Bell would be able to use its dominance in the local telephony market to gain unfair advantage in the broadcast distribution market. The CRTC has estimated that Bell controls 95 per cent of the local residential and business phone market in 2002.

Bell Canada is not only the nation's largest incumbent phone company. It also operates Sympatico, the biggest Internet service provider. In addition, Telesat Canada, an affiliate of Bell's, is the country's only satellite carrier.

"The commission is not persuaded by the arguments of intervenors that the approval of Bell's applications would have anti-competitive effects in either the local telephony or the broadcasting distribution market," the CRTC said.

"Should the applicant behave in an anti-competitive fashion, the commission is satisfied that it has adequate tools to address that behaviour."

The CRTC ruled that satellite television services, including Bell's ExpressVu Inc., do not provide a sufficient competitive alternative to cable company offerings and it concluded that granting Bell the licences will actually improve competition.

Bell said the ruling upheld an important argument it has been making for years. "The fact that an entity is dominant in one market doesn't mean it can extend that dominance to another market," said Mirko Bibic, Bell's chief of regulatory affairs.

Both the phone carriers and the cable operators are racing to bring new technology to market that will let each compete in the other's backyard.

All the major cable companies have outlined plans to begin offering phone service over high-speed Internet connections by next year, while the telecom players are fine-tuning ways to deliver video service over their phone lines.

Manitoba Telecom Services Inc. is already selling TV service to 25,000 customers in Winnipeg and Saskatchewan Telecommunications has also signed up several thousand TV subscribers.

Last year, the CRTC licensed Vancouver-based Telus to sell TV service in 16 Western Canadian cities, including Victoria, Edmonton and Calgary. Meanwhile, Eastlink, the Halifax-based cable company, has begun selling phone service.

Each industry is hoping to lock up customers by offering them bundled services at a discount that include phone, TV, Internet and even wireless in one package.

Bell has been looking at several options for bringing video to homes, including laying fibre-optic cable in new home developments and some multiple-unit dwellings, as well as using a new technology for compressing a television signal and sending it down a regular copper phone line.

When Bell applied for the licences, it said its costs for launching the service would amount to $676-million, and that the service would be competitive with cable at about $23 a month. Bell would not say yesterday whether those projections had changed.

During the CRTC's review process, both the cable industry and the Canadian Association of Broadcasters expressed concern that Bell lacked the technical ability to distribute high-definition television, but Bell has assured the CRTC that it will deliver digital services.

The ultimate method of distribution Bell will use remains unclear, as does the time frame for launching its broadcast service.

The company will only say that when it begins selling TV subscriptions the service will be reliable and meet customer expectations.

Under the terms of the CRTC decision, Bell has two years to launch its service before it has to apply for an extension. Mr. Bibic said the company will launch within that period. "We face several more steps from a technical and marketing point of view before we're ready to launch," he said.

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