TORONTO — Canada’s telecommunications sector could end up like its beleaguered airline industry if incumbent carriers don’t stop trying to thwart competition, the president of Call-Net Enterprises Inc. warned Wednesday.


a keynote speech delivered at the Toronto Venture Group’s monthly breakfast seminar, Bill Linton said the major trend in the carrier industry over the last year has been failure, although some recent decisions from the Canadian and Radio-television Telecommunications Commission (CRTC) offer signs of hope.

Linton said that while Sprint Canada, which owns a 10 per cent stake in Call-Net, entered the market here 17 years ago, more than 85 per cent of the telecommunications business continues to be occupied by incumbents like Bell Canada and Telus Corp. In the business market, incumbent local exchange carriers (ILECs) control 90 per cent of the market. This, Linton said, is the kind of dominance not even “”everyone’s favourite whipping post,”” Air Canada, had enjoyed.

“”Imagine if WestJet was forced to rent planes from Air Canada at the highest rates possible,”” he said. “”Or if an Air Canada representative could come on any WestJet flight, approach passengers at random with a bouquet and say, ‘Here’s $100. How would you like to fly on our planes?’ I think you know where they’d be.””

Call-Net has been one of the most vocal critics of a CRTC decision last year to review the amount competitive local exchange carriers (CLECs) pay to incumbents for use of their networks. Though the Call-Net received $15 million in relief from the five-year-old price cap, it had asked for $100 million.

Call-Net has since decided to focus on the small-to-medium enterprise customers and multi-national accounts it serves through Sprint Canada and large accounts and cancelled plans to expand its local phone service to Quebec City and Edmonton. In late February, the company reported total revenue in 2002 of $800.7 million, 13.8 per cent lower than the $928.4 million reported a year ago.

Linton said Call-Net has fought to stay alive through restructuring $2 billion of its debt and outsourcing areas like IT and its call centres. Though he said 2003 was a time for stability and not a bold new vision, he continues to field calls from third parties to deploy strategically useful technologies. As a warning to any of the entrepreneurs in the Toronto Venture Group meeting, however, Linton said he isn’t interested in anything that would be considered revolutionary or a “”paradigm shift.””

“”Unless you’ve developed a way to teleport Grandma through a phone, we don’t want to be the first to start with it,”” he said. “”Even then, we wouldn’t want to be the first in case it chops her in two and we have to wait until the vendor works the bugs out.””

Linton said he approved of a recent CRTC decision to send investigators into incumbents to monitor their activities. “”After a decade of disappointment, recent discussions have given us hope,”” he said.

Jon Arnold, a voice-over-IP analyst with the Canadian arm of Frost & Sullivan who attended the event Wednesday, said he didn’t get much out of Linton’s remarks.

“”The Air Canada analogy I thought was good on one level, but at the same time he’s taking it down a very pedestrian path and oversimplifying it,”” he said. “”He’s building his logic to show how extensive the monopoly situation is. That picture doesn’t really need to be painted. It’s a one-sided view.””



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