Bell: Regulatory changes don’t always mean price drop

Bell Canada wants the CRTC to stop regulating its high-speed digital services for business customers in certain Ontario and Quebec cities and open the market to competition, but analysts aren’t sure Canada’s media watchdog is likely to heed the telco’s


“”I think (the CRTC) is worried about Bell in total,”” explained Elroy Jopling, principal analyst with Gartner Group Canada in Toronto. “”If you look at it from a total macro point of view, you’re always going to shackle Bell because of that.””

Bell filed an application yesterday with the CRTC urging it to stop regulating prices, terms and conditions associated with the company’s high-speed, fibre-based digital services in cities like Montreal, Ottawa and Toronto. It expects summer to be the earliest it will receive an answer.

If the application is approved, it means Bell Canada will have more flexibility and there’ll be less price transparency in the market, which customers usually prefer, said Lawson Hunter, executive vice-president of Montreal-based BCE Inc.

“”I’m not saying that it necessarily means prices are going to decline because it would depend,”” said Hunter. “”We think prices have already fallen quite significantly, which is basically part of our evidence that this is a competitive market.””

As Canada’s incumbent telephone carrier, Bell Canada said it must wait for regulatory approval of price changes, submit bids on the public record and provide one-size-fits-all solutions —— burdens competitors like Telus, Allstream, Groupe Vidéotron and municipal electrical utilities like Toronto Hydro aren’t subject to.

Agreeing to Bell’s application to remove regulations is a move Jopling believes the CRTC should make because it’s always looking for competition in the telecommunications marketplace, which is “”good for everybody, most specifically the end users.””

The CRTC will listen to comments from stakeholders over the next month and make its decision based on two main criteria, said spokesperson Philippe Tousignant of Gatineau, Que. It must decide there’s enough competition in the particular telco service area to protect users in aspects like pricing and preferences and the competitive market will be sustained in the long run, he said.

Even if the CRTC ignores Bell’s complaint that it has “”less ability to respond to what some of their end users might be telling them,”” business customers of the Montreal company’s digital services won’t necessarily jump ship, said analyst Mark Quigley of the Ottawa-based Yankee Group in Canada.

“”Price isn’t the sole determining factor for these types of services. Typically if you look at a customer for this stuff, you’re looking at the high end of the marketplace. Quality of service, service-level agreements, network breadth —— those kinds of things exist as well and do help determine which way a contract is going to go.””

In the past, BCE has argued the CRTC’s practice of keeping low residential prices for voice communications also has an impact on competition because new entrants see few opportunities and high risks, a theory supported by a report by the C.D. Howe Institute released earlier this month. While Gartner’s Jopling understands the CRTC’s rationale, he said the commission will eventually be forced to change plans as more competitors like cable companies enter the market.

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