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- === Article from Canadian Communications Network Letter October
- 1, 1990.
-
- TED ROGERS SAYS UNTIEL WON'T OFFER LD SERVICE WITHOUT 15%
- DISCOUNT DURING START-UP
-
- If the CRTC denies the provision allowing Unitel to offer LD
- voice service at 15% below the telcos during its start-up phase,
- Rogers Communications Inc (RCI) CEO Ted Rogers says he wouldn't
- offer the service -- even if all other aspects of the application
- were accepted as proposed.
-
- "Subscribers won't leave the telephone company without a
- significant incentive," Rogers told delegates to last week's
- Ottawa conference of the Canadian Assocation of Data,
- Professional Services and Software Organizations (CADAPSO). Even
- if the company were able to provide service technically equal to
- the telcos, it wouldn't be equal in terms of marketing. Rogers
- believes Unitel needs maximum flexibility in pricing to overcome
- this disadvantage.
-
- Rogers' speech was a tribute to competition. "History shows that
- monopoly telephone companies always resist the idea of
- competition," he told the conference. But history also shows
- that even monopolies benefit when competition is introduced, he
- said. To make his point, he discussed AT&T, which now holds 70%
- of the LD market in the US. Rogers said the carrier currently
- earns higher reveneues than when it held 100% of the market.
- Closer to home, Rogers said that Bell Canada's revenue increased
- when the CRTC allowed competition in terminal equipment. Despite
- the telcos argument that teh traditional black rental telephones
- contributed to ensuring local rates, Rogers said in the first
- year of competition the telcos local rates didn't have to go up
- because revenues from the telephones increased 30%. Without
- competiton, Rogers said there is no incentive for monoploy
- providers to imporve productivity. There is no need for them to
- introduce new and innovative products and services.
-
- Rogers said Unitel must price its service in a manner that will
- enable it to meet csutomer needs and allow the company to obtain
- and maintain a high level of product anbd service innovation. He
- said in the first 10 years of operation, Unitel will contribute a
- minimum of 2% of its net revenues to research and development.
- Some of the work will be accomplished internally and other
- projects will be contracted out. He said the money will also be
- used to fund telecom research at Canadian universities. When
- questioned about the 2% level, it was pointed out by another
- delegate that Bell's R&D budget is about 2.1% of its net revenues
- and higher figures from the US usually include equipment-oriented
- research.
-
- Rogers appeared cautious when asked if he would consider offering
- international LD competition with Teleglobe Canada should it lose
- its protected monopoly status in 92. Recognizing that he was
- speaking for only a 40% interst in Unitel, he said he doesn't
- forsee such a move before Unitel if fully able to stand on its
- own. "I don't think we should have a wide-open, daredevil
- competition," he said. Rogers added that he believed the time is
- right for LD competition in the Canadian market, but he isn't so
- sure about the international scene. At least it's not on the
- horizon for the next five years.
-
- ===Article from The Financial Post January 31, 1991
-
- LOSS WON'T DETER UNITEL FROM LONG-DISTANCE PLAN
-
- Money-losing Untel Telecommunications Inc. will rack up its
- fourth consecutive annual loss next week, but president George
- Harvey says that won't interfere with plans to enter the
- long-distance telephone market.
-
- Ongoing staff reductions and the popularity of Unitel's private
- corporate communications networks should allow the company to
- break even on revenue of $420 million in 1991, Harvey said
- yesterday.
-
- "We have a base business plan, which by the time we enter the
- long-distance business, will be quite profitable," Harvey said.
-
- Unitel, formerly CNCP Telecommunications, has been losing money
- since 1987, mainly because of a rapid decline in its telex and
- telegraph business.
-
- The company has applied to the Canadian Radio-television and
- Telecommuncations Commission to compete in the $7-billlion public
- long-distance market, now a monopoly shared by nine regional
- telephone companies. CNCP's last bid to compete was turned down
- by the CRTC in 1985.
-
- But some industry observers are beginning to doubt whether
- Unitel's case before the CRTC will be successful because of
- repeated cuts in long-distance phone rates.
-
- "I don't think they've got a better than 50-50 chance, whereas I
- was much more hopeful a year ago," said Frank Koelsch, a director
- at technology consutlants Transition Group Inc. in Toronto.
-
- "The hard question for Unitel is, if they're losing money this
- year, how does Harvey expect to get into the long-distance
- business?"
-
- Harvey says the price war won't hurt Unitel's case because its
- biggest expense, if it is allowed to compete, will consist of
- transfer payments to the phone companies. As prices fall, so
- will the payments.
-
- Unlike the monopoly phone companies, privately held Unitel can
- afford to rack up losses, he said.
-
-