Canada Opens Long Distance to Competition : Ruling: Regulators approve applications from two companies. Bell Canada may later face American rivals too.
The government on Friday opened this country’s $6.3-billion long-distance telephone market to competition in a decision that could also open the door to American suppliers.
The Canadian Radio-television and Telecommunications Commission ruled in response to applications from Unitel Communications Inc. of Toronto and BC Rail Telecommunications/Lightel Inc. consortium of Vancouver. The decision to allow competing long-distance services promised to end Bell Canada’s century-old monopoly.
The commission said competition will lead to cheaper long-distance rates for Canadians and spur the competitors to offer new services and products.
Bell Canada Chairman Jean Monty predicted, however, that the change will lead to higher rates for local telephone services--a prediction echoed by one telecommunications regulator who dissented on the ruling Friday.
“The United States is an example of a country where, with long-distance competition, there have been significant increases in local rates,” the commission’s minority observed in an opinion that recalled MCI Communications Corp.’s struggle to compete with American Telephone & Telegraph Co. in the 1970s and early 1980s.
MCI won entry to the market in 1971 and filed an antitrust suit in 1974. That suit led to the spinoff of AT&T;’s local telephone subsidiaries a decade later.
Bell Canada’s Monty told reporters his company pays 17 cents Canadian (about 15 cents U.S.) per minute of long-distance calling to subsidize local service. The new competitors will pay less than half that much, he said.
Unitel President George Harvey said, however, that his company will subsidize local phone service to keep prices from rising. Unitel said in a statement that it will invest more than $2.1 billion and add 4,700 jobs as it moves into Bell Canada’s turf.
Monty also lamented that, under the ruling, foreign telecommunications companies will be allowed to compete in Canada. In the United States, AT&T; said Friday that it hadn’t yet had time to review the decision and assess its impact. MCI had no comment.
William Davidson, a business administration professor at USC, said the Canadian decision may appear to invite more open competition than actually will occur. Davidson, who testified at the hearings, said outside companies may find it difficult to compete with established Canadian long-distance carriers without special considerations, such as lower rates for connecting with local carriers.
He said the special deals granted MCI and Sprint when the U.S. government exposed the AT&T; monopoly to competition probably were not granted by the Canadian government. The upshot, he said, is that outside competition will be stifled.
Unitel Communications is a 60-40 partnership between Canadian Pacific Ltd. and Rogers Communications Inc. It plans to begin selling long-distance service to households and small businesses in seven of 10 Canadian provinces within a year. Unitel now supplies private voice and data lines to medium and large businesses, such as banks that use them for automatic teller machines.
The company and a predecessor, CNCP Telecommunications, had been trying to get into the general long-distance telephone market since 1985. Friday’s ruling was the result of its most recent application, filed in 1990. Canadian regulators listened to about 500 witnesses and plowed through 50,000 pages of testimony to decide how to answer the application.
The other organization now authorized to enter the Canadian long-distance market is BC Rail Telecommunications / Lightel Inc., whose service will grow out of a private phone service that BC Rail offers businesses along a north-south railway line in British Columbia.
Times staff writer Carla Lazzareschi in Los Angeles contributed to this report.
