TORONTO-Wireless carriers Clearnet Communications and Microcell Telecommunications have won a key regulatory battle to gain competitive local exchange carrier (CLEC) designation in Canada. The change in status will allow the two companies to offer their wireless subscribers free listings in the white pages, a directory of telephone numbers, as well as local number portability, the right to keep a telephone number when changing carriers.
The new regulatory provisions put cellular carriers like Microcell and Clearnet on a more even footing with incumbent landline carriers, as more Canadians are cutting the cord for all communications.
The federal regulatory agency Canadian Radio-Television and Telecommunications Commission (CRTC) approved the operators’ rights to offer competitive local service in September. The action means the mobile entities no longer have to pay millions of Canadian dollars each year in interconnection charges to the Canadian Bell carriers. In addition, Clearnet and Microcell will start to receive payments from the contribution pool into which carriers not providing local service must pay.
All other Canadian mobile carriers are owned by parent landline units with incumbent local exchange carrier (ILEC) status, so they already enjoy local carrier benefits.
This pool amounts to about C$800 million (US$530.4 million) annually. “The interconnection and termination charges were vestiges of the old monopoly days,” said Dean Proctor, Microcell’s vice president of regulatory affairs. “We had to pay Bell when a Microcell customer called one of its subscribers and pay Bell again for the privilege of having one of its customers call someone at Microcell. What’s the logic in that?”
The new ruling means Microcell will no longer have to pay termination rates- effectively reducing its access fees by half. In addition, from the Canadian fund that helps subsidize the cost of providing communications to rural areas, the carrier is now eligible to receive subsidy payments for rural customers (from C$1 (US$0.66) to C$10 (US$6.60) a month per subscriber) in so-called high-cost service areas.
Landline replacement
“Getting CLEC status will give us that much more `oomph’ behind the drive for the home-phone replacement,” said Clearnet spokesman Mark Langton. Listings in the telephone directory and number portability certainly help Clearnet woo businesses and consumers to replace their home phones with a mobile phone. Langton concedes there is still a relatively small market of wireless-only phone users, but that classification for Clearnet, “has been increasing at an algorithmic growth.”
Clearnet currently has about 700,000 subscribers compared with Microcell’s base of 750,000 users. It will probably be early in 2001 before the two carriers will start selling their CLEC service, and the change will have more of an impact on Microcell because it is still unaligned with a major Canadian landline operator. In October, Telus acquired Clearnet for C$6.6 billion (US$4.4 billion), so it is highly unlikely Clearnet will offer alternate local services in Telus’ stronghold of western Canada, where it offers wired and mobile service.
“But I don’t see either Clearnet or Microcell moving in the wireline market despite their CLEC status. There’s already a market in Canada overwrought with numerous local providers who are not making any money,” said Jeremy Depow, an analyst with the Yankee Group in Canada.
