'Bell Canada Enterprises' (, ), legally 'BCE Inc.', is a major
Canadian telecommunications company. Through its subsidiaries including
Bell Canada,
Bell Aliant,
Northwestel,
Télébec, and
NorthernTel, it is the
incumbent local exchange carrier for
telephone services in most of
Canada east of
Manitoba and in the northern Territories, and a leading
competitive local exchange carrier (CLEC) in the western provinces. Bell Canada is competing with
Rogers Communications for majority of subscribers. Bell Canada currently services over 13 million phonelines, and functions under the umbrella brandname "Bell". The current president of the group is
Michael Sabia.
History
Inception
Alexander Graham Bell, who vacationed most of his life in
Nova Scotia,
Canada, received a
US patent (#7,789) for the
telephone in
1877. Graham Bell assigned 75% of the Canadian patent rights to his father,
Melville Bell, who, with a friend, Reverend Thomas Henderson, leased pairs of wooden hand telephones for use on private lines constructed by the client from, for example, a store to a nearby warehouse or from a business to an executive's residence. In
1879 Melville Bell sold the rights to
National Bell Telephone Company in
Boston, Massachusetts,
USA, and thus officially became one of the first regional operating companies of what was to become the
Bell System.
Charles Fleetford Sise, a Chicago Businessman, was brought in as General Manager, and The Bell Telephone Company of Canada Ltd. was founded in
1880.
[3] Granted a government monopoly on Canadian long distance telephone service, by
1914, the Bell Telephone Company serviced 237,000 subscribers.
Since the early years of The Bell Telephone Company of Canada, Ltd., it was known colloquially as "The Bell" or "Bell Canada." On
7 March 1968 Canadian law renamed The Bell Telephone Company of Canada, Ltd., as Bell Canada.
Competition and territory reduction
Bell Canada originally extended lines clear from
Nova Scotia to the foot of the
Rocky Mountains in what is now
Alberta. However, most of the attention given to meeting demand for service focused on major cities in
Ontario,
Quebec, and the
Maritime Provinces.
During the late 19th century Bell sold its Atlantic operations in the three Maritime provinces, but acquired interests in all Atlantic companies, during the early 1960s. It held interests in the parents of
NBTel,
Island Telecom,
NewTel, and
MTT. These four companies later merged into
Aliant in the late 1990s, which Bell continues to own interest in.
Independent companies appeared in many areas of Ontario, Quebec and the Maritime provinces without adequate Bell Canada service. Bell went on during the 20th century to acquire most of the independent companies in Ontario and Quebec. Quebec, however, still has large swaths of relatively rural areas served by
Telus and Telebec, and some 20 small independent companies. As of
1980, Ontario still had some 30 independent companies, and Bell has not acquired any; the smaller ones were sold to larger independents with larger capital resources.
The three prairie provinces, at separate times up to
1912, acquired Bell Canada operations and formed provincial utility services, investing to develop proper telephone services throughout those provinces; Bell Canada investment in the prairies had been scant or not keeping up with growth. Having achieved a high level of development, during the 1990s,
Manitoba and Alberta moved to privatize, while
Saskatchewan continues to own
SaskTel as a
crown corporation. Edmonton was served by a city-owned utility that was sold to Telus of Alberta in the 1990s.
British Columbia, served today by
Telus, was served by numerous small companies that mostly amalgamated to form BC Tel (the last known acquisition was the Okanagan Telephone Company in the late 1970s), which served the province from the 1960s until sale to Telus. (The amalgamations produced one anomaly: Atlin is surrounded by the territory of
Northwestel, implying that the company that established service there was acquired by a company serving territories further south.)
Although Bell Canada entered the
Northwest Territories with an exchange at
Iqaluit (then known as Frobisher Bay, in the territory now known as
Nunavut) in
1958, Canadian National Telecommunications, a subsidiary of
Canadian National Railways, provided most of the telephone service in Canada's northern territories. CNR created
Northwestel in 1979, and Bell Canada Enterprises acquired the company in 1988 as a wholly owned subsidiary. Bell Canada sold its 22 exchanges in the eastern region of the NWT to Northwestel in
1992, and BCE transferred ownership of the company to Bell Canada in 1999.
Divestiture and deregulation
The Bell System had two main companies in the
telephone industry in Canada: Bell Canada as a regional operating company (owned by and affiliated with
AT&T until
1956) and
Northern Electric as an equipment manufacturer (owned by and affiliated with
Western Electric until 1956, which itself was also affiliated with
Nippon Electric in
Japan until 1956). The Bell Telephone Company of Canada and Northern Electric were structured similarly in Canada to the analogous portions of the Bell System in the United States; the regional operating company (Bell Canada) sold telephone services as a local exchange carrier, and Western Electric (Northern Electric) designed and manufactured telephone equipment.
Because of the 1956 break-up of the Bell System to which AT&T and the United States' Department of Justice consented as a resolution of an antitrust lawsuit filed in the United States in 1949, AT&T and the Bell System proper divested
Northern Electric and Bell Canada. Northern Electric renamed itself Northern Telecom in 1976, which in turn became
Nortel Networks in 1998 with the acquisition of Bay Networks.
Bell Canada acquired 100 percent of Northern Electric in 1964; starting in 1973, Bell's holdings in Northern Electric was diminished through public stock offerings, though it retained majority control. In 1983, as a result of deregulation, Bell Canada Enterprises (later shortened to BCE) was formed as the parent company to Bell Canada and Northern Telecom. As a result of the stock transaction used by Northern Telecom to purchase Bay Networks, BCE ceased to be the majority owner of Nortel, and in 2000, BCE spun out its share of Nortel, distributing its holdings to its shareholders.
Between
1980 and
1997, the federal government fully deregulated the telecommunications industry and Bell Canada's monopoly ended. Today Bell Canada itself provides local phone service only in major city centres in
Ontario and
Quebec.
Convergence strategy / Internet boom and bust
When
Jean Monty assumed the job of CEO in 1998, he pursued a convergence strategy, attempting to combine both content creation and distribution within BCE, and to take greater advantage of the emerging Internet market.
BCE Emergis was formed to market e-commerce solutions. Capitalizing on the success of its Internet service provider division,
Sympatico, in 1999 BCE formed a partnership with
Lycos to create an Internet portal for its customers.
Shortly after the AOL -
Time Warner merger, BCE purchased the
CTV television network in 2000. In 2001, BCE acquired control of
The Globe and Mail, and combined it with CTV and the Sympatico-Lycos portal, its other content creation assets, to form Bell Globemedia. The desired synergies did not occur and the portal was sold back to Bell Canada in 2002. Bell Globemedia was highly profitable, however, and it was spun out as a separate company in August 2006. The new company assumed the name
CTVglobemedia in 2007.
In 2000, BCE acquired control of
Teleglobe, an overseas carrier coveted by Bell since the early 1980s. The acquisition was a disaster as BCE lost billions of dollars financing Teleglobe. In 2002, BCE sold Teleglobe, and Jean Monty resigned.
[4] Michael Sabia subsequently assumed the position of CEO.
Post Teleglobe: Refocus on core business
Michael Sabia refocused BCE on its core telecommunications business, prompting BCE to buy back the 20% share in Bell Canada that it had sold in 1999 to
Ameritech (which was subsequently acquired by
SBC).
[5] BCE also spun off operating units that it did not consider to be core to its business, including
Emergis in 2004, and
Bell Globemedia and
Telesat Canada in 2006.
On
February 1,
2006, stating the need to remain competitive, Bell Canada announced job cuts of 3,000 to 4,000 employees by the end of
2006.
On April 28, BCE announced that CEO Michael Sabia was taking a 555% pay increase, his salary being raised from $1.21 million
CAD a year to $6.71 million CAD a year. The pay included a $1.25 million CAD salary, a $2.2 million CAD bonus that Sabia converted to deferred share units, a long-term incentive payout of $3 million CAD and other compensation, the filing shows. Bell Canada also posted record revenue increases for the previous fiscal year.
Under pressure from investors, on October 11, 2006, BCE announced it would be wound down, with its remaining assets converted to an
income trust. The new entity was planned to be named "Bell Canada Income Fund". As part of this restructuring, Bell Aliant offered to take Bell Nordiq private, while remaining separate from the new Bell trust.
[6] Due to
announced changes in taxation law by the Canadian federal government, on December 12, 2006, BCE announced it would not proceed with its planned conversion to an income trust, but would go ahead with its plans to simplify the corporate structure and eliminate the BCE holding company. On June 6, 2007, BCE shareholders approved renaming BCE Inc. to Bell Canada Inc.
[7] Bell plans to have two operating business units: Bell and Bell Aliant Regional Communications.
[5]
On
April 30 2007, Bell Canada announced that the price for making a local phone call from payphones will be increased from 25 cents to 50 cents starting
June 2 2007. Other phone companies will also be permitted to double their rate from a quarter to fifty cents for cash calls from phone booths. Non-cash calls will also go up to a dollar starting on that day.
The new rules, laid out by the
Canadian Radio-television and Telecommunications Commission (CRTC) will also allow higher home service charges for people living in rural areas. Rates for those living in the city won't change. The updated regulations will also take away price caps on things like call-display and voicemail. The last time Bell Canada increased the price for making a local phone call was in
1981.
Due to its stagnant share price, starting in April 2007, BCE was courted for acquisition by pension funds and private equity groups, including a consortium led by the
Canada Pension Plan Investment Board (with
Kohlberg Kravis Roberts as one of the participants), a consortium led by the
Ontario Teachers' Pension Plan, and a consortium that included
Cerberus Capital Management.
[9]
Proposed acquisition by the Ontario Teachers' Pension Plan
On June 30, 2007, BCE accepted a bid from the group led by the
Ontario Teachers' Pension Plan of $42.75 per share in cash, for a total valuation of $51.7 billion, the largest acquisition in Canadian history and one of the largest in the world. If shareholders approve the deal, it is expected to close in the first quarter of 2008.
[10]
Project Cleanfeed Canada
In November 2006, to address the problem of the accidental access to child pornography sites, especially by those under the age of majority, Bell,
Bell Aliant,
MTS Allstream,
Rogers,
Shaw,
SaskTel,
Telus, and
Videotron, in conjunction with
cybertip.ca (a nationwide tipline for reporting the online sexual exploitation of children), announced the creation of '''Project Cleanfeed Canada''', an initiative designed to block access to child pornography sites. It is based on a similar program introduced by British Telecom in 2004.
[1] Project Cleanfeed Canada uses an encrypted blacklist of known child-pornography sites operating outside the country and targets only those sites that offer images of prepubescent children.
However, some critics denounce the initiative, saying that this amounts to nothing more than internet
censorship.
[2] Others argue that it is a risk worth taking.
[3]
Current operations
The BCE subsidiary Bell Canada has moved into new industries via new divisions such as
Bell Sympatico, an
Internet service provider;
Bell Mobility, a
cellular wireless service now operating in most Canadian provinces;
Bell ExpressVu, one of Canada's two national
satellite television providers; Bell Home Monitoring, a new division announced in February 2007; and Bell Distribution.
BCE also owns 15% of
CTVglobemedia, one of Canada's largest privately held media companies which owns the
CTV television network and ''
The Globe and Mail'', a national newspaper, as well as other (primarily television) media assets.
In July 2006, Bell and former subsidiary Aliant completed a restructuring whereby Aliant, renamed
Bell Aliant Regional Communications, took over Bell's wireline operations in much of Ontario and Quebec (while continuing to use the "Bell" name in those regions), as well as its 63% ownership in rural lines operator
Bell Nordiq (a publicly traded income trust that controls
NorthernTel and
Télébec). These are in additional to Aliant's most of operations in
Atlantic Canada. In turn, Bell has assumed responsibility for Aliant's wireless and retail operations. Bell Aliant, now itself an income trust, is currently 73.5% owned by Bell.
Other company assets include satellite systems integrator
Telesat Canada, Western Canada
CLEC Bell West, and a 29% minority stakes in IT service provider CGI. All in all, BCE partially or fully owns 17 companies in the fields of telecommunications, media, and information technology. e-Business unit
Emergis was spun off in
2004.
Shifting its focus to
IP, Bell has in recent years deployed
MPLS on their nationwide fibre ring network in anticipation of upcoming consumer and enterprise-level IP applications, such as
IPTV and
VoIP.
Corporate governance
Current members of the
board of directors of Bell Canada Enterprises are:
Richard Currie,
André Bérard,
Ronald Brenneman,
Anthony Fell,
Donna Kaufman,
Brian Levitt,
Edward Lumley,
Judith Maxwell,
John McArthur,
Thomas O'Neill,
Jim Pattison,
Robert Pozen,
Michael Cora,
Paul Tellier, and
Victor Young.
See also
★
Bell Tower, a skyscraper in Edmonton
Former BCE units:
★
Teleglobe Canada Inc - now
VSNL International Canada
★
Nortel - formerly ''Northern Telecom'' and ''Northern Electric''
External links
★
Bell Canada Official Website
★
Bell Canada Enterprises
★
Bell Telephone Company of Canada
★
CRTC chart of Bell Canada's assets
★
Operator. May I help you?: Bell Canada's 125 Years — Bell Canada's origins (illustrated with many early photographs)
★
BCE plans up to 4,000 job cuts, business spinoffs
★
BCE and Aliant form one of North America's largest regional telecommunications service providers
★
Frank and Gordon
★
TSX Stock Quote
References
1. BCE Annual Report
2. BCE: Profile for B C E INC
3. About BCE — History
4. Monty quits as BCE CEO
5.
6. BCE to be wound down, Bell Canada to convert to income trust, BCE press release, October 11, 2006
7. United States SEC filing, June 12, 2007, Form 6-K
8.
9. Telus's exit likely to pull down price of BCE bids
10. Teachers win BCE bid
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