Bell Canada

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BCE Inc.
Type	Public (TSX: BCE, NYSE: BCE)
Founded	1880
Headquarters	Montreal, Quebec, Canada
Key people	Michael Sabia - President
Industry	Communications Services
Revenue	$19.1 billion CAD (2005)[1]
Operating income	$4.0 billion CAD (2005)
Employees	60,001[2]
Website	bce.ca

Bell Canada Enterprises (TSX: BCE, NYSE: BCE), 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.

[edit] History

[edit] Inception

Bell Canada logo used from 1902 to 1922. Note USA-oriented stars used in other Bell System trademarks. A later version used from 1922 to 1940 used maple leaves instead.

Alexander Graham Bell, who vacationed most of his life in Nova Scotia, 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 and thus officially became one of the first regional operating companies of what was to become the Bell System. The Bell Telephone Company of Canada Ltd. was founded in 1880 and 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.

[edit] 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.

[edit] 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 acquistion 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.

[edit] Current operations

Current marketing logo for Bell Canada

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 20% of [1] 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 BCE 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.

It once owned Teleglobe, an overseas carrier coveted by Bell since the early 1980s. BCE ceased funding of Teleglobe in 2002 and is in a bitter legal battle with Teleglobe's administrators and creditors. Teleglobe's assets are now owned by the Tata Group.

On February 1, 2006, stating the need to remain competitive, Bell Canada announced job cuts by the end of 2006. The cuts will effect 3,000 to 4,000 employees. As well, Bell said it would spin off its minority stake in Telesat Canada.

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.^[3] 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. At the next annual shareholders meeting, BCE plans to return to the name Bell Canada, with two operating business units: Bell and Bell Aliant Regional Communications.^[4]

[edit] Project Cleanfeed Canada

In November 2006, to address the problem of the access and proliferation of 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 hundreds of pornography sites. However, some critics denounce the initiative, saying that this amounts to nothing more than internet censorship. [2]

[edit] 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 Sabia, Paul Tellier, and Victor Young.

[edit] Advertising

Bell makes ads and commercials using pixel art. They also advertise using two beavers called Frank and Gordon which are celebrated by the critics in their French speaking broadcast.

[edit] See also

Former BCE units:

• Teleglobe Canada Inc - now VSNL International Canada
• Nortel - formerly Northern Telecom and Northern Electric

[edit] 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
• Bell pixel ads

[edit] References

1. ^ BCE Annual Report. Retrieved on 2006-06-29.
2. ^ BCE: Profile for B C E INC. Retrieved on 2006-06-29.
3. ^ BCE to be wound down, Bell Canada to convert to income trust, BCE press release, October 11, 2006
4. ^ BCE, Inc. (2006-12-12). Bell announces 2007 business outlook - Improving revenue and EBITDA growth in 2007 guidance. Press release. Retrieved on 2007-01-11.