CityWest examines the communications landscape ahead

With the government making changes to the regulations regarding deregulation of the telephone industry, CityWest is examining the impact that it may have on its expansion plans.

One project that CityWest is looking at is entering the Terrace market as a telephone service provider. With last years purchase of Monarch Cable, CityWest now has an entry into that market that they wish to expand upon.

CityWest's potential Terrace moves, come as the possibility of competition in the cellular world in Prince Rupert sits in the exploratory stage. Last year Rogers Communications announced that they were interested in providing service to the Prince Rupert area, though to this date little progress seems to have been made on that project.

The CityWest expansion plans however, could prove to be a controversial move in its home base, as local's express frustration with some aspects of local service in Prince Rupert such as Internet and cellular services. Two particular hot spots which can get a Rupertite rather agitated at times.

The Daily News examined the company's reaction to the deregulation and where it may lead the Prince Rupert based communications company in the future.

Alarm bells ring for phone companies
By Leanne Ritchie
The Daily News
Friday, April 13, 2007

In the David and Goliath-like competition between small companies such as CityWest and billion-dollar telecoms firms like Telus and Rogers, the federal government has just handed Goliath a shield.

But the decision is not nearly as bone crushing to small telecoms as they thought it was going to be, said Rob Brown, CityWest general manager.

Last week, Industry Minister Maxime Bernier announced he is forging ahead with his controversial plan to deregulate pricing for local telephone services.

“The decision was softened a bit from where it was originally going,” said Brown, whose company is looking at expanding into the Terrace market.

“What it originally meant was for a small guy, if they wanted to go to Terrace to compete against Telus, instantly Telus could do whatever they wanted ... to win that customer back — deregulation or forebance they call it.”

However, government decided to provide an 18-month window before telecoms can deregulate their land-line prices.

“The 18-month transition period given to smaller competitors to enable them to build sustainable market share in their communities will help ensure that consumers in Canada’s non-urban areas will be able to share the benefits real competition will bring,” said Alyson Townsend, president and CEO of the Canadian Cable Systems Alliance (CCSA), an organization representing Canada’s regional telecom companies including CityWest.

With its purchase of Monarch Cable Systems last year, Brown said it makes sense for the Rupert-based company to expand into Terrace because it already owns cable infrastructure in the area.

“Without this change of regulation, I could go there and offer very nice service at a very competitive rate and Telus could instantly come in and try to win that customer back,” said Brown. “Telus could offer and lose money in Terrace and that in our mind wouldn’t be fair to us or the customer because what that would do is eliminate the competitor again. This at least gives us 18 months to put everything together.”

CityWest was founded back in 1910 as a Rupert-based telephone company offering local phone service.

However, last year, the city turned the company into a corporation in order to try and meet the competition anticipated from Telus and Rogers in the northwestern market.

Since then, both Rogers and Telus have begun preparations to offer additional services in the region and this most recent decision by the federal government makes it harder for CityWest to fight back.

Although the decision forces large telecoms to keep their prices stable for 18 months, it frees large telecoms to immediately begin direct-marketing to win its customers back to moment a smaller competitor enters the ring.

“The win back rules are at the heart of the matter,” said Townsend. “Without these rules, customers will not have the opportunity to experience our members’ new competitive services before the big telcos try to win them back through bundled offers that cross-subsidize local service. That means that not all customers will see the benefits of competition, only those who switch to a competitor. You can be sure that Canada’s small cable companies will work hard to ensure that as many customers as possible switch, so as to create sustainable competitive markets in all of the areas they serve.”

The federal decision to deregulate has also been roundly criticized by the Liberal opposition as flying in the face of an earlier ruling by the Canadian Radio-television and Telecommunications Commission and has been criticized as an effort by the Conservatives to pander to phone giants Bell Canada and Telus.