Bell Canada: Wikis

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Bell Canada
Type Public (TSXBCE, NYSEBCE)
Founded 1880, by Charles Fleetford Sise
Headquarters Montreal, Quebec, Canada
Key people George Cope (CEO)[1]
Industry Communications Services
Revenue $17.698 billion CAD (2008)[2]
Operating income $2.864 billion CAD (2008)
Net income $1.811 billion CAD (2008)
Employees 54,434[3]
Website www.bell.ca
Bell Canada's headquarters located in Montreal, Quebec.

Bell Canada, commonly shortened to "Bell", is a major Canadian telecommunications company. Including its subsidiaries such as 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. In a majority of its service territory, Bell Canada's principal competition is Rogers Communications. Bell Canada currently services over 13 million phone lines. It is headquartered in Montreal, Quebec.[4]

Bell Canada is the main remaining asset of BCE Inc. (TSXBCE, NYSEBCE), also known as Bell Canada Enterprises, a former conglomerate operating in a variety of businesses. BCE ranks number 224 on the Forbes Global 2000 list (2008 edition). In 2007, BCE accepted a purchase offer from a group led by the Ontario Teachers' Pension Plan, but in the wake of the 2008 economic crisis, the resulting corporate structure (including the debt load that would have been assumed) was deemed to not meet necessary solvency criteria, and the takeover was cancelled.[5] The current CEO is George Cope, who was appointed in July 2008.[1]

Contents

History

Historically, Bell Canada has been one of Canada's most important and most powerful companies, and in 1975 was listed as the fifth largest in the country.[6]

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Inception

Bell Canada logo used from 1902 to 1922. Note the 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 resided increasingly for most of his life in Nova Scotia, Canada, received 'the master patent' (U.S. Patent 174,465) for the telephone in the United States in 1876. 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. The two gave a licence to Hugh Cossart Baker, Jr. to lease telephones in Ontario.[7] 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.[8] With a government-granted monopoly on Canadian long-distance telephone service, The Bell Telephone Company serviced 237,000 subscribers by 1914.

Since the early years of The Bell Telephone Company of Canada, Ltd., it was known colloquially as "The Bell" or "Bell Canada." On March 7, 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: in Newfoundland Telephones (which later was organized as NewTel Communications), in Maritime Telephone and Telegraph Company, later known as MTT, which also owned PEI-based Island Telephone, and in Bruncorp, the parent company of NBTel. These four companies later merged into Aliant (now Bell Aliant which also owns much of what were Bell Canada's more rural areas in Ontario and Quebec) in the late 1990s, in which Bell continues to own a stake.

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 Québec Telephone (later acquired by Telus) and Télébec (now owned by Bell Canada via Bell Aliant) as well as 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's investment in the prairies had been scant or insufficient relative to growth. Having achieved a high level of development, Manitoba moved to privatize its telephone utility and Alberta privatized Alberta Government Telephones to create Telus in the 1990s. 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 1995.

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 its 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

Bell Canada logo used from the 1980s until 1995.

The Bell System had two main companies in the telephone industry in Canada: Bell Canada as a regional operating company (affiliated with AT&T, with an ownership stake of approximately 39%)[9] and Northern Electric as an equipment manufacturer (affiliated with Western Electric, with an ownership stake of approximately 44%).[9] 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.

As part of the consent decree signed in 1956 to resolve the antitrust lawsuit filed in 1949 by the United States Department of Justice, AT&T and the Bell System proper divested itself of Northern Electric and Bell Canada.[10][11][12] 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 ownership stake 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 largely ended. Today Bell Canada itself provides local phone service only in major city centres in Ontario and Quebec.

Convergence strategy / Internet boom and bust

BCE corporate logo used until August 2008

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.[13] Michael Sabia subsequently assumed the position of CEO.

Post Teleglobe: Refocus on core business

Bell Canada logo used from 1995 to 2008

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).[14] 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 455% pay increase, his salary being raised from C$1.21 million a year to $6.71 million a year. The pay included a $1.25 million salary, a $2.2 million bonus that Sabia converted to deferred share units, a long-term incentive payout of $3 million 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.[15] 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. It had planned to restructure, eliminating the BCE holding company,[16][17] but this was put on hold due to attempts to privatize the company.

On April 30, 2007, the Canadian Radio-television and Telecommunications Commission (CRTC) announced its decision to allow pay phone rates for Bell Canada, Telus, Bell Aliant, SaskTel, and MTS Allstream to increase from 25 cents to 50 cents, starting as early as June 1. The CRTC also permitted local rural rates to increase by the lesser of the annual rate of inflation or five percent, and removed price caps on optional rural services, such as call display and voicemail.[18] On June 2, 2007, Bell Canada increased the cost of a local pay phone call to 50 cents when paid in cash and one dollar when paid by calling card or credit card,[19] Bell's first increase in pay phone rates since 1981.[18]

Privatization target

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.[20]

On June 30, 2007, BCE accepted a bid of $42.75 per share in cash, for a total valuation of $51.7 billion, from the group led by the Ontario Teachers' Pension Plan, and including Providence Equity Partners, Madison Dearborn Partners, Merrill Lynch Global Private Equity, and Toronto-Dominion Bank. The proposed deal would have been the largest acquisition in Canadian history and the largest leveraged buyout ever.[21][22] The deal was approved by BCE shareholders,[23] Quebec Superior Court[24] (whose ruling was overturned by the Quebec Court of Appeal,[25] but was later upheld by the Supreme Court of Canada[26]), and the CRTC, subject to certain conditions for its corporate governance structure to ensure that Bell remained under Canadian control.[27]

Due to the tightening of the credit market caused by the subprime mortgage crisis, the investment banks financing the deal—led by Citigroup, Deutsche Bank and the Royal Bank of Scotland—started negotiations on May 16, 2008, to revise the terms of their loans with higher interest rates and greater restrictions to protect themselves.[22] On July 4, 2008, BCE announced that a final agreement had been reached on the terms of the purchase,[28] with all financing in place, and Michael Sabia left BCE, with George Cope assuming the position of CEO on July 11.[1]

On November 26, 2008, BCE announced that KPMG had informed BCE that it would not be able to issue a statement on the solvency of the company after its privatization, one of the required conditions of the buyout. As a result, the purchase was cancelled.[5][29]

Project Cleanfeed Canada

In November 2006, Bell, Bell Aliant, MTS Allstream, Rogers, Shaw, SaskTel, Telus, and Vidéotron, 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.[30] 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.[31] Others argue that it is a risk worth taking.[32]

Current operations

Current BCE corporate logo

The BCE subsidiary Bell Canada has moved into new industries via new divisions such as Bell Internet, an Internet service provider; Bell Mobility, a cellular wireless service now operating in most Canadian provinces; Bell TV, 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, the /A\ television system, The Globe and Mail, and the CHUM Radio Network, as well as other (primarily television) media assets. It also operates retail stores, as simply the Bell Store (formerly BellWorld in English Canada and Espace Bell in Quebec, and prior to 1999, the Bell Phonecentre/Téléboutique Bell).

In mid 2009, BCE extended its ownership of Virgin Mobile Canada from 50% to 100%. BCE also bought The Source by Circuit City (which was renamed after the sale to The Source) and all assets of InterTAN from bankrupt Circuit City.

Service van with previous Bell Canada logo
Service van with current Bell Canada logo

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 Bell Aliant's most of operations in Atlantic Canada. In turn, Bell has assumed responsibility for Bell Aliant's wireless and retail operations. Bell Aliant, now itself an income trust, is currently 44% owned by Bell.[33]

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.

Brand

Coinciding with its advertising campaign as part of its sponsorship of the 2008 Beijing Olympics, Bell introduced a new logo and minimalist ad style, with the slogans "Today just got better" (with emphasis on the suffix "er") in English Canada and "La vie est Bell" (a pun on "La vie est belle" — French: life is beautiful) in French Canada.[34] The font used in Bell's marketing is a custom typeface known as 'Bell Slim', by Canadian typeface designer Ian Brignell.

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

Former BCE units:

References

  1. ^ a b c BCE (2008-07-11). "George Cope appointed to the boards of directors and as CEO of BCE Inc. and Bell Canada". Press release. http://www.bce.ca/en/news/releases/corp/2008/07/11/74806.html. Retrieved 2008-07-11. 
  2. ^ {{cite web|url=http://www.bce.ca/annual_report/index.php?page_id=112&lang=en
  3. ^ "BCE: Profile for B C E INC". http://finance.yahoo.com/q/pr?s=BCE. Retrieved 2007-12-08. 
  4. ^ "Contact Us." Bell Canada. Retrieved on August 24, 2009.
  5. ^ a b CBC News (2008-12-11). "BCE takeover deal dead as fight looms over $1.2B breakup fee". Canadian Broadcasting Corporation. http://www.cbc.ca/money/story/2008/12/11/bce-takeover.html. Retrieved 2009-01-03. 
  6. ^ The Top 200 - Canada's Largest Companies c1973-74 - Business
  7. ^ Surtees, Lawrence (2000). "Bell, Alexander Graham". Dictionary of Canadian Biography Online. University of Toronto/Université Laval. http://www.biographi.ca/009004-119.01-e.php?&id_nbr=7894. Retrieved 2009-03-05. 
  8. ^ "About BCE – History". BCE Inc.. http://www.bce.ca/en/aboutbce/history/index.php. Retrieved 2007-06-30. 
  9. ^ a b Rens, Jean-Guy; Roth, Kathe (2001). The Invisible Empire. McGill-Queen's Press — MQUP, 2001. pp. 217–218. ISBN 077352052X, 9780773520523. 
  10. ^ Todd, Kenneth P.. "A Capsule History of the Bell System". in Massey, David. American Telephone & Telegraph Company. http://www.porticus.org/bell/capsule_bell_system.html. Retrieved 2008-06-28. 
  11. ^ The Porticus Centre (2007). "Bell Canada (and other Canadian telecommunications companies)". The Porticus Centre. http://www.porticus.org/bell/canadian_bell_companies.html. Retrieved 2008-06-28. 
  12. ^ Nortel Networks. "Northern Electric — A Brief History". Nortel Networks. http://www.porticus.org/bell/northern_electric_history.html. Retrieved 2008-06-28. 
  13. ^ Macklem, Katherine (2002-05-06). "Monty quits as BCE CEO". Maclean's Magazine. http://www.thecanadianencyclopedia.com/index.cfm?PgNm=TCE&Params=M1SEC677092. Retrieved 2007-06-29. 
  14. ^ BCE, Inc. (2002-06-28). "BCE to Own 100 per cent of Bell Canada". Press release. http://www.bce.ca/en/news/releases/bce/2002/6/28/69087.html. Retrieved 2007-06-29. 
  15. ^ BCE to be wound down, Bell Canada to convert to income trust, BCE press release, October 11, 2006
  16. ^ BCE, Inc. (2006-12-12). "Bell announces 2007 business outlook — Improving revenue and EBITDA growth in 2007 guidance". Press release. http://www.bce.ca/en/news/releases/corp/2006/12/12/74065.html. Retrieved 2007-01-11. 
  17. ^ "United States SEC filing, June 12, 2007, Form 6-K". Securities and Exchange Commission. 2007-06-12. http://www.secinfo.com/d16Vm2.uv.htm. Retrieved 2007-06-30. 
  18. ^ a b "Hello? The 50-cent pay phone call is coming". Canadian Broadcasting Corporation. 2007-04-30. http://www.cbc.ca/money/story/2007/04/30/payphones.html. Retrieved 2007-12-14. 
  19. ^ "Bell's pay phone price increases to 50 cents Saturday". Canadian Broadcasting Corporation. 2007-06-01. http://www.cbc.ca/consumer/story/2007/06/01/payphone-increase.html. Retrieved 2007-12-14. 
  20. ^ "Telus's exit likely to pull down price of BCE bids". Reuters. 2002-06-27. http://www.globeinvestor.com/servlet/story/ROC.20070627.2007-06-27T170950Z_01_N27295009_RTRIDST_0_BUSINESS-BCE-BIDS-COL/GIStory/. Retrieved 2007-06-29. 
  21. ^ "Teachers win BCE bid". CanWest News service. 2007-06-30. http://www.canada.com/ottawacitizen/news/story.html?id=86dacb18-6f44-4c27-9c38-27e9e48f247b&k=2695. Retrieved 2007-06-30. 
  22. ^ a b Sorkin, Andrew Ross; de la Merced, Michael J. (2008-05-19), "Banks’ Terms Imperil Deal to Buy Out Bell Canada", The New York Times, http://www.nytimes.com/2008/05/19/business/worldbusiness/19deal.html 
  23. ^ "BCE holders approve giant buyout". Toronto Star. 2007-09-22. http://www.thestar.com/printArticle/259285. Retrieved 2007-10-01. 
  24. ^ CBC News (2008-03-07). "Quebec court OK's BCE takeover, dismisses bondholders' complaints". Canadian Broadcasting Corporation. http://www.cbc.ca/money/story/2008/03/07/bce-ruling.html. Retrieved 2008-06-20. 
  25. ^ Austen, Ian (2008-05-22), "Bell Canada Takeover Is Blocked", The New York Times, http://www.nytimes.com/2008/05/22/business/worldbusiness/22bce.html 
  26. ^ Beltrame, Julian (2008-06-20). "Supreme Court approves BCE deal". The Canadian Press. http://cnews.canoe.ca/CNEWS/Canada/2008/06/20/5941106-cp.html. Retrieved 2008-06-20. 
  27. ^ "CRTC approves BCE purchase with conditions". CNW Group. 2008-03-27. http://www.newswire.ca/en/releases/archive/March2008/27/c7841.html. Retrieved 2008-04-03. 
  28. ^ BCE, Inc. (2008-07-04). BCE press release "BCE and Purchaser Enter Into Final Agreement Financing and Credit Agreements Signed". Press release. http://www.bce.ca/en/news/releases/corp/2008/07/04/74793.html BCE press release. Retrieved 2008-08-07. 
  29. ^ BCE, Inc. (2008-11-26). "BCE statement regarding privatization transaction". Press release. http://www.bce.ca/en/news/releases/corp/2008/11/26/75050.html. Retrieved 2008-12-03. 
  30. ^ Bright, Martin (2004-06-06). "BT puts block on child porn sites". The Observer (guardian.co.uk). http://www.guardian.co.uk/technology/2004/jun/06/childrensservices.childprotection. Retrieved 2009-02-12. 
  31. ^ Geist, Michael (2006-11-24). "Project Cleanfeed Canada". http://www.michaelgeist.ca/content/view/1548/125/. Retrieved 2009-02-11. 
  32. ^ Geist, Michael (2006-12-04). "Child porn plan a risk worth taking". TheStar.ca. http://www.thestar.com/article/154517. Retrieved 2009-02-11. 
  33. ^ Bell Aliant (2010). "Fact Sheet" (HTML). Bell Aliant. http://www.aliant.ca/english/ir/factsheet.shtml. Retrieved 2010-02-04. 
  34. ^ BCE, Inc. (2008-08-07). "Bell to launch its new national brand tomorrow". Press release. http://www.bce.ca/en/news/releases/corp/2008/08/07/74829.html. Retrieved 2008-08-07. 

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