Canadian Telco-Cable License Irks Some

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Ottawa -- The starting-gate gunshot opening direct
competition between cable and telephone operators in Canada may have gone off recently,
but the country's cable-systems companies are hobbled by a regulatory issue.

That was the cry of the Canadian Cable Television
Association, following the first-ever cable-license award to a telco -- New Brunswick
province's NBTel.

The CCTA is complaining that NBTel's license will
become valid before the local-number-portability issue is resolved in Canada. LNP -- the
ability to change carriers without changing one's local telephone number -- is vital
to fair competition, CCTA officials argued. Without it, NBTel will have an unfair edge
over Fundy Cable when the telco launches cable TV in Saint John and Moncton -- the two New
Brunswick cities that NBTel is licensed to cover.

In licensing NBTel, the Canadian Radio-television and
Telecommunications Commission tried to avoid this problem by setting the license start-up
date for this fall, which is when the CRTC expects the LNP issue to be resolved.

However, "that's a really big assumption,"
said Jay Thomson, the CCTA's vice president of legal and regulatory affairs.
"Our indications are that it will not be in place by September, and certainly not in
both Saint John and Moncton."

Ironically, NBTel probably won't launch until next
year, despite its license. The telco is delaying its launch because it's waiting for
the delivery of ImagicTV -- a new software product that enables the transmission of
digital television over twisted-pair copper networks -- said Jack Leachman, NBTel's
general manager of cable television.

According to Leachman, it makes more sense for NBTel to
wait until the first ImagicTV product comes out early next year, rather than launching now
on the company's experimental hybrid fiber-coaxial network in New Brunswick. After
all, "we only have HFC in front of 12,000 homes," Leachman said. Hence, as a
vehicle for cable TV, "it proved to be too expensive going forward, especially
compared with plant that was already in place." NBTel and ImagicTV are controlled by
the same parent company, Bruncor Inc.

Meanwhile, Fundy isn't panicking about NBTel entering
its turf. That's because the cable operator plans to enter the local-telephony market
as soon as it's practical, said Mario Theriault, Fundy's vice president of
corporate communications. And there is little doubt that the CRTC will grant it the
necessary licenses.

"We're in most of New Brunswick households with
cable right now, and we have our fiber optic ring," Theriault said, "so
we're pretty confident that we can pull it off and bring it all home."

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