Note: This was an essay I wrote in a research-focused class while getting my degree in communication. References are at the end.
Bell Canada Enterprise (BCE)
A Critical Corporate Review of BCE Including Company Operations, Initiatives and Board of Directors Analysis
Bell Canada Enterprise (BCE) originated as the Bell Telephone Company of Canada founded in 1880, and named after Alexander Graham Bell who invented the telephone. It is now a publicly traded company listed on the Toronto (TSX) and New York Stock Exchange (NYSE) and headquartered in Montreal, Quebec (Wikipedia, 2006). In 2005 BCE reported revenues of $19,105 million and profits of $1,961 million (BCE, 2006a).
This report will provide a critical analysis of BCE. It will do so first by providing an overview of the company’s operations, followed by its initiatives and a summary outlining the important significance of its Board of Directors. It will investigate the implications that BCE’s activities will have on the public as it attempts to enter new markets, earn more revenues and promote its brand.
BCE earns revenues mainly by providing communication services such as landline telephone access, wireless mobility, Internet and video viewing under the Bell Canada banner. This is becoming the focus of the company’s growth strategies. Revenue-generating operations are considered by Bell to be of four focused groups: “Residential,” “Business,” “Aliant” and “Other Bell Canada.” “Residential” services compose 40 per cent of revenue and are offered to commercially under the brands Bell (for landlines), Bell Mobility (for cellular services), Sympatico (for Internet) and Bell ExpressVu (for television). “Business accounts” for 10 per cent of revenue and provides “competitive” rates to various-sized companies. “Aliant,” of which BCE owns 53 per cent, brings in 10 per cent of its revenue from the Atlantic provinces. “Other Bell Canada” includes company subsidiaries that service remote regions of Canada and the wholesale of services to resellers. Also, this section includes revenues generated from subsidiaries Bell Globemedia,–which owns the Globe and Mail and CTV–plus Telesat, a satellite service provider (BCE, 2006a).
In its mobile phone section, Bell Mobility, the company has been introducing advanced technology including the ability to surf the net on a wireless handset. In 2005, Bell held a virtual monopoly in Quebec and Ontario, providing wireless service for 95 per cent of the provinces’ population. Altogether, the subsidiary holds 5.8 million clients (BCE, 2006a).
Bell, in offering television services, provides 400 channels to its 1.7 million subscribers through Telesat, a 100 per cent BCE subsidiary that runs satellite services. The TV service also includes hardware (BCE, 2006a).
Since cable telephone services over the Internet, known as voice over Internet protocol (VoIP), along with prepaid long-distance cards began to take over landline services, Bell, in 2005, launched Digital Voice, making a comeback and reclaiming control of its market. Bell also continued in this pattern by making a comeback with long distance calling in the mobile industry and introduced in early 2006 a $2.49 flat fee international roaming rate (Craig, 2006). This deal is available only on its Motorola A840 handset, a new model allowing usage in both CDMA and GSM networks (Bell Canada, 2006). Its capabilities are obviously designed for high-usage business customers who might travel a lot, and therefore need better long distance rates that can beat VoIP. So Bell is certainly increasing its presence in this market of business users who need to make calls on the go. However, a recent plan has been announced to cut 3,000-4,000 jobs due mainly to competition from the cable service providers (Wall Street Journal, 2006). BCE hopes this, along with other revenue-saving plans, including turning part of its phone services into an income trust, will bring back $2 billion. However, shareholders are not happy with these plans (Wahl, 2006).
In 2005, Bell also began offering Evolution, Data Optimized (EVDO) service in its wireless mobility operations. The new service cost $100 million to launch but will allow for faster download speeds on handsets (Schick, 2005). In 2000, through Telesat, Bell began offering satellite phone services to remote areas in Canada, laying a stronger hold on this market as well (Satellite Today, 2000).
A significant new market outreach within Bell Mobility has been the agreement to allow Virgin Group to offer wireless mobility services using Bell towers. Meanwhile, Bell also introduced Solo Mobile, which includes a push-to-talk (PTT) handset option that allows a person to walkie talkie country-wide. Coming in both post and prepaid options, Solo is targeting a younger generation of mobility users, especially those that loved to play with walkie talkies when they were kids! According to Bell, “We (Bell) are the first Canadian wireless operator to actively market PTT to the consumer youth segment” (BCE, 2006a). Earlier, Bell Canada made moves to enter this younger market through an agreement with Groove Mobile to provide downloadable music on their wireless handsets that could also be transferred to and from a computer (RCR Wireless News, 2005).
In terms of its Internet provisions, Bell cooperated in Inukshuk in 2003, offering high-speed Internet nation-wide (BCE, 2006a). According to the Toronto Star, this new service (which Rogers also will use), offers a subscription to Internet access wherever one may be, “similar to a mobile phone network,” and will create immense competition in markets relatively new to Bell in Western Canada. Bell will go up against Telus and Shaw, the two dominant communication companies in the West (Hamilton, 2006). However, the Edmonton Journal, criticizes Inukshuk because “you can’t actually get Internet while in motion.” The paper also complains that the service requires cellular PC cards (Makris, 2006). (Just to note, the Journal’s sister paper, The National Post, competes with Bell Globemedia’s Globe and Mail, and would likely not have anything good to say about the service due simply to the fact that it comes from a rival company).
BCE has divested of a few operations in the last couple of years. One that has had some controversy is its selling of its investments in CGI. It made $869 million selling most of its shares back to the company and plans to sell the rest later. For employees of CGI, a major player in the computer industry, that only helped the enormous number of 1000 jobs the company was forced to cut (Reuters, 2006). Also, if all gets approved by regulatory agencies such as the CRTC, Bell plans to sell most of its interest in Bell Globemedia, reducing its 68.5 per cent hold to 20 per cent (BCE, 2006a). This decision comes after Bell Globemedia won the communication agreements, along with Rogers, to air the Olympic Games and BCE became the official sponsor of the 2010 Vancouver Olympics, set to provide all the infrastructure and communication services for the event, which will also make Bell a new dominant player in the West (BCE, 2006b, VANOC, 2005). It seems Bell needs these media companies only to produce synergy to provide a promotional, supportive voice for Bell, but is not really interested in their operations or the revenue they produce on their own. It looks more interested in advancing its communication services.
One group that is unhappy with BCE and its revenue-increasing plans is the Canadian Telecommunications Employees’ Association (CTEA). Representing Bell Canada and other employees, the union is outraged that Bell has decided to send five per cent of its call centre operations overseas. They feel this will only lead to more job losses for Canadian employees (CNW Telebec, 2006).
BCE Board of Directors Diagram Summary
As mentioned above, BCE was named as the Vancouver Olympic Committee’s premier partner in 2004. BCE will not only provide communication infrastructure and services for the Games (BCE, 2006b), but will also be responsible, along with Rogers, to broadcast the Games across the country (VANOC, 2005). Interestingly, following that agreement, Petro Canada, Royal Bank of Canada (RBC) and the Hudson’s Bay Company (HBC) all became official sponsors of the Vancouver 2010 Olympics (VANOC, 2006). And these companies all have connections to BCE’s Board of Directors. For example, Richard Currie, the Chairman of the Board, also sits as a director on Petro Canada’s board. Ronald Brenneman, the President and CEO of Petro Canada, sits as a director on BCE’s board. Anthony S. Fell, the Chairman of the Board at RBC Dominion Securities also sits as a director on the BCE board. Then, sitting on both boards of BCE and RBC is corporate director Victor L. Young. Again, Donna Soble Kaufman, a lawyer and corporate director, sits on the board of HBC and BCE (BCE, 2006c).
There also seem to be a number of past and present connections to CN Rail and Loblaw Companies Ltd. Chartered accountant Thomas C. O’Niell and Anthony S. Fell from RBC Dominion Securities both sit on Loblaw’s board as directors, while Richard Currie himself formerly held a career with the food company. Two former associates of CN Rail, Michael J. Sabia (BCE’s President and CEO) and Paul M. Tellier (the former President and CEO of CN Rail) now sit on the board of BCE while Edward C. Lumley from Bank of Montreal currently sits on the CN Rail board (BCE, 2006c). These relationships could imply that positions were granted not on basis of merit but because of friendships and personal loyalties.
BCE is a company obviously keeping on top of new advancements and doing lots of activities to provide new technological services to its consumers. Through this, it is actively pursuing a break in new markets, such as in the West and in remote areas. Its focus is definitely on Bell Canada in creating these new markets. One major achievement in attempts to increase awareness of the Bell brand is the $200 million BCE promised to the Vancouver 2010 Olympics.
Reducing interest in its media subsidiary, Bell Globemedia, while actively attempting to advance its technological services in other subsidiaries, shows an attitude that could have negative effects on citizens looking for important information from Bell’s major news sources, CTV and the Globe. Since Bell Globemedia seems to have been acquired for the purpose of creating a synergy, people will unconsciously find themselves absorbing propaganda for BCE instead of fair and balanced news. It is unlikely, for instance, that CTV or the Globe will produce negative stories about Bell, or the Olympics and its other sponsors for that matter.
BCE, in trying to create more revenue through job cutting strategies, combined with efforts to sell portions of subsidiaries and create others into income trusts, show that perhaps the company is currently walking on delicate shells, doing its best to keep numbers high in the books for shareholder interests, while operational revenues may not be as promising as expected. The company seems to have a hard time pleasing anyone at the moment, especially employees.
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