BCE Inc and the seven other major Canadian telephone companies – AGT Ltd, BCE’s Bell Canada Inc, BC Tel, BC Telecom Inc, Bruncor Inc, IslandTelephone Co, Maritime Telegraph & Telephone Co, New Brunswick Telephone Co, Newfoundland Telephone Co and Quebec-Telephone Ltd have had their credit ratings put under review for possible downgrade by Dominion Bond Rating Service Ltd, which is concerned at the impact of deregulation on competition,regulatory uncertainties and new technology. It says some telephone companies have suffered accumulated market-share losses of more than 20% since the long-distance market was thrown open to competition in 1992. It expects these losses to continue and suggests they could exceed 30% in a few years before stabilising – it notes that it took five years for AT&T Corp to lose only 10% of the US market. It also warned the Canadian Radio-Television & Telecommunications Commission that phone companies need to operate in a regulatory regime that allows them to earn a fair rate of return, with minimum delays in regulatory changes, and that the decision allowing competition wasn’t accompanied by a streamlining of procedures needed to provide offsetting increases in local rates: the swift rise in toll competition and the sharp fall in toll profitability from 1993 to 1995 has surprised many and has accelerated the timetable for industry transition, the Toronto ratings agency concluded.
