Long-distance telephone wars

After the deregulation of the domestic long-distance market late last year, Canada's two biggest carriers, Bell Canada and Unitel Communications, grabbed the spotlight with big-bucks tv campaigns.In the shadows have been the aggressive marketing efforts of the country's long-distance resellers, which...

After the deregulation of the domestic long-distance market late last year, Canada’s two biggest carriers, Bell Canada and Unitel Communications, grabbed the spotlight with big-bucks tv campaigns.

In the shadows have been the aggressive marketing efforts of the country’s long-distance resellers, which lease long-distance phone time from Bell and, to a lesser extent, Unitel on a bulk basis and then resell it piecemeal to individual customers at lower rates.

Split evenly

Canada’s domestic long-distance market, which measures about $7 billion annually, is split fairly evenly between the residential and business sectors.

The resellers, among them Smart Talk Network of Chatham, Ont., Call-Net Telecommunications of Toronto, Cam-Net Communications of Vancouver, and Fonorola of Montreal, have been nibbling at the long-distance market since 1989, when the federal government rendered a decision partly deregulating the long-distance market.

Previous rules

Under the decision, resellers were permitted to lease and resell phone time on Bell lines, but they were still not permitted to link their customers’ calls directly to the Bell long-distance system.

This means the customers of resellers are required to dial a special numeric prefix that routes their calls through the reseller’s system and then onto the Bell system.

The customer can either dial the additional digits by hand, or install a speed dialer to do it automatically. Either way, it is an inconvenience that has hampered the ability of the resellers to compete.

But that is set to change.

The government’s 1992 decision requires Bell to provide the resellers direct access to its lines, and Bell has agreed to comply, although it will take about 18 months for installation of the necessary hardware.

Assured they will eventually be able to compete against Bell on a level playing field, the resellers have begun stepping up their marketing efforts.

Their aggressiveness is typified by Smart Talk Network, which has unleashed a sales force of 600 door-to-door representatives on Ontario households in the Windsor-Ottawa corridor.

Door-to-door

Raymond Samuels, residential coordinator at Smart Talk, says the door-to-door representatives introduce residential consumers to Smart Talk’s service and try to persuade them to switch over from Bell.

Samuels, who notes Smart Talk’s rates are 15% to 20% below Bell’s, says many residential consumers are unaware deregulation has broken up the Bell monopoly.

Smart Talk does most of its business in Ontario, but as with most resellers, it has aspirations to compete nationally down the road.

Local ads

To support its door-to-door sales force, the company has been building brand awareness with local radio and print ads.

As well, it operates 20 service vans emblazoned with the company logo.

In addition to developing accounts in the residential market, Smart Talk also fields 65 sales representatives in its business long-distance division.

Last year, Smart Talk, which has about 15,000 customers, recorded sales of $25 million, up from $3 million a year earlier.