October 1, 2014 — OTTAWA, ON — Competition Bureau
The Competition Bureau announced today that in response to concerns stemming from its review of the proposed acquisition by Bell Aliant Regional Communications Inc. (Bell Aliant) of O.N. Tel Inc. (Ontera), Bell Aliant has agreed to a long-term lease along a significant portion of Ontera’s network to a third-party telecommunications provider, Bragg Communications Inc. (Eastlink).
Following an investigation, the Bureau determined that the transaction would likely substantially lessen and/or prevent competition in the sale of wireline telecommunications services in up to 16 Northern Ontario communities by providing Bell Aliant with the ability and incentive to exclude its competitors from access to high-bandwidth telecommunications transport services or raise the cost of those services. The Bureau advised the parties of its serious concerns and as a result, Bell Aliant worked cooperatively and constructively to address those concerns.
The firm ultimately agreed to lease telecommunications strands of fibre to Eastlink under a 20-year Indefeasible Right of Use (IRU) on the entirety of Ontera’s fibre-optic telecommunications ring south of Kapuskasing, Ontario. The lease of those strands of fibre preserves the ability of Eastlink or other providers to compete effectively with Bell Aliant for the provision of telecommunications services in Northern Ontario.
The proposed transaction is a non-notifiable merger that was brought to the Bureau’s attention via several stakeholder complaints. Under the Competition Act mergers of all sizes and in all sectors of the economy are subject to review by the Commissioner of Competition to determine whether they will likely result in a substantial lessening or prevention of competition.
- The transportation of voice, video and data signals over long distances through high-capacity fibre-optic telecommunications lines is known as "backhaul". Bell Aliant and Ontera currently own and operate the only two backhaul networks that connect the relevant communities with networks outside of the Northern Ontario region.
- Bell Aliant is the incumbent telecommunications provider in Atlantic Canada and much of rural Quebec and Ontario, including the vast majority of Northern Ontario. In Northern Ontario, it currently offers telephone and internet services and, in a number of localities, television services under the NorthernTel and Bell brands.
- Ontera is a wholly-owned subsidiary of the Ontario Northland Transportation Commission (ONTC), an agency of the Government of Ontario. Its primary line of business is the ownership and operation of a high-capacity fibre-optic telecommunications line (or "ring") that provides voice, video and data connectivity to Southern Ontario for telecommunications companies operating in Northern Ontario.
"This matter is another example of the Bureau’s ongoing vigilance when it comes to competition in Canada’s telecommunications sector. It also demonstrates our commitment to the principled enforcement of any transaction, regardless of its size. I commend the parties for working effectively to resolve the Bureau’s concerns in this matter. With the agreement reached between Bell Aliant and Eastlink, households and businesses in Northern Ontario will continue to benefit from vigorous competition in the provision of wireline telecommunications services."
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