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- Reprinted In File Form On March 27, 1990
-
- Orignally Publised In Popular Electronics Electronics Hobbyists Handbook 1990
-
- ===============================================================================
-
- Secret Phone Bypassing Stirs Row
- By: Mike Urlocker
- THE FINANCIAL POST
-
- An underground telecommunications network used by businesses to divert
- millions of dollars from Canadian telephone companies is flourishing,
- industry experts say.
- And apart from cutting their rates to compete, there is little the
- telephone companies can do to control it. (HAHA to Bell!! -Tomcat).
- "The telephone companies are scared to death," says Frank Koelsch,
- senior vice-president of Transition Group Inc., a Toronto-based market
- research firm. "There's lots of people doing it. It runs the gamut from
- small business to large corporations."
- Companies using the system, known as "Canada-Canada Bypass," use
- private lines and switches to route their domestic long-distance traffic
- through the U.S., where rates are lower.
- For example, a Vancouver-based company with operations in Windsor,
- Ont., could bypass the Canadian long-distance network by routing its traffic
- over private lines from Vancouver to a switch in Seattle, Wash. From
- there, the traffi is picked up by a U.S. long-distance carrier and piped
- across to Detroit. A third hop routes the calls back across the border
- to Windsor.
-
- Monopoly Carrier
-
- Similiar methods are used to route overseas calls through the U.S.,
- bypassing Teleglobe Canada Inc., the monopoly overseas carrier.
- People familiar with the technique say a corperate telecommunications
- manager could rig such a system so it is invisible both to employees
- and the telephone companies. With U.S. long-distance rates about half
- what Canadian companies charge, substantial savings are reaped.
- The practice violates agreements between U.S. telephone companies and
- Telecom Canada, the association of nine regional monopoly telephone com-
- panies, as well as policy of the Canadian Radio-television & Telecommun-
- ications Commision. Companies that bypass risk having their phones
- disconnected.
- Nobody knows how extensive bypassing is. But Koelsch estimates 20% of
- the $12-billion-a-year Canadian long distance business is threatened.
- Telecom Canada and rival CNCP Telecommunications say bypass is im-
- possible to monitor but downplay the damage.
- "It's probably getting worse," says Frank Degenstein, former president
- of Telecom Canada. "[But] it's not that economical for companies to do
- it."
- The telephone companies say bypass is illegal but others disagree.
- Koelsch and George Harvey, president of CNCP, say that while bypass breaks
- the phone companies' agreements, it is not against the law. Further,
- Koelsch argues that attempts to stop bypass could be challenged as a non-
- tariff barrier under the Canada-U.S. free trade agreement.
- "They have perpetuated the myth that it's impossible and illegal,"
- said Koelsch, who recommends bypass to reduce domestic long-distance
- bills.
-
- Alliance Disagrees
-
- The Canadian Business & Telecommunications Alliance, which represents
- 300 major telecommunication users, disagrees with Koelsch's analysis,
- saying the practice is illegal.
- To bypass the Canadian network, a Canadian company must lease private
- lines to the border. As a result, at least peripherally, a Canadian
- supplier is involved.
- Telephone companies, CNCP and a half-dozen resellers, small firms that
- lease bulk private lines from the carriers and resell them at a discount,
- offer lines to the U.S. That is permitted as long as the traffic is not
- rerouted back across the border into Canada.
- CNCP's Harvey says he "absolutely guarantees" CNCP does not let its
- lines be used for bypass. But, he adds, once lines are in the hands of
- resellers, "we have no way of checking."
- In a recent submission to the CRTC calling for increased regulation of
- resellers, British Columbia Telephone Co. said two Canadian resellers
- were bypassing the Canadian network. The firms were not named.
- Resellers, which deny the charge, usually sign agreements with their
- suppliers not to bypass the Canadian network.
-
- You may distrubute this file freely but may not change any part of this file in
- whole or part without the written or verbal concent of the author.
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- 04-27-90/010 Copywrite 1990 By The Lost Avenger-All Rights Reserved
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