Microcell sues Telus Mobility over analog coverage

2004-01-23 14:34 ET - Street Wire

by Stockwatch Business Reporter

Microcell Solutions, a subsidiary of Microcell Telecommunications, is
suing Telus Mobility in an effort to force the Telus subsidiary to
continue to allow Microcell access to Telus's analog network for cell
phones. Microcell claims that Telus's actions are part of an
anti-competitive drive after Microcell introduced a new phone plan in
Vancouver to allow unlimited calling on Microcell's digital network.

Microcell begins its 11-page tale of history, woe and injustice by
explaining that, with a 9-per-cent share in the Canadian cell phone
market, it has used the Telus Mobility analog network to provide
dual-mode service to its clients since Sept. 5, 1997. In Canada, Telus
Mobility and Bell Mobility offer analog roaming services in different
parts of Canada, with Telus providing analog services to Microcell in
non-urban areas of B.C., Alberta and several parts in Quebec. Microcell
itself provides only digital services in urban areas. Microcell's
dual-mode subscribers historically generate high revenue for Microcell.
Those dual-mode subscribers are provided with digital service in urban
areas and switch to the analog provider's coverage once outside of
Microcell's digital range.

Microcell then moves on to the source of its unhappiness, claiming that
on Oct. 23, 2003, without any prior notice or discussion, Telus
contacted it with allegations that Microcell was not meeting the terms
of the agreement that allowed Microcell to access the Telus analog
network. Telus was most concerned with Microcell's limitation of
liability provisions in the service agreement with its customers. Prior
to receiving the letter, Microcell states that Telus had not contact it
with any concerns over Microcell's coverage plans.

On Dec. 21, Telus and Microcell began mediated talks, which were
terminated by Telus's announcement that it was going to stop providing
analog network access to Microcell customers as of Jan. 12, 2004.
Microcell claims to have offered to address any concerns Telus may have,
by revising its limitation of liability provisions to its customers,
apparently to no avail.

Microcell alleges that Telus breached its obligations under the
agreement and has "engaged in a pattern of anti-competitive conduct
designed to interfere with Microcell's business." Microcell considers
the notice from Telus to be "legally ineffective" as it was not sent to
Microcell according to provisions in the agreement, as amended by Microcell.

For more than six years, Microcell claims, Telus has not raised any
issues with the Microcell limitation provisions, and so cannot now go
back and complain about previous service agreement Microcell had with
its customers.

Microcell growls that since the launch of Microcell's City Fido service
in October, 2003, under which customers can make unlimited calls in the
Vancouver Lower Mainland area for $40 per month, Telus "has retaliated
with a course of conduct that appears to be designed to interfere with
Microcell's ability to do business." The main allegation of bad-faith
manoeuvering is a telemarketing campaign directed by Telus directly at
Microcell customers. Microcell claims the campaign, conducted by
sequential dialling, is prohibited by the Canadian Radio-Television and
Telecommunications Commission (CRTC). On Nov. 10, 2003, the Quebec
Superior Court granted an provisional injunction against the campaign in
the form of a safeguard order to Microcell. However, Microcell claims
that Telus has continued its "improper and anti-competitive behavior" of
soliciting Microcell's customers. Two other safeguard orders against
Telus were granted on Dec. 3 and on Dec. 11. Microcell is currently
seeking to have Telus cited in contempt of the Quebec Superior Court as
a result of its continued actions.

Microcell, citing the highly competitive nature of the cell phone
industry and certain restrictions imposed upon it since coming out from
bankruptcy protection, has asked the B.C. court for an injunction that
will prevent Telus from suspending or terminating access to the analog
network, from terminating the agreement due to any past non-compliance,
as well as a declaration that Telus has an obligation resolve issues it
has with Microcell instead of just cancelling the agreement. Microcell
ends its sad story by claiming that if Telus is allowed to suspend or
end the analog provider agreement, Microcell would suffer irreparable harm.

The statement of claim was filed in the Vancouver registry of the
Supreme Court of British Columbia on Jan. 15, 2004, by Hein Poulus
Stikeman Elliott. The allegations made in the statement of claim have
not yet been addressed or proven before the courts, and no statement of
defence has yet been filed.