MTS Allstream and the Canadian Telecommunications Industry

The Canadian telecommunications industry is constantly evolving, owing to changes in technological innovation, new regulations, increasing competition and rising expectations for customer value.

The telecommunications industry in Canada historically has been one of our strongest sectors due, in part, to our geography and the great distances we need to bridge from coast-to-coast. We believe that it will remain at the centre of Canadian life in the future as an enabler to economic growth and community enrichment.

Today, more than ever, Canadian society and the organizations and individuals who function in it are highly dependent on a web of high-speed interactions, transactions and collaborative activities that flow across networks designed, built and operated by providers such as MTS Allstream.

Network Technology Innovation

Advances in internet protocol-based communications, next generation mobility systems, and fibre optic technology continue to radically increase the capabilities, change the economics, and drive the convergence of previously separate networking silos and business segments in the industry. The result today is an increasingly powerful, all-encompassing, globally connected network infrastructure that is at the service of millions of Canadian consumers and businesses, enabled by a proliferating array of new devices and applications.

Regulatory Evolution

The Canadian industry has on balance evolved toward a more competitive environment over the past decade, with the Canadian Radio-television Commission ("CRTC") responding to greater demands for new regulations toward the goal of injecting more flexibility, diversity and competition into the market. We believe that the Canadian economy - and Canadian society as a whole - can only benefit from the continued evolution of the regulatory framework governing our industry.

During 2006, several policy and regulatory decisions were issued that were positive for the company on an overall basis. These CRTC decisions lowered the costs incurred by our Consumer Markets division for the use of the local network facilities controlled by the incumbent telephone companies. In December, the federal Minister of Industry issued the first-ever policy direction that recognizes the direct link between competitor access to incumbent-controlled local networks and vibrant competition in the telecommunications industry, particularly in the business market. Developments also have occurred with respect to the potential auction of wireless spectrum to drive more competition in the national market.