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Telecommunications in Canada

Telecommunications in Canada

Copyright Date: 1990
Pages: 363
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  • Book Info
    Telecommunications in Canada
    Book Description:

    Babe reintroduces the principle of corporate/governmental responsibility for communication outcomes, a principle that has been largely drowned out by the shrill cries of 'Information Revolution.'

    eISBN: 978-1-4426-8042-5
    Subjects: Business, History

Table of Contents

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  1. Front Matter
    (pp. i-vi)
  2. Table of Contents
    (pp. vii-xii)
  3. Preface and Acknowledgments
    (pp. xiii-xvi)

    • 1 Mythologies of Canadian Telecommunications
      (pp. 3-21)

      ‘There are eight million stories in the naked city; this has been one of them.’ So ended each episode of a once popular U.S. television series.

      It is doubtful that there are more than a handful of distinctly different stories of Canadian telecommunications. None the less, the author is aware that what follows can be but one.¹

      Other books on our topic, although not numerous, have appeared. Mostly they have been ‘living histories’² that have tried to place the reader in the period; describe the adventures, misadventures, tricks, and heroism of the personalities; recount anecdotes, humorous and otherwise; describe the...

    • 2 Telecommunications Today
      (pp. 22-32)

      Literally ‘communicating over distance,’ and in that broad sense encompassing also the transportation of messages fixated on tangible form, the termtelecommunicationsis currently confined to the meaning: ‘any transmission, emission or reception of signs, signals, writing, images, sounds or intelligence of any nature, by wire, radio, optical or otherelectromagneticsystems.’¹ ‘Telecommunications,’ therefore, in modern usage denotes the transmittal of messages by electromagnetic spectrum, as opposed to either human travel or the transporting of messages enscribed on a palpable medium.² Telecommunications encompasses visual semaphores (an ancient art) as well as the electric telegraph, the telephone, radio and television broadcasting,...


    • 3 Onset of Electronic Communication
      (pp. 35-44)

      Although others anticipated electric telegraphy, some even giving practical demonstrations, it is generally to the English partnership of William Cooke and Charles Wheatstone, and to the American Samuel F.B. Morse, that credit for invention is given. Cooke and Wheatstone received their patent for England in June 1837 and in the following month successfully demonstrated a five-needle telegraph over a distance of 1½ kilometres to directors of the London-Birmingham Railway. Their first permanent line was constructed the following year, alongside the Great Western Railway. None the less the public remained unimpressed until 1845, when sensational news coverage depicted the telegraph’s role...

    • 4 Cartelization
      (pp. 45-53)

      In 1850, the year prior to Hugh Allan’s presidency, Montreal Telegraph operated merely 500 miles of line, all in the province of Canada. By decade’s end, however, its operations stretched 1900 miles, dipping even into some northern states.¹ Although the emerging giant had been barred entry to the Maritimes on account of exclusive charters bestowed on others, its lines touched the New Brunswick border as early as 1856 through take-over of Gisborne’s defunct B.N.A. Telegraph. Growth continued unabated through the next decade. By 1865 most towns and villages, harbours on the lakes, and the lumbering districts of the Ottawa River...

    • 5 The Telegraph Coast-to-Coast
      (pp. 54-62)

      Despite non-overlapping territories and common membership in the continental cartel, the American Telegraph Company and Western Union were in other respects great rivals between 1856 and 1866, each company striving to dominate telegraphy in North America and the rest of the world. Whereas the former was entangled laying faulty Atlantic cables, the latter became ensnared in an equally massive scheme – an overland telegraph to Europe from San Francisco, via the west coast of North America and across the Bering Strait to Russia,¹ a project in which the U.S. government took keen interest. Benefiting from generous congressional funding, Western Union completed...


    • 6 Inception
      (pp. 65-73)

      The telephone and telegraph industries in Canada have striking parallels in their inception and early development. Not only were the two fields closely integrated in telephony’s early years, but also charters were decisive in shaping industrial structures. Moreover, in each case, an ‘industry captain’ – Charles Fleetford Sise in telephony and Hugh Allan in telegraphy – arrived early on the scene to develop and implement monopolistic practices for the soon-dominant firms. The restrictive measures used were similar too: refusal to interconnect, mergers and acquisitions, collusive deals with the railroads, predatory pricing, political wheeling and dealing, and vertical integration. Finally, both industries emerged...

    • 7 Independent Telephones
      (pp. 74-90)

      In early 1885 one pillar undergirding the Bell Telephone monopoly crumbled. The Minister of Agriculture, Sir John Carling (the brewmaster), serving also as patent commissioner, noted that Bell was importing parts for its telephone instruments and was leasing, not selling, sets.¹ Carling declared the original Bell patent void on 24 January.² Adding insult to injury, another patent was negated in 1887.³

      Recognizing at once the gravity of the commissioner’s ruling, C.F. Sise, still vice-president of Bell, turned to Theodore N. Vail, general manager of American Bell, for help in devising strategies to shore up the flagging monopoly. Vail’s advice was...

    • 8 The Politics of Government Control
      (pp. 91-101)

      The first attempt by the federal government to assume a measure of regulatory control over the Bell Telephone Company of Canada occurred in 1892, with an amendment to the Bell charter providing that ‘existing rates shall not be increased without the consent of the Governor-in-Council.’¹ This provision was deemed nugatory by the minister of justice in 1897, however, when he opined that the amended clause pertained only to contracts existing prior to the act’s passage, meaning that Bell could raise prices indiscriminately – certainly to new subscribers, but also to existing ones upon changes in the equipment rented.² Therefore rounds of...

    • 9 Western Reaction
      (pp. 102-113)

      Laurier’s ‘compromise’ did not sit well on the prairies where the three governments each bought Bell out between 1908 and 1909. Only in British Columbia did the telephone situation in the west continue unaltered, but there, after all, Bell had pulled out in 1889. This chapter recounts developments in Canada’s four most westerly provinces.

      As early as 1899 Manitoba amended its Municipal Act to permit municipal ownership of local exchanges. Dozens of local companies thereafter arose, each of course prohibited from connecting with Bell’s long-distance lines. In an effort to resolve this perplexing and unsatisfactory situation, the provincial premier, Sir...

    • 10 Local-Exchange Competition in Ontario and Quebec
      (pp. 114-126)

      This chapter, which marks a transition in expository style, opens by recounting the development of the telephone industry in Ontario and Quebec between 1906 and 1925, the latter date marking the demise of direct telephonic competition at the local level. The discussion then continues with an analysis of Bell’s shifting relations over the intervening years with the surviving (non-competing) independents. It concludes with a review of a current issue, ‘reversed rate rebalancing,’ which is of immense importance to surviving independents and, beyond that, has far-ranging repercussions on the viability of competition in long-distance service, on the sustainability of telephone universality,...

    • 11 Long-Distance Competition and Reversed Rate Rebalancing
      (pp. 127-136)

      In addition to having a lethal effect on most local companies, the initial rounds of rate rebalancing undertaken between 1923 and the early 1970s also stirred up longings for rivalry in long distance, now the more lucrative field. One would-be entrant was Northern Telephone Limited. Founded in 1905 as the Temiskaming Telephone Co., Northern extended its territory to encompass vast reaches of northern Ontario, stretching from Chibougamou, Quebec, to the Manitoba border, and north from Cobalt, Sault Ste Marie, and Atikokan to Hudson Bay, embracing some 150 communities and settlements. In 1963 Northern applied for connection at Fort William for...

    • 12 Natural Monopoly: Arguments and Evidence
      (pp. 137-149)

      ‘Personal interest,’ John Kenneth Galbraith once observed poignantly, ‘always wears the disguise of public purpose, and no one is more easily persuaded of the validity or righteousness of a public cause than persons who stand to gain personally therefrom.’¹ Galbraith’s remarks enlighten perception when considering the doctrine of natural monopoly and examining its application to Canadian telecommunications.

      ‘Natural monopoly,’ coined in 1848 by John Stuart Mill,² denotes instances where competition is perceived as being unsustainable or undesirable. Early in this century the telephone industry began applying the appellation to itself, attaining thereby an aura of necessity, respectability, and even benevolence...

    • 13 Unnatural Monopoly: Predatory Pricing and the Cost Inquiry
      (pp. 150-157)

      The contradiction discussed in the previous chapter – between the doctrine of economies of scale, and service universality through cost-averaging and cross-subsidization – is matched by yet a further contradiction, this time inhering in the latter proposition alone. On the one hand cost-averaging and cross-subsidization can indeed be practised in a manner conducive to service universality. On the other, cost-averaging and cross-subsidization can also be practised in a manner that erodes universality of telephone service, owing to the temptation telephone companies may experience to cross-subsidize competitive markets from revenues generated in monopoly markets, making competition less viable in the former while eroding...

    • 14 Rate Regulation
      (pp. 158-174)

      Even in telephony’s early years, apprehension existed that in selected markets prices were too low. From 1885 to at least 1905 Bell Canada, in the face of competition, routinely lowered rates for local service, sometimes to zero. In the modern era too, as we have just seen, concern has persisted that in selected markets telecommunications prices may be non-compensatory, designed to drive out rivals.

      Such has not been the qualm preoccupying regulators’ attention over the bulk of regulatory history, however. Rather, their major misgiving has been that telephone prices could be toohigh.Guarding against this possibility, which was a...

    • 15 Juggling Corporate Forms
      (pp. 175-196)

      Assessing regulation on the basis of such policies as rate base, rate of return, costing, and revenue requirements is, however, to miss the main point. There is no arguing the importance of such concerns. None the less, they bear about the same relationship to telephone company operations as do a few still-photos to a complete football season. The attention to detail hides what is taking place on the rest of the playing-field, in the dressing-room, and during the off-season.

      Historically it has been within the telephone company’s powers to determinewhichactivities, investments, revenues, costs, prices, and profits will be...

      (pp. None)

    • 16 Broadcasting
      (pp. 199-207)

      At telephony’s inception, point-to-point communication was hardly the only use of the telephone. The 16 November 1877 edition of theBobcaygeon Independent,for example, reported that Mr Fowler, one of Melville Bell’s local agents, held soirées ‘almost every evening during the past week ... at which songs, duets and even glees have been so perfectly conveyed over the wire between here and Lindsay [about 20 miles] that the separate voices could be distinguished.’¹ Perfection not infrequently discloses imperfection, however, and the festivities in Bobcaygeon were no exception; according to one wag gifted with an especially acute ear, a distant vocalist...

    • 17 Cable Television
      (pp. 208-218)

      ‘I’m just the plumber who puts the pipes together,’ quipped cable industry consultant Israel Switzer to a broadcasting conference in 1980. ‘I don’t care what people flush down them.’¹

      Switzer’s perspective appears to have largely won the day. In the late 1980s Ottawa’s paramount concern is promoting ‘new technologies’; broadcasting content is increasingly perceived as a means towards that end. In speeding acceptance of this revisionary stance towards broadcasting, cable TV representatives have been not only loquacious but effective.

      Introduced to Canada in London, Ontario, in 1952, cable for many years remained predominantly a six-channel rediffusion service, enhancing television reception...

    • 18 Communications Satellites
      (pp. 219-228)

      In 1945 Arthur C. Clarke, then chairman of the British Interplanetary Space Society, was first to envisage artificial satellites in geosynchronous orbit. Microwave and broadcasting signals, the futurologist and science fiction writer advised, could be sent to and from geostationary satellites, of which but three were required to overlie virtually the entire surface of the earth.¹

      Whereas Clarke’s extraterrestrial vision was peaceable, less so was that of Wernher von Braun, best known of the German scientists who emigrated to the United States upon the close of World War II and who helped propel U.S. ascendency in the field of rocketry....

    • 19 Electronic Publishing
      (pp. 229-236)

      If simultaneously funding and restricting satellite communication has been the number one priority of the Department of Communications over the years, promoting Telidon, has surely been the number two. Invented at the department’s Communications Research Centre in the late 1970s, Telidon is at once an electronic device and a service.¹ Like Prestel in Great Britain and Teletel in France, Telidon is a means of digitally encoding/decoding graphic information in electronic transmission.²

      Invention of Telidon in 1978 was heralded by the Department of Communications as a major Canadian breakthrough, and the annual report for that year waxed enthusiastic: ‘Telidon, the world’s...


    • 20 Political Economy
      (pp. 239-246)

      For introduction this book required two chapters – one to adumbrate certain mythic doctrines enveloping Canadian telecommunications, and a second, to describe current industry structure. Likewise for conclusion, two chapters again are called for. The present chapter recapitulates Canadian telecommunications policy issues in the context of historical development (political economy). The final chapter probes the existential meaning of communications ‘technology’ and the ‘information revolution.’

      For decades prior to the 1970s, telephony was regarded as a ‘natural monopoly.’ Grounded on a triumvirate of assumptions –efficiencythrough economies of scale,systemic integritythrough end-to-end control,service universalitythrough cost-averaging and cross-subsidization-monopoly in telecommunications...

    • 21 An Information Revolution?
      (pp. 247-258)

      If the ‘information revolution’ may be said to have had a father, surely it would be the late Fritz Machlup, formerly economics professor at Princeton. Machlup’s 1962 book,The Production and Distribution of Knowledge in the United States,was the inaugural attempt to identify and explore the pervasive importance for the U.S. economy of information and knowledge production. That seminal work inspired two burgeoning literatures, most directly one on the information economy but another on the information society. The latter incorporates social, cultural, and political analyses and forecasts deemed attributable to the perceived exponential growth in information-related activity. Together these...

  9. Notes
    (pp. 259-318)
  10. Bibliography
    (pp. 319-342)
  11. Index
    (pp. 343-363)