Dumb-Bell: There’s Never Been a Better Time to Nationalize the Telcos

Bell Canada, corporately known as BCE Inc. (TSX: BCE, NYSE: BCE), announced Thursday that it would be laying off even more people, and selling off a few dozen radio stations, to “align costs to the revenue potential of each business segment.”

Statements from CEO Mirko Bibic and various other nodes on the Bell brass work have this down to two specific injustices perpetrated on Canada’s largest telco by the federal government.

  1. A November CRTC decision mandating that Bell must lease time on its newly constructed high-speed fiber network to other telco providers: no more hogging it all to themselves.
  2. A failure to stick the landing on Bill C-18, which would have forced search and social media giants to pay for news content shared by its users.

When the Online News Act became law, forcing digital content giants to work out a deal to pay for their redistribution of Canadian news, Facebook/Meta just blocked Canadian news, told the government to get stuffed, and hasn’t moved off of its position. Google has agreed to cough up $100 million / year for Canadian news outlets, and the government capped the portion of that sum that could be allocated to broadcast media at $30 million. That won’t be much use to Bell’s news division, which it claims runs around $40 million / year in operating losses…

The operating loss generated by Bell Media’s news division is a rounding error.

… that don’t really matter much in the broader context of Bell itself.

We’ve got plenty to say about content, who should finance it and why, but let’s deal with the fiber thing first.

Bell announced that it would be spending less money building out its network immediately after the CRTC’s November decision to mandate that Bell must allow wholesale access to its fiber network to competitors, who would then re-sell the service to consumers in competition with Bell. Bibic explained that the “incredibly tough” decision to lay off 9% of its workforce was a product of the CRTC keeping it from shutting competitors out of its networks “before we even had an opportunity to recoup our multi-billion dollar investment,” in its fiber networks, to which the CRTC replied, astutely, that it does not determine “how private companies allocate their profits,” in a statement to the Globe and Mail.

The Deep Dive called the CRTC pushovers after Bell’s last round of layoffs, so we’re happy to see them sticking up for themselves (and the rest of us), and extra happy to put their sentiment in the type of direct terms that government agencies aren’t allowed to use:


Bell spent $14 billion building out its network over the past five years, and still generated more than $2 billion per year in free cash flow because, contrary to what Bibic would have us believe, they didn’t build that network in an act of altruism.

The CRTC’s networking decision means Bell won’t end up with an outsized split of the money Canadians spend on telco that they currently enjoy for the fiber-optics internet network that that $14 billion was spent to build. Bell is suing to have the order overturned, but are throwing their toys out of the sandbox in the meantime, just in case the courts forget who they are.

As our business is hampered by regulatory decisions that discourage investment, we are slowing the pace of our network expansion and capping fibre speeds.

Bell Canada

On the heels of the CRTC’s November announcement, Bell told the world it would be cutting its capital expenditures, and capping internet speeds on its networks. True to form, Bell cut its capital expenditures in Q4 2023 by 37%, and appears to be firing anyone who they might need to build it out any further, just so everyone gets the message: “Don’t expect us to be job creators if we don’t get full control of our build.”

But at least they saved the dividend!

Shout out to The Toronto Star‘s David Olive, who might be the only one left in the business section of a daily paper who understands businesses holistically. He points out that the government didn’t force Bell into their underperforming radio assets, or into the competitive cellphone market. We’re happy to add here that the government isn’t making them prioritize the dividend and the stock price it affects, either.

Bells’ dividend hasn’t declined in at least ten years. It hasn’t had to, because Bell’s lock on the country communications infrastructure is a license to print money. Its capital investments in new and better network infrastructure amount to it expanding and buttressing its core business.

Somewhere along the way, Bell seems to have lost track of the reason it owns a media division in the first place.

A detour to the Post Office

In the United Kingdom, Post Office outlets are run by local sub-postmasters under something like a franchise agreement. These people are basically local shopkeepers who handle the counters under contract, and their contracts make them liable for any bookkeeping shortfalls that their branches encounter.

In 1999, the Post Office rolled out a centralized, networked software called “Horizon” that was meant to handle inventory and bookkeeping in the Post Offices. Sub-postmasters started reporting that the system wasn’t properly balancing their books almost right away. The reply from the Post Office to these individuals was that there was nothing wrong with the system, that they were the only ones reporting bugs, and that they’d better cough up the “shortfall” if they didn’t want to get charged with theft.

The UK Post Office has its own prosecutors, which it used to hound many of its sub-postmasters into financial ruin. By 2015, it had terminated about 900 sub-postmasters’ contracts and put 236 of them in jail.

It turned out that there was quite a bit wrong with Horizon, and the Post Office should have known as much based on the fact that it was far more likely than about half of their vetted and selected managers stealing from them and blaming it on the computer system. But the company forged ahead ruining these peoples’ lives.

Some of the affected sub-postmasters formed a group to get redress from the Post Office and spent about 15 years getting pretty much nowhere. When they finally won a civil suit, the yield after lawyer’s fees wasn’t anywhere near what most of them had lost, and many of them still had criminal jackets. They were standing around with signs and writing letters to the press, and people knew about it, but not at any scale that the government that owns the Post Office could care about, until someone put it all on “the telly.”

Title Card swiped from moneycontrol.com. Click image for video about the hottest story in the UK… the Post Office.

Mr. Bates vs. The Post Office is a show produced by and aired on ITV, an over-the-air television network in the UK. It isn’t a particularly entertaining show, but it isn’t bad. It’s sympathetic to the victims and faithful to the narrative. The four episode series played to about 10 million people per night from January 1st to 4th, and has become a hit.

During the filming of Mr. Bates vs. the Post Office, The Post Office announced an offer to settle with the affected sub-postmasters for £600,000 each. Since the show has aired, the former postmasters who had been pushed around for 20 years are in a position to take their time and think about it. Mr. Bates himself rejected a “cruel” compensation offer January 31st, and the media who ignored him for most of that time are all over it.

Yes, we’re aware that Bell Media creates original content for TV and streaming. We’re also aware that it all stinks.

We love TV. It’s a proven method of shaping public opinion, and if Bell had any imagination at all, they’d be running studios that create high grade original TV to put on their networks and streaming services, and giving the public something they want to watch.

If they managed to crank out a hit or two, the public might be inclined to take their complaints about government interference seriously. “We need the money to make your favorite shows,” is a way better pitch than, “We need the money so that we can continue to charge so much for our network, and if we don’t get it, you’re all fired!”

Letterkenny’s alright… but it’s only got the one gear.

Information for this story was found via the sources and companies mentioned. The author has no securities or affiliations related to the organizations discussed. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

3 thoughts on “Dumb-Bell: There’s Never Been a Better Time to Nationalize the Telcos

  • February 11, 2024 2:18 PM at 2:18 pm

    Agreed. Internet and telephone are essential services and a natural monopoly. Like water and electricity, every Canadian deserves equitable access to them. By equitable I mean the same price and performance irrespective of one’s geographic location or demographic characteristics. This translates into universal FTTP and 5G at postage stamp pricing.

    Facilities-based competition is a failed regime which makes no economic sense. Imagine building multiple electric cables or water pipes to the same civic address. It would be considered insane and wasteful.

  • February 10, 2024 2:29 PM at 2:29 pm

    Worth noting is Bell has received and contiues to receive billions of dollars in taxpayer funded subsidies to upgrade their infrastructure to their own subscribers in rural and remote communities where they have a monopoly or are part of duopoly. Governments should claw back these funds.

    • February 11, 2024 1:19 PM at 1:19 pm

      Or just take the networks. Buy them out, make it a national asset, knock the divvy money off the cost of cable phone & internet. The capital camping on that divedend can move up the risk curve & make something for a change. Works fine for hydro.

      Thanks for reading.



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