STATUTORY DECLARATION --------------------- CANADA ) IN THE MATTER OF ) PROVINCE OF ALBERTA ) An Application for Inquiry pursuant ) to Section 9 of The Competition Act ) TO WIT: ) I, Jonathan S. Levine, of the City of Calgary, in the Province of Alberta, at the address of #201 1039 17th Ave. SW T2T 0B2; I, Olaf Herman Nilsson, of the City of Calgary, in the Province of Alberta, at the address of Penthouse 1812 4th St. SW T2S 1W1; I, David E. Berzins, of the City of Calgary, in the Province of Alberta, at the address of 1835B 10th Ave. SW T3C 0K2; I, Hans J.H.M. Hoogstraat, of the City of Calgary, in the Province of Alberta, at the address of 4624 Varsity Drive NW T3A 2L9; I, Kevin W. Jameson, of the City of Calgary, in the Province of Alberta, at the address of #820 734 7th Ave. SW T2P 3P8; I, Geoffery Shmigelsky, of the City of Calgary, in the Province of Alberta, at the address of #1590 300 5th Ave. SW T2P 3C4; DO SOLEMNLY DECLARE AS FOLLOWS: 1. We are each of the opinion that Telus Corporation, AGT Limited, and/or related and/or subsidiary companies has or have committed or is or are about to commit an offence under Part VI or VII or grounds exist for the making of an Order under Part VII of the Competition Act, R.S.C., 1985, c.C-34, as amended. 2. The nature of the alleged contravention or failure to comply, or alternatively, the grounds alleged to exist for the making of an order, or alternatively, the alleged offence under The Competition Act is/are as follows: The promised entry by Telus Corporation, AGT Limited, and/or related and/or subsidiary companies into the business of supply of Internet services to end users will constitute an abuse of dominant position as defined under Section 78 of the Act, and should as such be subject to a prohibition order under Section 79 of the Act. 3. A concise statement of the evidence supporting our opinion is: Telus Corporation, through AGT Limited and ED TEL, completely controls the supply of local subscriber telephone service in the province of Alberta. Independent commercial Internet Service Providers (ISPs) must buy this service from AGT in order to supply Internet services to their customers. The large numbers of these telephone lines required makes telephone service the largest single expense incurred by ISPs in the course of their business. The price of this service is fixed by regulatory tariff and as such is not negotiable or subject to discount. AGT/Telus, as a profitable entity, thus can effectively supply to itself this necessary service at a rate unavailable to ISPs. AGT/Telus has, in financing the installation of the equipment required to support this service, provided a capital subsidy to its Internet operation. Additionally, the use of the company's existing billing mechanisms, et. al., will comprise operating subsidies, as may the use of "800" toll-free long distance service. Further, AGT/Telus has stated an intention to withdraw from ISPs the "Centrex" class of telephone service. This relatively inexpensive service is presently, in a low-margin business, one of the few advantages available in the struggle toward profitability. Withdrawal of Centrex service and its replacement by conventional "business" service will result in a dramatic increase in telephone service costs to the ISPs, guaranteeing their failure. AGT claims that they are withdrawing Centrex service on technical grounds, yet have stated that they intend to use Centrex in the delivery of their own Internet service. The threatened AGT/Telus entry into competition against independent commercial ISPs within the Internet market is, by its nature, a margin squeeze by a supplier holding a total monopoly over a service required by its competitors. Additionally, the increase in operating expense to ISPs attendant in withdrawal of Centrex service will assure the destruction of these competitors. Finally, by virtue of their position as a monopoly common carrier, AGT/Telus is uniquely privy to confidential and proprietary information regarding the independent ISPs with which it wishes to compete. As all of an ISP's business consists of telephone communications with customers, the ISPs' customer lists and detailed information on their usage are in AGT/Telus's possession. AGT/Telus would thus have an unfair competitive advantage by virtue of having access to this information, and the potential exists for abuse of this confidential and proprietary information. In the circumstances, the above-noted acts of AGT/Telus constitute an abuse of dominant position in the telecommunications industry and will substantially lessen competition in the Internet market. Supporting documents attached to this statutory declaration:
Description of services and price list
"re: High Usage Applications and Centrex Voice Service"
"RE: TARIFF NOTICE NO. 609"
4. Jonathan S. Levine, whose address is as listed above, is the person authorized to represent me for the purpose of receiving any communication to be made pursuant to The Competition Act; 5. We each make this Declaration conscientiously, believing it to be true and knowing that it is the same force and effect as if made under Oath. DECLARED BEFORE ME in the City ) of Calgary, in the Province of ) Alberta this 28th day of ) (signed) April, 1995. ) (signed) ) Jonathan S. Levine Commissioner For Oaths: DECLARED BEFORE ME in the City ) of Calgary, in the Province of ) Alberta this 28th day of ) (signed) April, 1995. ) (signed) ) Olaf Herman Nilsson Commissioner For Oaths: DECLARED BEFORE ME in the City ) of Calgary, in the Province of ) Alberta this 1st day of ) (signed) May, 1995. ) (signed) ) David E. Berzins Commissioner For Oaths: DECLARED BEFORE ME in the City ) of Calgary, in the Province of ) Alberta this 28th day of ) (signed) April, 1995. ) (signed) ) Hans J.H.M. Hoogstraat Commissioner For Oaths: DECLARED BEFORE ME in the City ) of Calgary, in the Province of ) Alberta this 28th day of ) (signed) April, 1995. ) (signed) ) Kevin W. Jameson Commissioner For Oaths: DECLARED BEFORE ME in the City ) of Calgary, in the Province of ) Alberta this 28th day of ) (signed) April, 1995. ) (signed) ) Geoffery Shmigelsky Commissioner For Oaths: