Indirect Impact

BCE's investments in reliable and innovative communications technology have an indirect but important financial impact on Canadian communities. By bringing robust, secure and advanced communications solutions to consumers and businesses, we help promote Canada's global competitiveness and economic well-being.

NETWORK INFRASTRUCTURE

BCE is committed to making investments to expand and update our networks and to meet customer demand for new services.

Our wireline network enables national transport of voice, data and Internet traffic. Our local access network consists of 12.6 million local telephone lines. Our national wireless networks provide voice and data services. We provide direct-to-home satellite, VDSL (very high speed digital subscriber line) and hybrid fibre co-axial cable delivery of video services. In addition,, our extensive fibre-optic network enables us to deliver advanced solutions to business customers in most cities of British Columbia, Alberta, Ontario, Québec, and the Atlantic provinces. In 2005, we introduced Voice over IP (VoIP) telephony service to residential customers in certain cities under the Bell Digital Voice banner.

Wireless network

Our wireless network provides voice services, as well as data services at typical transmission speeds of approximately 120 Kbps delivered over our existing single-carrier radio transmission technology (1xRTT) network. In 2005, we launched Canada's first Evolution, Data Optimized (EVDO) wireless data network in Toronto and Montréal. EVDO technology is the third generation (3G) of wireless networks delivering average data download speeds of 400-700 kilobits per second (Kbps) with peaks of up to 2.4 megabits per second (Mbps). At the end of 2005, our wireless network covered:

• 95% of the population in Ontario and Québec
• approximately 90% of the population in Atlantic Canada
• the major cities in the provinces of Alberta and British Columbia.

In 2005, Bell Canada launched a Wi-MAX (Worldwide Interoperability for Microwave Access) technology trial in Madoc, Ontario that, if successful, could be the foundation for bringing wireless broadband service to sparsely populated rural areas of Canada.

We also announced an alliance with Rogers Communications Inc. to jointly build and manage a national wireless broadband network through Inukshuk. Inukshuk will provide subscribers wireless access to the Internet and enable a host of voice, video streaming and data applications. The network footprint is expected to reach more than two-thirds of Canadians by the end of 2008, covering over 45 cities and approximately 100 rural and remote communities that are not currently served.

Broadband accessibility

During the year, we continued the rollout of broadband technology that is expected to ultimately bring next-generation services to approximately 4.3 million households in the Québec City to Windsor corridor. Our 2005 program included the rollout of FTTN (fibre-to-the-node) to an additional 1,672 neighbourhoods, increasing the total number of neighbourhoods provisioned to 2,048, and the signing of another 422 access agreements to bring VDSL to MDUs (multiple-dwelling units) in the Greater Toronto Area. By the end of 2005, we had signed VDSL access agreements with 757 buildings and had provisioned 464 of them.

Satellite communications

In 2004, a subsidiary of Telesat launched Anik^TM F2, the world's largest commercial communications satellite and the first to fully commercialize the Ka frequency band. This is a breakthrough in satellite communications technology as it enables the delivery of cost-effective, two-way broadband services.

In 2005, Telesat's Anik^TM F1R satellite was placed into service, providing broadcasting and telecommunications services and direct-to-home television programming to customers throughout North America for about the next fifteen years.

RELIABILITY AND SECURITY

Bell performs 24/7 proactive surveillance of the core network for voice, data and IP based services. Our core network is designed with redundant components for seamless service changes and is powered to ensure that service is available at all times during commercial hydro outages. All service outages are coordinated internally with the goal of restoring customer service in the most timely manner.

Bell takes great care to protect all of its networks (local, national, wireline, wireless) from fraud and other security threats. Our security policies and procedures are constantly reviewed in order to reflect security trends and technology standards such as the ISO 17799 standard. Our security policies are posted on the company's Intranet. An on-line basic security awareness course was rolled out in 2004 and is mandatory for all Bell employees.

Bell's security measures extend beyond networks to individual product lines and customer issues. For instance, Sympatico^TM is implementing new controls to protect our customers from "modem hijacking" - the downloading of covert software to a user's PC to establish an illicit overseas dial-up connection.

In an effort to ensure integrity and security to customer and Bell records, BCE has implemented WiFi intrusion detection devices on our networks. The devices detect and prevent wireless intrusions into sensitive and proprietary information, protecting customer privacy.

Internal efforts to thwart virus incidences has led to over 1,100 incidences of virus threats being addressed in 2005, including never-before seen variants of popular viruses. The increased data integrity ensures that customer information is not subject to this virus code and increases our customer security.

More info on Customer Protection

BUSINESS INNOVATION

Innovation is how modern nations grow and prosper. It's how we brought one of the world's most advanced communications systems to Canadians. It's also a way of life at Bell. From our internal "Intellectual Property Awards", to Bell's partnerships with businesses, governments, and universities, it's clear we believe in the power of ideas. Over the past year, we opened two new innovation centres to incubate and rapidly develop new ideas based on IP technology, bringing the total number of innovation centres to 12.

And with almost 300 active patents and patent applications to our name, most of our innovations lead to real products and services that help customers connect in new and better ways. In our highly competitive marketplace, BCE's sustainability depends in part on our ability to keep customers at the forefront of technology. Investments in next-generation solutions also enable us to exploit our networks to the fullest. R&D investments have generated solutions such as Bell Digital Voice, EVDO, Wi-MAX, IPTV, FTTN, Emily^TM, e-billing, and security features.

Our investment in research and development is key to our business success:

*Figures were re-stated in 2005 as a result of previously unprocessed SR&ED (Scientific Research and Experimental Development) claims.

UNIVERSITY RESEARCH

Our commitment to innovation extends beyond our own walls to universities. In 1998, we created Bell University Laboratories, a unique partnership where universities and industry work together to innovate. The program draws together Bell Canada professionals with the Canadian university research community in a joint effort to carry out research projects that improve Bell's efficiency in key strategic areas while contributing to the blossoming of universities' research capacities. It provides an innovative environment for hundreds of students and renowned researchers across the country. Research projects supported by Bell University Laboratories concern areas such as emerging wireline and wireless communications, IP applications, e-business, new media and e-health applications.

Bell also supports environmental research projects in Québec and Ontario universities. Examples include:

• Sites Remediation and Management - École Polytechnique (Montréal, Québec)
• Analysis of the impact of in-service utility poles
• Industrial Chair in Site Remediation and Management - Natural Sciences and Engineering Research Council of Canada (NSERC);
• Development of a probabilistic life cycle assessment methodology with application to the telecommunications sector based on Bell Canada's operations, products and services - Interuniversity reference centre for the life cycle assessment, interpretation and management of products, processes and services. (CIRAIG)

Management of a Large Canadian Service Organization's Air Emissions - Station expérimentale des procédés pilotes en environnement (STEPPE), Université du Québec à Montréal (Montréal, Québec)

• Tracking atmospheric releases, evaluating their potential sources and quantifying results;
• Improving the environmental management of Bell Canada and its affiliates' air emissions.

Since its creation in 1998, Bell University Laboratories has invested close to $55 million in university research.