Weak economic conditions may negatively affect our profitability and cash flows from operations. They could also negatively affect the financial condition and credit risk of our customers, which could increase uncertainty about our ability to collect receivables and potentially increase our bad debt expenses. We face intense competition from traditional competi- tors, as well as from new entrants to the markets in which we operate. We compete not only with other tele- communications, media, television, satellite and infor- mation technology service providers, but also with other businesses and industries. These include cable, software and Internet companies, a variety of compa- nies that offer network services, such as providers of business information systems, systems integrators and other companies that deal with, or have access to,  customers through various communications networks. Many of our competitors have substantial financial, marketing, personnel and technological resources. Other competitors may emerge from restructurings in the future with reduced debt and a stronger financial position. This means that they could have more finan- cial flexibility to price their products and services at competitive rates. We already have several domestic and foreign com- petitors, but the number of well resourced foreign competitors with a presence in Canada could increase in the future. Over the past two years, the Government of Canada has reviewed the foreign ownership restric- tions that apply to telecommunications carriers and  to broadcasting distribution undertakings (BDUs). Removing or easing the limits on foreign ownership could result in foreign companies entering the Canadian market by making acquisitions or investments. This could result in greater access to capital for our com- petitors or the arrival of new competitors with global scale, which would increase competitive pressure. It is impossible to predict the outcome of the government’s review or to assess how any change in foreign owner- ship restrictions may affect us because the government has not completed its review of these matters. These competitive factors suggest that our wireline accesses and long distance volumes will continue to decline in the future. Continued decline will lead to reduced economies of scale in those businesses and, in turn, lower margins. Our strategy is to mitigate these declines by building the business for newer growth services, but the margins on newer services will likely be less than the margins on legacy services. If the  legacy services decline faster than the rate of growth  of our newer services, our financial performance will be negatively and materially affected. Contracts for long distance services to large busi- ness customers are very competitive. Customers may choose to switch to competitors that offer lower prices to gain market share and that are less concerned about the quality of service or impact on their earnings. Technology substitution, and  VoIP in particular, has reduced barriers to entry in the industry. This has allowed competitors with far lower investments in financial, marketing, personnel and technological resources to rapidly launch new products and services and gain market share. This trend is expected to accel- erate in the future, which could materially and nega- tively affect our financial performance. We experience significant competition in the pro- vision of long distance service from dial-around providers, prepaid card providers, VoIP service pro- viders and others, and from traditional competitors such as inter-exchange carriers and resellers. We also face increasing cross-platform competition as cus- tomers replace traditional services with new technolo- gies. For example, our wireline business competes with VoIP, wireless and Internet services, including chat services, instant messaging and e-mail. We also expect to face competitive pressure from cable compa- nies as they implement voice services over their net- works and from other emerging competitors such as electrical utilities. These alternative technologies, products and services are now making significant inroads in our legacy services, which typically repre- sent our higher margin business.  Competition affects our  pricing strategies and reduces our revenues and profitability. It could  also affect our ability to retain existing customers and attract new ones. Competition puts us under constant pressure to keep  our prices competitive.  It forces us to continue to reduce costs, manage  expenses and increase  productivity. This means that we need to be able  to anticipate and respond quickly to the constant changes in our businesses and markets. Bell Canada Enterprises  2004 Annual Report 67 Competition Increasing Competition Wireline and Long Distance