Quebecor argues its subsidiary is not subject to CRTC rules on inside wiring

A defiant Quebecor Media Inc. appeared before the CRTC last month, continuing to argue that a subsidiary that took over the inside wiring of multi-unit dwellings (MUDs) in Quebec is not subject to commission rules. In an opening statement at a public hearing into the matter, counsel Robert Buchan from the law firm Johnston & Buchan noted that the commission dropped facilities ownership requirements in the new Broadcasting Distribution Regulations that came into force in January 1998. As a result, he argued that Quebecor Media unit Vidéotron ltée could legitimately sell its inside wiring to another subsidiary, Câblage QMI Inc. (CQMI). CQMI issued notices to distributors competing with Vidéotron stating that it would begin charging $5 per subscriber per month for use of the wires (CCR, March 28/02). That amount is significantly higher than the 44 cents proposed by the CRTC in an ongoing process to set rates for third-party use of inside wiring. "It is also Vidéotron’s position, given the clear wording of Section 10 of the BDU Regulations, as amended in October 2000, that because Vidéotron no longer owns the inside wire in the MDU buildings in question, the requirements of subsection 10(2) relating to ‘just and reasonable rates’ do not apply to it," said Buchan, who was acting as a communications regulatory lawyer for Vidéotron. He added: "It is Vidéotron’s position that, when it sold to CQMI for valid business reasons on February 8, 2002, the inside wire that Vidéotron then owned in MDUs with 20 suites or more, Vidéotron did not thereby give up operation ‘in fact’ of any of its licensee undertakings." According to Quebecor Media, CQMI owns the wiring in 7,600 buildings containing 387,304 wired units. Quebecor Media was called before the commission in a proceeding aimed at determining whether a mandatory order should be issued to require Vidéotron and its subsidiaries to comply with sections 9 and 10 of the Broadcasting Distribution Regulations, which prohibit "undue preference" and spell out inside wiring obligations, respectively. Cable VDN Inc., Bell ExpressVu LP, and Look Communications Inc. had filed complaints, arguing that the $5 fee was aimed at unduly keeping them out of the MUD market in Quebec. Quebecor Media countered that the Vidéotron-CQMI transaction was "in response to serious competitive threats to its core business. Those threats come from other BDUs operating in what some refer to as the ‘new competitive regulatory environment’ that has been put in place under the aegis of this commission, and which favours end-user choice of service providers." The hearing was punctuated by long pauses as Quebecor president Pierre Karl Péladeau conferred with counsel. He often initially refused to provide information requested by CRTC lawyers, such as the notes from the meeting at which CQMI was formed, on the grounds that Quebecor Media wasn’t a regulated business. Upon further pressure from CRTC legal counsel, however, he relented. A slew of documentation was added to the file this week. Quebecor goes to court At the same time, Quebecor Media has gone to Quebec courts for a safeguard order that it says prevents Bell ExpressVu from using, cutting, manipulating, connecting in any manner whatsoever or performing any other operation on the inside wiring of CQMI without prior written authorization. The latest safeguard, issued May 7, is in addition to four other safeguard orders and interim injunctions issued by Quebec courts. BCE Inc. and Bell Canada executive counsel Bernard Courtois, however, doesn’t see the injunctions as a win for Quebecor Media. He says the court decisions basically maintain the status quo, and that the real test will be what the CRTC decides. "The CRTC is going to be rendering its decision soon, so there is no point in taking this to court. The CRTC is the place where these things are to be decided," he tells CCR.

Quebecor argues its subsidiary is not subject to CRTC rules on inside wiring

Broadcast | May 9, 2002

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