Bell and Rogers dispute claims of unfair and discriminatory marketing practices

Bell Mobility and Rogers Wireless Communications Inc. are firing back at claims that they engaged in unfair and discriminatory marketing practices against Microcell Telecommunications Inc., saying that the struggling Montreal-based wireless operator is crying sour grapes over the effects of a highly competitive market. In comments to Microcell’s August 30 Part VII application, the two wireless operators deny that they have done anything wrong and that their marketing practices are common in a competitive marketplace. They also point out that using Microcell’s precarious financial position is fair game in targeting its subscribers. Microcell alleges that Bell Mobility and Rogers have engaged in unfair and discriminatory marketing practices aimed at luring its most profitable subscribers away, those spending a minimum of $40/month on services (RoW, Sept. 16/02). However, Bell and Rogers write in their September 12 reply comments that there isn’t anything inappropriate, or illegal, in targeting a particular segment of a competitor’s subscribers as this is how a competitive market traditionally operates. "It is not only acceptable practice but, indeed, a hallmark of competitive market dynamics to develop offers tailored to specific market segments," writes Barry Chapman, Bell Mobility’s VP of regulatory matters. "It is entirely acceptable in doing so to exploit the advantages of one’s product over those of another competitor. In this case, Microcell’s current situation may have given rise to concerns over quality of service and continuity on the part of some Microcell customers." The two operators insist that the Microcell Part VII lacks legal legs because the company has misinterpreted section 27(2) of the Telecommunications Act. Bell Mobility argues that it would have had to have unjustly discriminated against Microcell in the provision of a telecommunications service for Microcell’s claim to stand up to scrutiny. Rogers, on the other hand, indicates that none of Microcell’s allegations fall under the purview of the CRTC since misleading advertising falls under the Competition Act and the commission has forborne from regulating retail service rates. Bell Mobility argues that all of the national operators offer several types of pricing plans and packages geared towards attracting subscribers of its competitors and as such Microcell’s reading of section 27(2) is simply wrong as a matter of statutory interpretation. It also points out that offering packages targeted at a specific customer segment is not contrary to section 27(2) of the Act. "There is nothing unjustly discriminatory in this nor do such offers constitute a form of undue or unreasonable preference. Microcell’s contention that such marketing activity is unjust discrimination is a denial of how the wireless services market has performed for many years," the company writes. In its comments, Rogers asserts that section 27(2) doesn’t even apply in this case. It writes that the commission retains some level of regulation over the wireless services market, but only as it relates to concerns of competitive network access. It cites several commission decisions (Telecom Decision 96-14, 94-15, and 95-19) in backing up its case. These are the same decisions Microcell cited in arguing that the commission has the right to intervene. "It is clear from these decisions that where non-dominant carriers are concerned, the focus of the authority retained under section 27(2) is on issues of network access and resale – not retail rates and contractual terms offered to retail customers," writes Dawn Hunt, Rogers’ VP of government and inter-carrier relations. "Furthermore, even if the allegations respecting trade mark infringement and misleading advertising were true, which RWI strongly denies, such complaints would fall within the jurisdiction of the Registrar of Trademarks and the courts in the case of trade mark infringement, and the jurisdiction of the Commissioner of Competition and the Competition Tribunal and the courts in the case of misleading advertising," Rogers adds. Hunt writes that Microcell is simply complaining about the general competitiveness of the wireless market including retail rates, terms and conditions and allegedly misleading advertising. "Since the commission has forborne from regulating the rates charged by wireless carriers at the retail level and only exerts limited jurisdiction over the terms of their service offerings, and since misleading advertising falls under the Competition Act – not the Telecommunications Act, none of Microcell’s allegations fall within the commission’s jurisdiction over wireless carriers." Microcell refutes claims that its allegations fall outside of the CRTC’s jurisdiction in its September 17 reply comments. "The wording of Decision 96-14 itself clearly demonstrates that the commission saw an ongoing need to be able to effectively address unjust discrimination and undue preference in contexts other than that of access to networks," the company writes. It highlights a section of Decision 96-14 to back up its assertion. "Furthermore the commission considers that instances of unjust discrimination or undue preference in the provision of these services could arise in other contexts." Both Bell and Rogers also argue that the struggling operator is seeking regulatory intervention on the part of the CRTC to rescue it from intense competition in the wireless market. Both companies clearly state in their arguments that the commission can’t intervene on behalf of Microcell and provide it with a regulatory solution to its financial problems. "Microcell’s application is a thinly veiled attempt to utilize the regulatory process to subvert the operation of a vigorously competitive market and to shield Microcell from the effects of competition," writes Bell Mobility. Rogers agrees, adding that Microcell alone is to blame for its current situation. "As the commission has recognized in the past, it is not within its mandate to save competitors from their financial woes or from mistakes they have made in the marketplace or in their business plans," it writes. Bell Mobility also expressed concern that if the commission intervened and sided with Microcell it would set a dangerous precedent. "Intervention by the commission in this instance would likely establish a precedent which service providers may seek to repeat each time a competitor introduces a new service offering it perceives as a threat," it writes. In reply comments, Microcell contends that it isn’t seeking a "re-regulation" of the wireless services market. It is simply asking the commission to use its existing powers under section 27(2) of the Telecom Act. "As industry regulator under the Act, the CRTC acts as referee, not choosing winners or losers, but to ensure the rules of the game are respected. That there are rules and a referee seems to have been lost on both Rogers and Bell Mobility," Microcell’s VP regulatory affairs Dean Proctor writes. Microcell also paints a dire picture of competition in the wireless market, if the commission doesn’t side with it. "Such a ruling would allow for anti-competitive activity on an unprecedented scale: it would permit incumbents to target potential customers solely because those customers have chosen to use a smaller competitor’s or a new entrant’s service. It would allow, for example, Rogers salespeople to stand outside Microcell stores and sales outlets, offering $500 cheques, free handsets and free Rogers service for every new Microcell customer who promises to drop Microcell and sign up to Rogers."

Bell and Rogers dispute claims of unfair and discriminatory marketing practices

News | 09/30/2002 4:00 am EDT

Unlock all the Canadian telecom, broadcasting and digital media news you need.

FREE TRIAL

SUBSCRIBE

Reuse & Permissions

Inside The Wire Report

Information

Hill Times Publishing

Get in Touch With Us