Competitors tell court to reject Vidéotron’s request to appeal CRTC wiring decision

As fully expected, Vidéotron ltée’s application to the Federal Court of Appeal for leave to appeal a CRTC decision on inside wiring in Quebec apartment buildings is being opposed by several of its competitors. In a separate but related proceeding, satellite TV distributor Bell ExpressVu LP, Cable VDN Inc., and wireless cableco Look Communications Inc. are also expected to object to Vidéotron’s request to the CRTC to reconsider its decision to issue a mandatory order requiring that it lease the inside wires it owns to competitors for 52 cents per subscriber per month (CCR, Oct. 10/02). Bell ExpressVu, Cable VDN, and Look filed separate complaints against Vidéotron earlier this year after the Quebec cableco sold its wires to subsidiary Câblage QMI Inc. (CQMI), which attempted to charge them $5 per subscriber and a $35 hook up fee for their use. Vidéotron is seeking leave to appeal the CRTC decision on the grounds that the commission exceeded its jurisdiction in regulating CQMI, which is not a broadcasting undertaking, breached the rules of procedural fairness in keeping some information filed during the proceeding secret, and in not granting a fair hearing. But Gary Sherman, director of legal and regulatory affairs at Cable VDN, doesn’t think Vidéotron stands much of a chance at winning leave to appeal, or a revised decision by the CRTC. "I don’t think their appeal will succeed. Their request makes no valid points and is illogical," he tells Canadian Communications Reports. Both Look and Cable VDN’s business plans are reliant on the multiple-unit dwelling (MUD) market in Quebec. If the leave to appeal is granted, it would put Look’s plans to get back on track in the Quebec market in jeopardy (CCR, Aug. 15/02) as well as derail the plans of VDN. Bell ExpressVu is less reliant on the MUD market. The CRTC’s mandatory order setting the inside wire lease rate at 52 cents is currently allowing Look, VDN and Bell ExpressVu to once again sign up digital TV customers in MUDs in Quebec – at least for the time being. Vidéotron says it will comply with the mandatory order (CCR Update, Oct. 17/02), but wants to argue its case before the Federal Court of Appeal and hopefully ultimately win the ability to set its own rates. "The MUD market is very important to Look, particularly for our digital TV offering," Look president and CEO Paul Lamontagne tells CCR. "This issue is crucial to us." While Vidéotron’s competitors are once again able to sign up customers, they have refused to sign a binding agreement with CQMI. Sherman says it’s for their own protection. "If we sign the binding contract that CQMI wants us to sign, I’m pretty sure – given how Vidéotron has handled the matter so far – that they would create a disagreement, and then say only the courts can settle the matter," he says. "We want to deal with the CRTC. The commission has a process, and if we don’t pay the 52-cent fee, it can issue a mandatory order against us, ordering us to pay." In its November 8 filing to the CRTC for a reconsideration of the mandatory order, issued in Broadcasting Decision 2002-299 (CCR, May 9/02), Vidéotron tells the CRTC that its decision is unworkable because there is no obligation on the part of the user of the inside wire to pay the fee. It wants the CRTC to vary the decision to clarify that "any BDU that wishes to use third party inside wire is obligated to enter into a binding written contract, setting out terms and conditions of use." Vidéotron further notes that it is under "no obligation to ensure that CQMI allows BDUs that have not clearly accepted CQMI’s October 10, 2002 offer to use its inside wire." In its December 9 filing to the Federal Court of Appeal, Look disputes Vidéotron’s claims and asks that leave to appeal not be granted. "The commission’s mandatory order does not place any restrictions directly on CQMI or attempt to regulate CQMI. Rather, it places certain restrictions on the licensees, Vidéotron ltée, CF Câble TV and Vidéotron (Régional) Ltd., defined as ‘Vidéotron and its subsidiaries’…," writes Look legal counsel Michael Koch of Goodmans LLP. Look also rejects claims by CQMI that it was denied due process because the commission imposed a fee on it that was established in a separate proceeding. Look notes that Vidéotron was an active participant in the process to set a rate for the use of inside wiring, and that CQMI had time to become involved in the process. The sale of Vidéotron’s wires took place on February 8, 2002, and the deadline for comments on the inside wiring procedure was April 8, 2002. The fact that CQMI chose "not to participate does not mean it was deprived of the right to a fair hearing…," Look states. Furthermore, Look says the CRTC followed procedure in providing CQMI with only aggregate figures on the buildings served by Bell ExpressVu and Cable VDN as part of the proceeding that led to the mandatory order. "The commission has consistently recognized the competitive sensitivity of disaggregated market information in particular and has accorded this information confidentiality when warranted … A decision to grant or refuse a request for confidentiality where sensitive commercial information is involved is a discretionary decision of the commission pursuant to its statutory authority," Look states. Look also disputes Vidéotron’s claims that the role of the CRTC counsel throughout the public hearing resulted in "a reasonable apprehension of bias or denial of a fair hearing." Look responds that the commission has broad jurisdiction regarding the conduct of hearings and the power to "inquire into, hear and determine" a matter, including issuing mandatory orders. In its filing to the court, Cable VDN attempts to set the record straight on the relationship between Vidéotron and CQMI. It says Vidéotron has misrepresented ownership of CQMI, by claiming it’s a "wholly owned subsidiary of 4006305 Canada Inc." The numbered company, which is a subsidiary of Vidéotron, owns only 10 common shares in CQMI, whereas Vidéotron has 12,700 preferred shares. As well, Vidéotron has priority over 4006305 Canada when it comes to the dissolution of the assets of CQMI. Vidéotron has five days from December 9 to respond to the submissions by its competitors on its leave to appeal application with the court. Comments regarding the Quebec cableco’s request to the CRTC are due on December 13. Vidéotron has until December 23 to reply.

Competitors tell court to reject Vidéotron’s request to appeal CRTC wiring decision

News | 12/13/2002 5:00 am EST

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