Bell ExpressVu complains that Rogers is using anti-competitive means to retain hold on Toronto MUD market

Bell ExpressVu LP is accusing Rogers Cable Inc. of a litany of anti-competitive practices in protecting its hold on delivering TV services to multiple-unit dwellings (MUDs) in Toronto. It wants help from both the CRTC and the Competition Bureau to level the playing field as it shifts its focus from acquiring customers in rural areas not served or underserved by cablecos to more densely populated urban cores. One of the charges leveled by Canada’s leading satellite TV operator is that Rogers provides the inside wiring to condominiums under terms that end up costing third parties wanting to access the wiring more than the monthly charge of 52 cents per subscriber per month mandated by the CRTC. The commission set that rate last September following a bitter dispute between Quebec cableco Vidéotron ltée and its competitors (CCR Update, June 11/03; CCR, Oct. 10/02; CCR Update, Sept. 4/02). Bell ExpressVu also alleges that Rogers bribes and entices customers who have decided to switch TV providers to remain with the cableco. It further accuses the cableco of tampering with the inside wiring so that Bell ExpressVu customers lose service, and of failing to provide timely access to the inside wiring in order to switch customers. Building owners seeking leave toappeal CRTC decisionBuilding owners are asking the Federal Court of Appeal for leave to appeal the CRTC’s decision that gave competing telephone companies automatic access to apartment buildings to provide their services. The Canadian Institute of Public and Private Real Estate Companies (CIPPREC) and the Building Owners and Managers Association Canada stated July 30 that the CRTC may have overstepped its jurisdiction by regulating private property in making the June 30 ruling in Telecom Decision 2003-45. "Landlords have to consider security, building safety, fire protection, the allocation of space, future tenant needs, prudent cost and property management and a host of other matters in determining and regulating access. The CRTC has no expertise in these areas, and neither do the phone companies," Michael Brooks, executive director of CIPPREC, said in a media release.But Ken Engelhart, Rogers VP of regulatory affairs, states that the cableco has done nothing that violates any rules. "I think that we have completely complied with the letter and the spirit of the rules," he tells Canadian Communications Reports. "I think that Bell is trying to deflect attention away from themselves because of our bundling application. And so they thought the best way to deflect attention would be to file an application against us." Rogers filed a Part VII application with the CRTC in June asking it to prohibit the packaging of local telephony with other services, citing the lack of competition in local residential telephone service as the reason for the move. Earlier this month, the Competition Bureau supported Rogers and urged the CRTC to take action to enhance the "prospects of long-term, sustainable competition in telecommunications markets." But Lawson Hunter, an executive VP at BCE whose job includes regulatory affairs, calls that charge "ridiculous." "If we’re going to have any success and provide consumers in these buildings with a choice then we’ve got to have some rules that give us a fair opportunity to compete with them (Rogers). And it’s not because of what they’re doing on the bundling side," he tells CCR. In its July 29, 2003 submission to the CRTC, Bell ExpressVu states that the anti-competitive practices, which are in violation of the Broadcasting Distribution Regulations, are enabling Rogers to maintain almost 100% of the Toronto MUD market, where 39.3% of the city’s population resides. Bell ExpressVu notes that its success in the MUD market has been "marginal" while it "has had a measure of success competing against Rogers in the single-family household market." It points out that it has managed to acquire only 10,000 MUD customers in the Toronto area despite expending "considerable effort" in trying to break into that market. Bell ExpressVu explains in its application that it is distributing its TV signals through a "stacked solution" and a "VDSL solution" to that market. With the stacked solution, a dish is mounted on the roof of a MUD, common equipment, including a spine, is installed in the building and the signal sent to individual apartments through wiring leased from the incumbent cableco. With the VDSL solution, Bell ExpressVu’s service is received at a central location, and transmitted via wiring that crosses public property to the MUD, and the broadcast signals are distributed using VDSL technology via twisted copper pair telephone wires to subscribers’ suites. Engelhart suggests that cracking the MUD market requires different strategies than "pumping out dishes from retail stores" to owners of single-family homes. "Selling to building owners and condominium boards is very different than retail sales to customers," he says. "…To sell to building owners and condominium boards you really need a dedicated team of salespeople that understands the property management business and can satisfy their requirements. We’ve had a dedicated sales team that has been patiently working at that market for several years and I don’t think that Bell has put the resources into that segment of the market, so they haven’t had many sales there." Bell ExpressVu accuses Rogers of inserting anti-competitive clauses into its agreements with condominium developers related to the installation of the inside wiring. Rogers installs the wiring, but if developers decide to allow another TV service provider into the building then they must purchase the wiring from Rogers. Under the agreement, Rogers charges the condominium developer $200 per suite - an arbitrary amount according to Bell ExpressVu - with depreciation factored in. In a five-year-old, 300-suite building, if a new entrant was able to reach a 33% penetration rate, the cost of the wiring would amount to $3.33 per suite per month, more than six times the amount deemed appropriate by the commission, Bell ExpressVu notes in its application to the CRTC. But Rogers contends that the agreements are fair, and that under any other terms no one would want to be the ones to put in the wiring in the first place. Engelhart says 99% of the MUD buildings that Rogers has wired in Toronto do not contain these agreements. "The contract only exists for a handful of buildings," he says. "Basically since the CRTC decision (mandating the rate) came out and a brand new building goes up, I think you can understand that we can’t spend $200 a suite wiring a building only to find out the very next day that we’re renting all that wiring to our competitors for 52 cents per month. It just doesn’t make economic sense. So what we’ve done for the new buildings is we’ve said to the landlords we’ll put in the wiring for you. But if someone else comes into the building, they have to share the costs of the wiring. …So if someone else wants into the building, we’ll sell the wiring to the landlord at depreciated cost, we’ll pay half and the other entry will pay half. Without some sort of mechanism like that no one is going to put the wiring into the building. Bell is perfectly free to wire up these buildings at $200 a suite…but they don’t want to do that." Bell ExpressVu also argues that Rogers is ignoring winback restrictions, including offering free digital cable set-top boxes to customers in buildings where Bell ExpressVu has established facilities who have agreed to change providers. The Canadian Cable Television Association (CCTA) has asked the CRTC to repeal the winback restrictions (CCR, July 17/03, June 30/03; CCR Update, April 30/03). Engelhart says better cable deals are resulting from the increased competition. "The reason that the CRTC has introduced competition into all the markets that it has…is that customers get better deals. When there is competition, there is all kinds of interesting deals." He notes that with Rogers’ VIP customer loyalty program anyone who subscribes to the first three tiers of cable service, even if they don’t live in a MUD, gets a free digital box. Bell ExpressVu’s complaint further contends, "ExpressVu understands that Rogers has offered building supervisors free cable service, free security cameras, and other perquisites such as scenic flights, dinners, lunches, and even free playground equipment to help win back subscribers." The satellite TV operator also charges that Rogers has delayed transfers of wiring, disconnected Bell ExpressVu subscribers, and caused havoc by actions such as moving the location of its distribution panel boxes through which the wiring is accessed far from the satellite TV operator’s facilities without notice. "In another MDU (multiple-dwelling unit), locking terminators were found on (a) ExpressVu plant that could only have been installed by Rogers technicians. ExpressVu technicians were unable to install service or remove the terminators," states Bell ExpressVu’s complaint to the CRTC. Bell ExpressVu is asking the commission to immediately require Rogers to delete clauses in its contracts with condominium developers that require them to buy back inside wiring if a competitor serves the MUD, and to provide the wiring at 52 cents per subscriber per month. It also wants Rogers to file with the CRTC a description of the procedures it follows to track customers who have left to ensure that the names are removed from marketing lists for a 90-day period, and to establish a reporting requirement so that the commission can determine if the cableco is violating winback regulations. As well, it wants the commission to force Rogers to develop a code of conduct that would prohibit anti-competitive activities, and stop the cableco from "engaging in narrowly targeted pre-emptive marketing of special offers in MDUs where a competitor is installing facilities to compete." Bell ExpressVu also recommends that the CRTC consider imposing specific conditions of licence at the time of Rogers’ licence renewal, in light of its "patent disregard for its current regulatory obligations relating to winback activities." For more on Rogers’ bundling complaint to the CRTC, see the July 15/03 issue of CCR affiliate publication Network Letter.

Bell ExpressVu complains that Rogers is using anti-competitive means to retain hold on Toronto MUD market

Broadcast | July 31, 2003

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

FREE TRIAL

SUBSCRIBE

Inside The Wire Report

Information

Hill Times Publishing

Get in Touch With Us