CCTA, Bell Canada at odds over phone giant’s quest for Class 1 cable licences

The cable industry is adamantly opposing Bell Canada’s application for two Class 1 broadcast distribution licences, saying its entry into the field would "transition the market from a state of competition to a state of market distortion." "Nobody else already controls the fourth largest distributor in terms of (Bell) ExpressVu. Nobody else is the country’s largest private broadcaster. Nobody else controls the largest specialty services. Nobody else is controls half of the national newspapers. Nobody else is the number one dominant company. Nobody else, in fact by a factor of almost 10, has the kind of revenues that they have," said Canadian Cable Television Association (CCTA) president Michael Hennessy during an editorial board with Canadian Communications Reports’ publisher Decima Reports on July 14.* Bell applies for Bell TV trademarkBell Canada filed a trademark application on July 22 for the mark "Bell TV". According to its application filed with Industry Canada’s Canadian Intellectual Property Office, it intends to use the name in connection with television set-top box receivers, satellite TV receiving dishes and antennas, and in printed and online publications in conjunction with its proposed TV service. The name could also be used in conjunction with interactive TV offerings.The cable industry tells the CRTC in comments submitted July 15 that "granting the application would provide Bell Canada with the unfettered ability, through its parent and affiliates, to eliminate and discipline competitors in the entire range of communications markets in which it competes, including the local BDU market." For example, the CCTA charges that Bell Canada will engage in "tied selling," or make its new TV service conditional upon the purchase of its local telephony service. "Right now it’s not possible for Bell to unbundle its local service from the video side of the VDSL service. And, if they can’t do that, we don’t think they should approve the application until they can," said Hennessy. The cablecos also worry that Bell Canada will bundle its proposed TV service with the other services it offers - telephony, wireless service, and high-speed Internet - in such a way as to entice its phone subscribers to go to it for their TV needs as well. "Here’s a good example, they dropped their long-distance pricing to $5 a month or half a cent a minute (in their bundles). I don’t think you can buy on the wholesale market long-distance for two cents a minute, if you’re lucky. To sustain that kind of pricing, to bring it into the broadcasting business is frightening," notes Hennessy. If Bell Canada wins licences to operate a TV service through VDSL in Ontario and Quebec (CCR, June 21/04), which the CCTA opposes, then the cable organization is calling for a number of safeguards and for several issues to be cleared up. The CCTA calls on the CRTC to impose structural separation and confidentiality safeguards between Bell Canada and its affiliates, including BCE, Bell ExpressVu, Telesat Canada and Bell Mobility as a condition of licence. The cable industry also wants the commission to prohibit Bell Canada from bundling its TV service with its local telephone service. It further wants the CRTC to ensure that Bell Canada complies with inside wiring rules and will be able to comply with carriage obligations concerning high-definition (HD) channels. Rogers Cable, Cogeco Inc., and Quebecor Media Inc. make similar arguments in their individual submissions to the CRTC. Cogeco goes even further charging that the BCE-controlled "analog" specialty TV channels could hold up migration to all-digital distribution on cable systems. Cogeco says, "BCE has in fact the opportunity and the incentive to prevent a full conversion to all-digital distribution on cable systems for competitive reasons." Bell Canada, however, in July 26 reply comments defends its broadcast distribution undertaking (BDU) applications, telling the commission its licensing would not distort the market, but further the state of competition in the TV distribution business to the benefit of consumers. On this point, the telephone giant has the backing of the Public Interest Advocacy Centre (PIAC). "The licences may offer consumers a viable alternative to the incumbent cable distribution undertakings operating in a given area as well as stimulate innovation in the method of service delivery," writes PIAC counsel Michael Janigan. Bell Canada assures the commission that it will comply with all distribution and linkage requirements applicable to incumbent analog cable BDUs, will distribute HDTV signals, and says calls for structural separation are unnecessary and inappropriate. The CRTC imposed structural separation on Shaw Cablesystems and its related companies Star Choice and Canadian Satellite Communications Inc. (Cancom), mostly at the urging of Canada’s private broadcasters. "Shaw Communication’s dominance in the BDU marketplace necessitated its structural separation from Star Choice. The CCTA’s call for similar constraints against Bell Cable, however, is predicated on a faulty premise, as Bell ExpressVu remains a non-dominant distributor with no ability to engage in anti-competitive behaviour," states Bell in its reply. "All of Bell’s lines of business are subject to competition, and all but one are considered by the commission to be non-dominant, the exception being local voice communications." "Arguably, the reason why the combination of Shaw and Star Choice raised dominance issues was that, in markets such as Calgary and Edmonton, this combination might take Shaw’s combined penetration level from 80% to 90%," states Bell Canada. "However, that is not an issue with Bell ExpressVu, which is non-dominant in each local market that it services," Bell Canada further points out that the CRTC has established rules for bundling and local telephony under the Telecommunications Act, and thus the bundling issues raised by the CCTA are "simply irrelevant to a broadcasting licensing proceeding." Incumbent cablecos have always enjoyed complete freedom to bundle their TV service with any telecom service without regulatory approval, notes the phone giant, pointing out that it is precluded from offering bundles with local telephony without CRTC approval. While many cablecos are currently contemplating entering the telephony business through Voice over Internet Protocol (VoIP), EastLink is the only cableco currently offering a telephony service (CCR, Aug. 15/02). *To obtain a copy of the entire discussion with Michael Hennessy contact Ryan O’Neill at (613) 230-1984.

CCTA, Bell Canada at odds over phone giant’s quest for Class 1 cable licences

News | 07/30/2004 4:00 am EDT

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