Commission allows incumbents to offer promotions, but imposes strict limits

Bell Canada and cable operators have sharply different views of a recent CRTC decision that puts strict new limits on the kinds of promotions incumbent telephone companies can run to win customers. While Bell was able to lift a more-than-two-year ban on promotions against which it complained this spring (NL, March 16/05), the victory came at a steep price. The country’s incumbents face limits on the kinds of promotions they run including prohibitions against specifically targeting competitors’ customers, running campaigns sooner than six months after the end of a previous one or that run longer than six months and other restrictions. Competitors and cablecos applaud the ruling, saying that it levels the playing field as competition in the local market has failed. Bell and TELUS Corp., however, say they’re looking at the decision with an eye to reversing some of the ties being put on their campaigns. The decision moves the yardsticks forward from the commission’s previous position, but, says Mirko Bibic, chief of regulatory affairs at the telco, the commission was wrong to introduce a degree of micro-management in this ruling to the competitive landscape. He says that the new prohibition on long-term promotions, for example, runs counter to creating a competitive marketplace. "Here they’re dealing with the notion that if your promotion is too long, then competitors are actually going to have to try to match your price and compete. Well, that’s pro-competitive. That’s what competition is about, and this is an example of the commission protecting competitors rather than a competitive process," he says.Bibic adds that he feels the decision is unfair to telcos in relation to their cable company rivals. "I think it continues to perpetuate the asymmetry in regulation between the cablecos and the established telcos, the incumbents. In this sense the cablecos are acknowledged by the commission to be dominant in their core market. Yet, they have no ban on promotions. Well, now there is no ban on the telcos either, however the cablecos don’t face these restrictions, and the telcos now do. So, there’s an asymmetry there that we feel will need to be addressed." Bibic’s counterpart at TELUS, Janet Yale, agrees that the decision is positive insofar as it removes the promotions ban, but hints that there may be aspects with which the company disagrees. "I would say we’re still evaluating the conditions to look at how significant an opportunity the commission has opened up," she notes. "Obviously, we would have preferred even more freedom and flexibility than what the commission gave us, but it’s a step in the right direction." Yale adds that the company is working, like Bell, with its business units to assess the impact. Suzanne Blackwell, VP of telecommunications and economics at the Canadian Cable Telecommunications Association, agrees with the commission that the restrictions are appropriate. She applauds the decision, but hopes the CRTC will take care to ensure the rules are enforced. "I think that there is some reasonable recognition of the fact that the telephone companies – 97% of subscribers still take their service month after month…The telephone companies should be comforted by the fact that the commission is prepared to give them some more flexibility. We just hope that the safeguards will be actually applied, will be respected, and the commission will be prepared to act quickly on any disputes that might arise." Echoing Blackwell’s caution on enforcement, Call-Net Enterprises Canada Ltd. VP and senior counsel Alexander Adeyinka says vigilance will be the key watchword moving into a new period of promotions. He’s optimistic that the new rules, which provide Call-Net greater certainty that its customers won’t be targeted, will be effective. He issues a warning to Bell that competitors will be monitoring the telcos’ campaigns. "We hope that the commission will be very vigilant and that we will not be opening a can of worms of Part VIIs and complaints to the CRTC about this once the rules come into play. But, as I said earlier, enforcement will be very important," he notes.

Commission allows incumbents to offer promotions, but imposes strict limits

News | 05/10/2005 4:00 am EDT

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