CRTC’s undue preference ruling sets precedent for wireless, online, Telus says

A CRTC ruling Wednesday that said Quebecor Media Inc. acted with undue preference when it held back competitor access to exclusive content for video-on-demand services has set a precedent for similar issues on mobile and online platforms, Telus Corp. says. “I think it very much sets a precedent for both wireless and the Internet,” Michael Hennessy, Telus' senior vice-president of regulatory and government affairs, said in an interview. On June 21, Telus filed a complaint with the commission, arguing that Videotron Ltd.'s video-on-demand service, Illico sur demande, held exclusive rights to popular TVA programs. Bell Canada filed a similar letter with the commission two days later, arguing Illico had acquired the exclusive rights to TVA programs for three consecutive years. Quebecor owns both Videotron and TVA Group Inc., Quebec's largest conventional television network. Bell and Telus told the commission they made several unsuccessful attempts to acquire the rights to TVA programming for their video-on-demand services. Telus argued that Illico's exclusive distribution of TVA content is a commercial disadvantage that “significantly reduces its ability to attract new subscribers.” Bell and Telus also told the commission that Illico's exclusive access violated pay television regulations and the objectives of the Broadcasting Act, which promotes access to Canadian content. But Quebecor said Illico's exclusive acquisition of the rights did not penalize Canadian viewers because the content was provided free of charge on its on-demand service and the programs were previously broadcast in linear form on TVA's conventional or specialty networks, which are carried by Telus and Bell. In its decision Wednesday, the CRTC said an exclusivity agreement existed between Quebecor’s Illico and TVA properties, and determined that Illico benefited from a preferential position over its competitors. Hennessy said Telus is satisfied with the ruling, adding that it sets a precedent for undue preference on new distribution platforms, including wireless. “The CRTC really provided a very good roadmap for looking at the issue of undue preference on emerging platforms,” he said. “The emerging platform in this particular case was video-on-demand, but all of the conclusions the commission reached are equally applicable, in my mind, to emerging platforms like wireless and the Internet.” Hennessy said the conclusions set out in the decision could be applied to the exclusive carriage of sports content by Bell on its wireless services. “We think the principles are equally applicable there. It's bad for consumers if you limit access to some of the most popular programming on wireless because it forces up the costs of consumers by forcing them to have to choose a particular provider if they want to get the content,” he said. But Scott Hutton, executive director of broadcasting at the CRTC, said in an interview that the ruling applies only to regulated services, and does not affect unregulated ones like mobile and online broadcasting. “These facts relate to a well-established regulatory framework ,” he said. “The decision we put out yesterday relates to video-on-demand and you can't assume it's the same principle that would appear in the exemption order .” Hutton added that companies concerned about undue preference on wireless or online platforms can file a complaint with the commission. The commission, he said, will soon issue new standards for video-on-demand services following a call for comments that closed on Oct. 25. Jacqueline Michelis, a spokeswoman for Bell, said by email that the only precedent set by the ruling is in the commission's ability to deal with cases of undue preference. “Each undue preference complaint is examined case by case, based on the specific facts at hand,” she said. “So, in as much as decision had nothing to do with wireless or the Internet, it can't be seen as a hard-and-fast precedent for those segments.” The commission said in its ruling that TVA must make its programs available without delay on Telus' and Bell's services. The companies will also be required to negotiate an agreement within 30 days for carriage of TVA's on-demand services, and agree on a process to determine fees, terms and conditions for the carriage. Quebecor must file a report by Feb. 25 confirming the requirements were met. Bell and Telus will then have 10 days to confirm the report. Should Quebecor fail to comply with the requirements, the commission intends to summon the parties to a public hearing to consider a mandatory order. Hennessy said that requiring TVA to make its content available immediately while the parties negotiate a carriage agreement is a key point. “ can't withhold the content. That, going forward, addresses a critical issue of delay where you can withhold,” he said. “ also set a 30-day clock that said, if you can't meet that deadline, we're going to mediation.” Ian Morrison, spokesman for watchdog group the Friends of Canadian Broadcasting, said in an interview he does not think the commission's ruling sets a new precedent for emerging platforms, but it shows consumers what goes on behind closed doors. “It's a window on how, in the absence of regulation, big players would behave,” he said. “It shows why the CRTC is important in the interest of the viewer. It's the CRTC doing its job.” Serge Sasseville, Quebecor's vice-president of corporate and institutional affairs, said in an interview that the company is now analyzing the ruling. “Sure, we're disappointed, but we're still analyzing the decision ... and all its aspects,” he said. Michelis said Bell, which is in the process of acquiring CTVglobemedia Inc., is also satisfied with the CRTC decision. “It's clearly the right decision, and we look forward to being able to bring our customers the content they've been denied up until now,” she said. “Bell has always said that we would make content available to competitors, because we will obviously seek content from them; our CTV acquisition levels the playing field, allowing us to compete with communications companies that already own significant media properties—Quebecor, Rogers , Shaw .” Michelis said the ruling demonstrates that the commission already has the rules in place to deal with questions of undue preference. Mirko Bibic, Bell's senior vice-president of regulatory and government affairs, told The Wire Report in October that the CRTC’s upcoming hearing on vertical integration is “completely unnecessary.” Bibic argued that the commission's existing anti-competitive framework is strong enough to deal with cases of undue preference. The vertical integration hearing is intended to look at new rules to ensure, in part, good faith negotiations between distributors and programmers. The commission has also indicated a desire to acquire the power to issue administrative monetary penalties and fines, as well as a reverse onus model that would require the accused to disprove allegations of undue preference. Hennessy said the commission's decision Wednesday sets the stage for the hearing. “The issue of exclusivity is really only step one to ensuring reasonable and timely conditions for accessing the content,” he said. kfournier@thewireport.ca

CRTC’s undue preference ruling sets precedent for wireless, online, Telus says

Broadcast | January 27, 2011

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