Court’s satellite piracy decision raises questions about CRTC data collection: Experts

A Quebec judge's decision in Quebecor Media Inc.'s satellite piracy lawsuit against BCE Inc. raises questions about the quality and thoroughness of company data filed with the CRTC, experts say. “The whole premise of the regulatory system to date has been that companies are honestly reporting to the CRTC,” Iain Grant, managing director of the Seaboard Group, said in a phone interview. He said the idea that Canada’s broadcast and telecommunications companies may not be honest with the information they file with CRTC is “very troubling.” In a July Quebec Superior Court decision for a Quebecor lawsuit against Bell related to the piracy of satellite television signals, Justice Joel A. Silcoff wrote that, in 2003, Bell officials kept Chris Frank, Bell's executive responsible for keeping the CRTC informed, in the dark about its satellite piracy rates. “What is surprising, however, is the fact confirmed by him, that although he was Vice President of Regulatory and Government Affairs, charged with keeping the CRTC informed as required, he was unfortunately not one of those on the ‘need to know’ list,” Silcoff said. “He innocently believed that rate of piracy of BEV's signal was within industry norms.” The CRTC primarily collects data from companies through major surveys each year, in which companies submit confidential information related to revenues, revenue sources like advertising, programming and technical expenses, sales, and other figures. The CRTC releases much of that data in its annual Communications Monitoring Report. Companies also file information with the commission specific to its regulatory proceedings, investigations and reviews of transactions. Tom Copeland, chair of the Canadian Association of Internet Providers (CAIP), said in an interview that he believes companies omit or provide incomplete information for the CRTC more often than the industry is aware. “I would hazard that we’d be surprised to the degree that an omission of information occurs,” he said. He said most companies are “very forthcoming” when the CRTC requests specific information “but many companies won’t be forthcoming with information they feel may be damaging to their case unless they’re specifically asked to do so.” Copeland said it’s “critical” for the commission to be diligent in its investigations and get as much information from companies as possible. He said regardless of the CRTC proceeding, anytime information is withheld “it’s going to skew the judgment that’s used to come to a decision.” Serge Sasseville, senior vice-president of corporate and institutional affairs at Quebecor, whose company competes with Bell and is part of a coalition campaigning against Bell's deal to purchase Astral Media Inc., said in an interview that Silcoff established that senior Bell managers misled the commission with incomplete data. “That’s why we deplore such a lack of respect towards the laws and institutions that are supposed to protect the Canadian broadcasting system,” Sasseville said. He said Quebecor wants the CRTC to look further into the matter and sanction Bell for it. Sasseville said it’s important for the industry to take note of the court’s decision to ensure it does not happen again. “If they don’t sanction, Canadians’ slowly eroding confidence in the regulatory authorities would only be further undermined,”he said. Grant said the CRTC should have the power to impose fines on companies to compel them to comply with the rules and requests for information. “The government has actually resisted giving the CRTC those powers and it may be time to rethink that,” he said. Under former chair Konrad von Finckenstein, the CRTC called for stronger enforcement powers and the statutory authority to impose administrative monetary penalties across all of its regulated sectors. Right now, the CRTC can only impose administrative monetary penalties on companies that breach the telemarketing rules related to call numbers listed under the commission’s national do-not-call list. In January, von Finckenstein told The Wire Report that the commission's greatest power under the current rules is holding a hearing on the issue at hand. “You’ve heard me say many times that we don’t have the power to fine. If we really want to go after someone, we have to do a show-cause hearing for why we want to cancel your licence. That’s a lengthy process and a pretty huge hammer to use for what’s often a very minor discussion,” von Finckenstein said. Copeland said the commission has not used its powers “frequently enough” in the past. “Where we see them using them is relative to telemarketing and the do-not-call list, but beyond that, we don’t often see them levy huge administrative penalties when they come to a decision,” he said. Sasseville said that, in Quebecor’s view, the CRTC has enough power but it needs to exercise those powers to ensure stakeholders provide “true and exact” data when required, he said. “When you are a stakeholder and you have privileges provided to you by the CRTC, you have to act according to the rules,” Sasseville said. “And if you don’t, it has to be taken into consideration.” Sheridan Scott, a partner at Bennett Jones LLP and former commissioner of competition, said in an email to The Wire Report that industry assumes parties submit accurate information to the CRTC. “That is probably true for the most part,” Scott said. “I think it is for that reason that we are so upset when that does not turn out to be the case.” Bell spokeswoman Jacqueline Michelis said in an emailed statement to The Wire Report that Silcoff's decision did not accuse Bell of any illegal behaviour. “The Judge's decision only said that the Court was surprised that Mr. Frank would not have seen the report, not that he had omitted information,” Michelis said. “The Court did not conclude that Bell ExpressVu used illegal means or acted in bad faith in any way. That's underlined by the fact that no punitive damages were awarded. Indeed the Court reduced the damages sought by our competitor by 99.85% to $600,000 from $387 million that TVA/Videotron demanded,” she said. The court decision, which Bell is now appealing to the Quebec Court of Appeal, found that Bell did not take appropriate measures to prevent the illegal decoding of its satellite television signals despite having technology to address the problem and knowledge of the extent of the piracy being committed. The court ordered Bell to pay damages of about $600,000 to Quebecor’s subsidiaries as well as Quebecor’s expert witness costs of more than $400,000. “Despite the very low damages awarded, we decided to appeal as we disagree with some specific aspects of the decision,” Michelis said. Quebecor is also appealing the amount of the damages awarded in the decision. dgrenier@thewirereport.ca

Court’s satellite piracy decision raises questions about CRTC data collection: Experts

Broadcast | September 27, 2012

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