Cable and DTH square off over business practices

Vidéotron ltée and Star Choice Communications Inc. have been sparring since late last year over a widespread satellite provider policy that the cableco claims is anti-competitive, but the DTH BDU says is a standard practice in the industry. "I think Vidéotron’s just trying to create noise for us," says Ken Stein, senior VP of corporate and regulatory affairs at Star Choice, of the Montreal-based cableco’s complaint. "What’s the penalty in hockey, hooking?Interference?"In December 2005, Vidéotron filed a complaint with the commission based on section 9 of the Broadcasting Distribution Regulations, which forbids BDUs from giving undue preference or disadvantage to any person (Broadcasting Notice 2006-41). Vidéotron argued that Star Choice’s practice of allowing customers to buy multiple dishes and receivers serviced by just one monthly subscription is anti-competitive, and indeed subjects it to undue disadvantage. The commission broke from the standard protocol governing complaints, however, when it accepted comments from the Canadian Association of Broad-casters (CAB) in February of this year.Normally, interaction on complaints is limited to the parties involved and the commission. The CAB refrained from commenting on the merits of Vidéotron’s complaint, but rather more generally decried the practice of "treating the provision of service to two separate residences owned by the same person as a single subscription." Luc Lavoie, executive VP of corporate affairs at Vidéotron’s parent, Quebecor Inc. says: "The CRTC has always defined the subscriber as a civic address, and all of a sudden the subscriber is not a civic address anymore. We cannot compete against people who are selling the distribution of television signals at the price of two-for-one." But Stein says that the complaint is less about financial hardship due to business practices than it is about creating an administrative headache for Star Choice: to introduce a program to track subscribers and monitor them for unauthorized use at other addresses would be costly and cumbersome out of proportion with the size of the problem. "It’s just another way to try to make the satellite business guys’ costs go up," he says. "Only 5% of Canadians have a second home, and of that 5%...how many would actually have a dish there? 1%?" asks Stein. "So, we’re maybe talking about 0.15% of households in the country." But it’s not the magnitude of the problem that concerns Vidéotron, Lavoie says. Rather, it’s that it’s happening at all. "It’s like, I’m going to a shoe store and I’m only stealing one pair – don’t be mad at me," he says. "It’s still theft." Both Stein and Peter Bissonette, president of Star Choice’s parent Shaw Communications Inc., take exception to Vidéotron’s use of the term "account stacking" to describe Star Choice’s policy of allowing subscribers to access the DTH service from multiple locations, as long as it’s only from a single location at a time. "Stacking is when you go and...get a second and a third receiver and give one to your mom and one to your neighbor – this is not stacking," he says. "To lump together people who have a dish at their cottage that they use for a couple of months a year maybe, and then to compare that to the stacking issue, is really a real twist." The CAB submission based on Videotron’s complaint drew a similar response from Star Choice rival Bell ExpressVu. The DTH provider noted that third-party submissions in complaints were highly irregular, but if the commission planned to launch a public proceeding it wanted its take on multi-address accounts heard as well. As a result, the CRTC put out a public notice calling for comments on the matter. Rogers Cable Communications Inc. VP of regulator affairs Pamela Dinsmore filed a submission in which she noted that if the commission allowed the practice to continue, it would mean Star Choice and other DTH providers would be paying lower wholesale rate payments to programmers overall, which in turn would mean cable companies and other BDUs would likely see their wholesale rates increase to offset the loss. National Broadcast Reading Service Inc., which operates the Voiceprint service, confirmed Rogers Cable’s fears, asking the CRTC to rule against the practice and then order all Class 1, Class 2 and DTH distributors to provide detailed accounts of their wholesale payments and immediately remit any outstanding funds. The CAB also reiterated its position in its comments, as did Star Choice, Quebecor, and ExpressVu. Comments on all submissions can be made until May 19. In fact, Lavoie says Vidéotron’s biggest peeve is not with Star Choice, but ExpressVu. He says Vidéotron chose to go after Star Choice because the Calgary-based DTH provider is open about letting subscribers access its service from second addresses. ExpressVu, he says, has denied the practice, even when Vidéotron employees posed as potential buyers and called ExpressVu asking whether it would be possible to order a second dish for another residence. " ‘Oh, yes sir, it’s one advantage of being with ExpressVu,’" Lavoie claims. "But as we were getting these kinds of answers from their call centres, they were denying the practice." Officially, ExpressVu says its policy is to permit users to move their DTH receiver and dish from their primary residence to another address – such as a cottage – if they call ExpressVu first to temporarily shut off service at their main address. However, Lavoie says such a policy is "a farce," and merely pays lip service to ensuring subscribers actually are where they say they are. As well, Lavoie says the policies Star Choice and ExpressVu have in place are impossible to police, and pose few problems for subscribers looking to purchase additional units for residences they don’t own. "Who are we to believe when a client calls and says ‘I’ve got a country home’?" Lavoie asks. "Do you know if it’s his country home? Is this an in-law? Is this a friend of ?" Taking a more technical approach, Star Choice has argued that the portability of equipment and the ability to get reception over a wide area are inherent advantages of satellite technology, and DTH providers would be hampered in their ability to do business if they weren’t able to make full use of those technological advantages. That argument is one that Lavoie thoroughly refutes. "This is ludicrous…what advantage are they talking about? The fact that we have video on demand and they don’t?" he asks. "Well, they’ve got other things that don’t. What I care about is a level playing field. You want to have a subscription? It’s so much per civic address. Everything else is a lot of blah, blah, blah." While he says he’s unsure of how the matter might ultimately be resolved, Stein says the complaint is frivolous and the commission should turn its attention to more high-profile and widespread forms of theft, namely the illegal reception of satellite signals in Canada. "I think we should worry more about the 750,000 to one million black-market dishes," Stein says. "That’s where our efforts should be going, not running around trying to figure out how we can ding people for their cottage satellite receiver." For his part, Lavoie believes the fact that the complaint has been turned into a public process bodes well for Vidéotron. "I expect wisdom and I expect the truth, and fairness," he says.

Cable and DTH square off over business practices

Broadcast | May 5, 2006

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