Telecom Procedural Letter addressed to Dennis Béland (Quebecor Media Inc.)

Ottawa, 15 June 2017

Our reference: 8662-Q15-201704487

BY EMAIL

Mr. Dennis Béland
Vice President, Regulatory Affairs, Telecommunications
Quebecor Media Inc.
612 St-Jacques Street, 15th Floor
Montréal, Québec  H3C 4M8
dennis.beland@quebecor.com

RE: Application by Quebecor Media Inc., Videotron Ltd., and Videotron G.P. (collectively, Videotron) to stay, and review and vary, the implementation of Telecom Decision 2017-105 regarding Videotron’s Unlimited Music program

Dear Mr. Béland,

  1. On 25 May 2017, Quebecor Media Inc., Videotron Ltd., and Videotron G.P. (collectively, Videotron) filed an application requesting that the Commission stay, and review and vary, Telecom Decision 2017-105, which was published on 20 April 2017, regarding Videotron’s Unlimited Music program. In its application, Videotron stated that it does not take issue with the Commission’s conclusion in Telecom Decision 2017-105 that its Unlimited Music program violates subsection 27(2) of the Telecommunications Act (the Act). However, the company claimed that it will not be able to terminate the program by the 19 July 2017 deadline set out in that decision (i.e. within 90 days of the date of the decision), due to technological, administrative, and privacy-based constraints, as well as its contractual and legal obligations.
  2. Videotron requested a variance of Telecom Decision 2017-105 to allow it to grandfather contracts currently in place with affected subscribers until each of those subscribers has reached the end of their handset subsidy amortization period or has renewed their contract. In the alternative, Videotron requested a revised deadline for compliance with the decision of 31 January 2018, which it argued would be fair and reasonable and would take into account technological, administrative, and privacy-based factors. Videotron submitted that the Commission had failed to consider such factors when making its determinations in Telecom Decision 2017-105 and, accordingly, there is reason to doubt the correctness of the decision such that it should be reviewed and varied.
  3. Videotron also made submissions with respect to Telecom Regulatory Policy 2017-104, which was issued concurrently with Telecom Decision 2017-105 and which set out a framework for differential pricing practices. Videotron argued that the analytic approach in that decision established a broader test under subsection 27(2) of the Act than had previously been applied, so that the Commission must now also consider whether there are exceptional circumstances relevant to a differential pricing practice.
  4. Finally, Videotron requested that the Commission stay its direction to Videotron to terminate the Unlimited Music program by 19 July 2017, pending disposition of the company’s review and vary application.
  5. The Commission received interventions from the Equitable Internet Coalition, Marc Nanni, and OpenMedia, which all opposed Videotron’s application, as well as from TELUS Communications Company, which supported the application. The public record of this proceeding, which closed on 5 June 2017, is available on the Commission’s website at www.crtc.gc.ca or by using the reference number provided above.

Videotron’s position
Compliance with 19 July 2017 deadline

  1. Videotron submitted that the 19 July 2017 deadline set out in Telecom Decision 2017-105 is not achievable, on the basis that it must respect its contractual and statutory obligations to affected subscribers. Among other things, Videotron’s contracts require it to provide 30 days’ notice of any amendment to the services provided. The customer can either accept the amendment or terminate the contract without paying cancellation fees.
  2. Videotron argued that if subscribers who are affected by the cancellation of the Unlimited Music program elect to terminate their contracts, it will suffer significant financial losses, loss of market share, and reputational damage.
  3. In addition, Videotron submitted that it will require time to develop, test, and implement alternative services to Unlimited Music. Therefore, according to Videotron, the termination of access to the Unlimited Music program will not be achievable until 31 January 2018.
  4. Videotron submitted that while it could attempt to comply with Telecom Decision 2017-105 by simply terminating all access to the Unlimited Music program as of 19 July 2017 instead of implementing alternative services, it would have to inform affected subscribers of the termination by 19 June 2017. In order to meet that deadline, Videotron would have to begin taking steps to communicate with affected subscribers by no later than 9 June 2017.

Framework for differential pricing practices

  1. Videotron submitted that since Telecom Decision 2017-105 and Telecom Regulatory Policy 2017-104 were published on the same day, it was not aware of the new analytic framework that the Commission would use to evaluate its Unlimited Music program, and therefore there was no reason for it to have adduced evidence of mitigating factors or extenuating circumstances associated with the program.
  2. Videotron thus submitted that the Commission erred in its determinations in Telecom Decision 2017-105 since it made its decision in the absence of evidence regarding how much time would be required to terminate the Unlimited Music program, taking into account technological and administrative constraints, privacy-based considerations, and other factors.

Issues

  1. In Telecom Information Bulletin 2011-214, the Commission outlined the criteria it would use to assess review and vary applications filed pursuant to section 62 of the Act. Specifically, the Commission stated that applicants must demonstrate that there is substantial doubt as to the correctness of the original decision, for example due to (i) an error in law or in fact, (ii) a fundamental change in circumstances or facts since the decision, (iii) a failure to consider a basic principle which had been raised in the original proceeding, or (iv) a new principle which has arisen as a result of the decision.
  2. The Commission has determined that it must address the following issues in this decision:
    • Is there substantial doubt as to the correctness of Telecom Decision 2017-105?
    • Should the Commission stay the implementation of Telecom Decision 2017-105 until it renders its decision on Videotron’s review and vary application?

Is there substantial doubt as to the correctness of Telecom Decision 2017-105?

  1. In Telecom Decision 2017-105, the Commission determined that Videotron’s actions regarding Unlimited Music contravened subsection 27(2) of the Act, and Videotron stated that it does not dispute that determination. Accordingly, any impact on Videotron, such as customers leaving before the end of their contracts and the financial impact of this early termination, is the direct result of Videotron’s actions that contravened the Act. Further, any claim that Videotron cannot comply with the Commission’s decision by the 19 July 2017 deadline because of consumer-related statutory obligations undermines the purpose of such obligations, which is to protect consumers and ensure they are empowered to make informed choices. A company obviously cannot be allowed to justify the continuation of unlawful conduct based on the consequences of its own conduct.
  2. In its current application, Videotron is essentially requesting an extension of the 19 July 2017 deadline to bring itself into compliance with the Act. However, Videotron has known since September 2015, when the first complaints against the Unlimited Music program were filed, that there was a reasonable possibility that it would be found to be in violation of the Act.
  3. Even though Videotron was, or should have been, aware that the Commission might direct it to terminate the Unlimited Music program, it failed to take measures, pending a Commission decision, to prepare for such termination. Furthermore, Videotron did not cease offering the Unlimited Music program to new subscribers until 10 May 2017, or 20 days after the publication of Telecom Decision 2017-105. It was Videotron’s own choice not to immediately undertake the required steps to comply with Telecom Decision 2017-105 by the 19 July 2017 deadline.
  4. In addition, on 18 May 2016, the Commission issued Telecom Notice of Consultation 2016-192 to initiate a proceeding to examine the use of differential pricing practices such as Unlimited Music. As stated above, Videotron should reasonably have known that its Unlimited Music program might be found to be in violation of the Act as a result of that proceeding. It was therefore incumbent on Videotron, at any stage of either the complaint proceeding or the notice of consultation proceeding that both led to Telecom Decision 2017-105, to place evidence before the Commission as to the possible consequences of such a finding. However, the company chose not to do so. Regardless, now that Videotron has described the consequences of terminating Unlimited Music by 19 July 2017, the Commission has considered those arguments in making its determinations on Videotron’s current application.
  5. With regard to Videotron’s submission that it will need 27 weeks not only to terminate the Unlimited Music program, but also to identify, create, develop, test, and implement alternative services, the Commission did not direct Videotron to implement alternative services. It simply directed Videotron to bring itself into compliance with subsection 27(2) of the Act with regard to the Unlimited Music program. The decision to replace the program with new services is of Videotron’s own choosing and cannot be used as a reason not to bring itself into compliance within 90 days of Telecom Decision 2017-105.
  6. Videotron stated that simply terminating all access to the Unlimited Music program could be achieved in 40 days (i.e. 10 days to contact all affected subscribers plus the 30-day notice period required in its contracts). It therefore cannot be said that the 90 days provided in Telecom Decision 2017-105 to terminate the Unlimited Music program in a way that would bring Videotron into compliance with subsection 27(2) of the Act was inadequate.
  7. With regard to Videotron’s request that it be allowed to grandfather contracts currently in place with affected subscribers, the Commission considers that permitting the continued use of the Unlimited Music program in such a manner would not be consistent with the fundamental determinations made in Telecom Decision 2017-105 and Telecom Regulatory Policy 2017-104. Those decisions were intended to promote the freedom of consumers to access the online content of their choice and to support the ability of all content providers to innovate. Consequently, Videotron should not be allowed to continue to offer the Unlimited Music program to current subscribers until, in some cases, May 2019 (given that some of the contracts signed on or before 10 May 2017 are likely two-year contracts).
  8. Finally, Videotron’s submission that the Commission committed an error by not providing it with the opportunity to address the issue of exceptional circumstances, as identified in Telecom Regulatory Policy 2017-104, is inherently contradictory. The purpose of Telecom Regulatory Policy 2017-104 is to assist parties to better understand how the Commission generally intends to examine whether a particular situation involving differential pricing practices is, or is not, in violation of subsection 27(2) of the Act. Accordingly, the relevance of Telecom Regulatory Policy 2017-104 is with respect to findings under subsection 27(2). However, in this proceeding, Videotron plainly stated that it does not take issue with the Commission’s finding that the Unlimited Music program breached subsection 27(2) of the Act. Further, to the extent that Videotron is arguing that it was deprived of an opportunity to make submissions on mitigating or extenuating circumstances associated with its Unlimited Music program in the proceedings leading to Telecom Decision 2017-105, it clearly had an opportunity to do so in the current proceeding and took full advantage of that opportunity. Accordingly, any want of procedural fairness that might have existed previously has now been resolved.
  9. In light of all the above, the Commission determines that Videotron has failed to demonstrate that there is substantial doubt as to the correctness of Telecom Decision 2017-105. The Commission therefore denies Videotron’s request to review and vary Telecom Decision 2017-105.
  10. However, the Commission has discretion, under section 50 of the Act, to extend the deadline for implementing Telecom Decision 2017-105. Since Videotron indicated that, in order to terminate all access to the Unlimited Music program as of 19 July 2017, it would have to begin taking steps to communicate with the affected subscribers by no later than 9 June 2017, the Commission considers it reasonable to exercise its discretion to extend the 19 July 2017 deadline, in light of the date of issuance of the current decision. Specifically, the Commission directs Videotron to
    • file a plan, demonstrating how it intends to bring itself into compliance with subsection 27(2) of the Act with respect to data charges for the Unlimited Music program, by no later than 27 June 2017;
    • bring itself into compliance with subsection 27(2) of the Act with respect to data charges for the Unlimited Music program by no later than 4 August 2017; and
    • report to the Commission immediately once it has come into compliance.

Should the Commission stay the implementation of Telecom Decision 2017-105 until it renders its decision on Videotron’s review and vary application?

  1. Since the Commission is making its final determination on Videotron’s review and vary application in this decision, it is not necessary to address Videotron’s request for a stay of the implementation of Telecom Decision 2017-105, as the request is moot.

Yours sincerely,

Original signed by

Danielle May-Cuconato
Secretary General

c.c: .Equitable Internet Coalition, John Lawford, jlawford@piac.ca
Marc Nanni, m_nanni@hushmail.com
OpenMedia, Cynthia Khoo, regulatory@openmedia.org
TELUS Communications Company, Stephen Schmidt, regulatory.affairs@telus.com

Appendix (1)

Appendix: Related documents

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