ARCHIVÉ - Transcription
Cette page Web a été archivée dans le Web
L’information dont il est indiqué qu’elle est archivée est fournie à des fins de référence, de recherche ou de tenue de documents. Elle n’est pas assujettie aux normes Web du gouvernement du Canada et elle n’a pas été modifiée ou mise à jour depuis son archivage. Pour obtenir cette information dans un autre format, veuillez communiquer avec nous.
Offrir un contenu dans les deux langues officielles
Prière de noter que la Loi sur les langues officielles exige que toutes publications gouvernementales soient disponibles dans les deux langues officielles.
Afin de rencontrer certaines des exigences de cette loi, les procès-verbaux du Conseil seront dorénavant bilingues en ce qui a trait à la page couverture, la liste des membres et du personnel du CRTC participant à l'audience et la table des matières.
Toutefois, la publication susmentionnée est un compte rendu textuel des délibérations et, en tant que tel, est transcrite dans l'une ou l'autre des deux langues officielles, compte tenu de la langue utilisée par le participant à l'audience.
TRANSCRIPT OF PROCEEDINGS
FOR THE CANADIAN RADIO‑TELEVISION AND
TELECOMMUNICATIONS
COMMISSION
TRANSCRIPTION DES AUDIENCES
DU
CONSEIL DE LA RADIODIFFUSION
ET DES TÉLÉCOMMUNICATIONS CANADIENNES
SUBJECT / SUJET
Expedited
procedure for resolving competitive issues /
Procédure
accélérée de règlement des questions de concurrence
HELD AT:
TENUE À:
Salon Réal Therrien
Salon Réal Therrien
7th floor, Central Building
7e étage, l'édifice central
Les Terrasses de la Chaudière
Les Terrasses de la Chaudière
1 Promenade du Portage
1, promenade du Portage
Gatineau, Quebec
Gatineua (Québec)
March 21, 2005
Le 21 mars 2005
Transcripts
In order to meet the requirements of the
Official Languages
Act, transcripts of proceedings before the
Commission will be
bilingual as to their covers, the listing of
the CRTC members
and staff attending the public hearings, and
the Table of
Contents.
However, the aforementioned publication is the
recorded
verbatim transcript and, as such, is taped and
transcribed in
either of the official languages, depending on
the language
spoken by the participant at the public
hearing.
Transcription
Afin de rencontrer les exigences de la Loi sur
les langues
officielles, les procès‑verbaux pour le Conseil
seront
bilingues en ce qui a trait à la page
couverture, la liste des
membres et du personnel du CRTC participant à
l'audience
publique ainsi que la table des
matières.
Toutefois, la publication susmentionnée est un
compte rendu
textuel des délibérations et, en tant que tel,
est enregistrée
et transcrite dans l'une ou l'autre des deux
langues
officielles, compte tenu de la langue utilisée
par le
participant à l'audience
publique.
Canadian
Radio‑television and
Telecommunications
Commission
Conseil de la radiodiffusion et des
télécommunications
canadiennes
Transcript / Transcription
BEFORE / DEVANT:
Andrée Wylie
Vice-Chairman,
Broadcasting /
Vice‑présidente,
Radiodiffusion
Barbara Cram
Commissioner / Conseillère
Andrée Noël
Commissioner / Conseillère
ALSO PRESENT / AUSSI
PRÉSENTS:
Stephen Millington
Legal Counsel
Len Katz
Executive Director, Telecom
Marc O'Sulivan
Executive Director,
Broadcasting
HELD AT:
TENUE À:
Salon Réal Therrien
Salon Réal Therrien
7th floor, Central Building
7e étage, l'édifice central
Les Terrasses de la Chaudière
Les Terrasses de la Chaudière
1 Promenade du Portage
1, promenade du Portage
Gatineau, Quebec
Gatineua (Québec)
March 21, 2005
Le 21 mars 2005
TABLE OF
CONTENTS / TABLE DES MATIÈRES
PAGE / PARA
Opening Remarks by the Chairperson / 1 / 1
Remarques d'ouverture par la
présidente
Applicant:
Aliant Telecom Inc.
Respondent: Bragg
Communications Inc.,
operating as Eastlink Telephone
Regarding: Bragg
Communications' refusal to accept
Aliant Telecom advertising in Nova Scotia
and Prince Edward Island
File No.:
8624‑A53‑200415530
OPENING REMARKS BY / REMARQUES D'OUVERTURE PAR
Aliant Telecom 4 /
21
EastLink Telephone 15 / 78
QUESTIONS BY / INTERROGATOIRE PAR
The Commission 24 / 120
Aliant Telecom 80 /
427
EastLink Telephone 98 /
501
CLOSING REMARKS BY / REMARQUES DE FERMETURE PAR
Aliant Telecom 108 / 558
EastLink Telephone 109 / 568
Gatineau, Quebec / Gatineau
(Québec)
‑‑‑ Upon commencing on Monday, March 21, 2005
at 1000/
L'audience débute le lundi
21 mars 2005 à 1000
OPENING REMARKS / REMARQUES
D'OUVERTURE
1 LA PRÉSIDENTE: À l'ordre, s'il vous
plaît.
2 Bonjour et bienvenue à
tous. Je suis Andrée Wylie. Je suis
la vice‑présidente de radiodiffusion du CRTC et je présiderai cette
audience.
3 Mes collègues sont
Barbara Cram, à ma droite, conseillère régionale du Manitoba et de la
Saskatchewan, et à ma gauche, Andrée Noël, conseillère de la région du Québec,
et elles se joignent à moi aujourd'hui pour siéger à cet comité
d'audition.
4 Avant de débuter, je
voudrais souhaiter le bienvenue à Rick French, our new Vice Chair, Telecom. Those who haven't had the opportunity to
meet him can at the break, or whenever, as long as it is not while I am
speaking.
‑‑‑ Laughter / Rires
5 THE CHAIRPERSON: We certainly are happy to have him with
us.
6 Over the course of this
hearing we will be assisted by a number of Commission staff, including, among
others, Stephen Millington, our legal counsel, who is to the right of Madam
Cram; Len Katz, Executive Director Telecom, who is here and on time ‑‑
good; and Mark O'Sullivan, Executive Director of
Broadcasting.
7 Please don't hesitate
to contact Mr. Millington if you have any procedural questions with respect to
the conduct of this hearing.
8 The purpose of this
oral public hearing is to adjudicate a complaint by Alliant Telecom against
Bragg Communications regarding Bragg's refusal to accept Alliant's advertising
in Nova Scotia and Prince Edward Island.
9 Before we begin, I
would like to say a few words about the administration of the
hearing.
10 This hearing, as you
know, is less formal than traditional telecom hearings, and much narrower in
scope. Due to its expedited nature,
intervenors and the general public will not participate in the oral
phase.
11 The parties will be
asked first to introduce the members of their respective teams. The applicant, followed by the
respondent, will have 10 minutes each for opening
remarks.
12 Following these
remarks, the applicant, and then the respondent, will be questioned on matters
related to the application, first by the Commission, followed by the applicant,
then the respondent, and ending with the Commission's final
questions.
13 The Commission will not
entertain written final argument.
Rather, parties will have an opportunity at the end of the hearing to
make final oral submissions.
14 The Notice of Public
Hearing letter indicated that the parties must file all documents with the
Commission and serve them on the other parties prior to the hearing. We are, therefore, not inclined to
accept any additional documents at this stage.
15 There is a verbatim
transcript of this hearing being taken by the court reporter. In order to ensure that the court
reporter is able to produce an accurate transcript, please make sure that your
microphone is turned on when speaking, simply by pushing the button on the
microphone.
16 If you have any
questions on how to obtain all or parts of the transcript that will be produced,
please approach the court reporter at the end of the hearing and some
indications will be given to you on how to
proceed.
17 We would like all of
you to ensure that cellphones and pagers are turned off at all times when you
are in the hearing room.
18 As indicated in the
Commission's organization and conduct letter of March 17, 2005, we plan to
consider this application from 10:00 a.m. to noon, and we intend to issue a
brief written decision by April 1, 2005.
19 We will now proceed
with the opening remarks of Alliant.
20 Mr.
Fitzpatrick.
OPENING REMARKS BY / REMARQUES D'OUVERTURE
PAR
21 MR. FITZPATRICK: Thank you, Madam
Commissioner.
22 First, I will introduce
the people here from Alliant today.
My name is Paul Fitzpatrick. I am senior legal counsel with
Alliant.
23 To my left is Sue
Harley. She is the Director of
Market Integration with Alliant Telecom.
24 To her left is Rick
Stephen, the Director of Regulatory Matters for
Alliant.
25 Madam Commissioners,
ladies and gentlemen, in this proceeding EastLink wears two hats. First, EastLink is a broadcast
distribution undertaking, or BDU, under the Broadcasting Act. It operates a cable TV service in parts
of the maritimes. It is virtually a
monopoly cable TV provider in its operating territory, including the Halifax
Regional Municipality.
26 As part of its cable
programming, EastLink operates a TV listing channel. This is a channel that you go to to find
out what is coming on the various network channels that EastLink carriers. Although it is referred to as the TV
listing channel, EastLink also sells advertising there.
27 Until recently, Alliant
Telecom purchased advertising space on this channel and ran ads for cellular
telephone services.
28 In October 2004,
EastLink advised Alliant that it would no longer carry its advertising, except
advertising for the New Brunswick and Newfoundland
markets.
29 EastLink's second hat
is that of a telecommunications service provider. It operates mainly in Nova Scotia and
Prince Edward Island, where it is a well known and successful competitive local
exchange carrier.
30 Historically, Alliant
has not sold cellular telephone services.
However, this is changing.
In December 2004, less than two months after EastLink cancelled Alliant's
cellular advertising, EastLink announced a partnership with Rogers
Wireless. Under this partnership,
Rogers' cellular services will be added to EastLink's
bundles.
31 Alliant sees EastLink's
refusal to accept its advertising as unjust discrimination. It appears that this change in
EastLink's policy is intended to give EastLink and its partners an undue or
unreasonable preference and to disadvantage Alliant.
32 Is EastLink's behaviour
within the accepted standards required of BDUs under Canadian regulatory
law? Does EastLink's conduct meet
the standard of fairness and propriety that public policy
dictates?
33 The first step in our
analysis is to determine which regulatory regime applies, the Broadcasting Act
or the Telecommunications Act.
34 Alliant submits that
EastLink's behaviour is prohibited under both, and it is up to the Commission to
decide under which Act this issue should be
adjudicated.
35 Both section 9 of the
Broadcast Distribution Regulations and subsection 27(2) of the
Telecommunications Act prohibit unjust discrimination. However, the wording is slightly
different under both statutes, and the wording in the Telecommunications Act is
slightly broader and arguably offers greater protection to the victims of
discrimination.
36 Another important
difference is that subsection 27(4) of the Telecommunications Act places a
reverse onus on the perpetrator of discrimination to prove that any preference
or disadvantage is not undue or unreasonable. In other words, if the
Telecommunications Act applies, the onus falls to EastLink to show that its
discriminatory behaviour is not unjust and that any preference or disadvantage
arising from its behaviour is not undue or unreasonable.
37 Under what
circumstances will the issue fall under the Broadcasting
Act?
38 Basically, as Alliant
understands the authorities, the regulation of "programming services" falls
under the Broadcasting Act. If
EastLink's TV listing channel is a non‑programming service, then it falls under
the Telecommunications Act. This
follows from CRTC Telecom Decisions 96‑1, the regulation of broadcasting
distribution undertakings that provide non‑programming services, and 97‑2, the
regulation of full‑channel TV services.
39 How do we determine
whether the EastLink TV listing channel is a non‑programming
service?
40 The Commission has
provided guidance on this, and in CRTC Telecom Decision 97‑2, essentially
indicated that non‑programming services would include visual images, whether or
not combined with sounds, that consist predominantly of alphanumeric
text.
41 Is the EastLink TV
listing channel a non‑programming service?
42 Alliant submits that
under any common sense interpretation it must be a non‑programming service,
consisting predominantly of alphanumeric text.
43 The Commission has also
indicated that, in this analysis, the word "predominant" is to be given the
extraordinary meaning of signifying that which is more influential or more
powerful. What are the most
influential or powerful constituents of EastLink's TV listing channel? Let's look at some
considerations.
44 First, what is the
channel called? How does EastLink
refer to it?
45 They call it their TV
listing channel because that is what it is. Clearly, its predominant purpose is to
list the programming coming on the network channels carried on EastLink's cable
service. That listing is done in an
alphanumeric format.
46 Second, what do people
use the channel for?
47 Obviously, to obtain
information about what is coming on TV.
This is useful information.
Take it from someone who has stayed in hotels in Halifax and who has
availed himself of this channel.
48 Alliant Telecom submits
that people do not select the TV listing channel to view advertisements or
public service announcements or other content that may be featured on the
channel. These other features are
incidental to the main purpose of the channel.
49 To suggest that the TV
listing channel's predominant characteristic is something other than providing
TV listings, which are presented in an alphanumeric format on the left‑hand side
of the screen, is, quite simply, ignoring the plain reality of the
situation.
50 Alliant submits that
the TV listing channel is clearly a non‑programming service and is, therefore,
reviewable under the unjust discrimination provisions in section 27(2) of the
Telecommunications Act. That
provision states:
"No Canadian carrier shall, in
relation to the provision of a telecommunications service, or charging of a rate
for it, unjustly discriminate or give an undue or unreasonable preference toward
any person, including itself, or subject any person to an undue or unreasonable
disadvantage."
51 Alliant also submits
that the burden is now on EastLink to show that its discriminatory behaviour is
not unjust, and that any preference or disadvantage that has accrued, or may
accrue to it or Rogers Wireless is not undue or
unreasonable.
52 Of course, EastLink
will try to persuade the Commission that the harm accruing to Alliant is
minimal. Alliant would respond as
follows.
53 First, this case is
different from most others. It is
not a case that lends itself to the easy quantification of negative impact or
competitive harm. Alliant submits
that this case is more about principle.
It is about equity, fairness and propriety, and the expected standards of
conduct of the BDU.
54 EastLink has singled
out Alliant and has subjected it to not unintentional or incidental
discrimination, but rather targeted and intentional
discrimination.
55 As a matter of public
policy, is that appropriate? Is
that the standard that should apply?
56 When you consider the
issue at this broad level, Alliant submits that the answer is clear. EastLink ought not to be permitted to
abuse its position of authority and power granted under its broadcast
distribution licence to give itself and its business partners in a separate
industry, telecommunications, an advantage over its
competitors.
57 Second, EastLink is in
a unique and powerful situation vis‑à‑vis the cable television market where it
operates. Because it is a virtual
monopoly there, it essentially owns access to the cable television viewer. Contrary to EastLink's submission,
Alliant has not targeted EastLink's customers in either the telecommunications
or broadcasting markets with its ads on EastLink's TV listing channel. In fact, Alliant targeted cable TV
viewers. It has specifically
tailored its TV listing channel advertising in the past to reach that
market.
58 By denying Alliant
access to this advertising medium, EastLink is completely closing the door to
that market, as it were, and denying access to a very cost effective mode of
advertising.
59 Third, we must not lose
sight of the fact that EastLink, in its capacity as a BDU, is using the
privileges and authorities granted under that regime to benefit itself and its
business partners in another industry, telecommunications.
60 Would this be permitted
if the shoe were on the other foot and if Alliant were a combined BDU and
Canadian common carrier and discriminated against EastLink by denying it Yellow
Pages advertising because EastLink was a competitor in the broadcast
area?
61 The answer to that
would be a resounding no, and rightly so.
62 Fourth, if this is a de
minimus issue, as EastLink suggests, then why has it changed the status quo and
proactively taken a decision to deny Alliant access?
63 The proof of the
significance of this issue is demonstrated by the fact that EastLink has
consciously considered the matter and has decided to deny Alliant something that
it had previously accepted.
64 EastLink's actions show
that it is something which it considers significant. If that wasn't the case, it would let the
status quo remain.
65 One expects that
EastLink will also argue that Alliant has other advertising avenues open to it
and that Alliant has engaged in discriminatory behaviour by refusing EastLink
access to certain advertising vehicles.
These arguments are unpersuasive for several
reasons.
66 First, Alliant only has
one vehicle where it sells advertising space to third parties, the Yellow
Pages. EastLink is free to
advertise wherever it chooses.
EastLink's sale of third party advertising on the TV listing channel is a
fair analogy to the Yellow Pages.
Why shouldn't the same rules of access as apply to Yellow Pages
advertising apply to EastLink's advertising services? Why shouldn't there be regulatory
symmetry here?
67 Second, while Alliant
advertises its services on its website, through billing inserts and in other
marketing avenues exclusive to Alliant, it does not carry third party
advertising there. The same avenue
is open to EastLink. It, too, has
the ability to advertise on its own website and through its own billing
inserts.
68 However, should Alliant
carry third party advertising on its website, it could do so without being
subjected to the Commission's scrutiny, as such website content is not under the
Commission's purview.
69 Similarly, EastLink may
not carry third party advertising on its website, but can do so if it
chooses.
70 Third, EastLink
suggests that it is common for companies to deny their direct competitors access
to advertising through their venues, and cites the CBC advertising
policy.
71 However, to compare the
CBC refusing advertising for competitive services is quite different from
EastLink, which is operating as a BDU and which is a virtual monopoly cable TV
service provider in its operating territories, accepting advertisements in
relation to Alliant's telecommunications services.
72 The CBC example relates
to same industry advertising, whereas EastLink's situation deals with
advertising in telecommunications, not broadcasting. Alliant does not compete with EastLink
in the broadcast industry.
73 In conclusion, Alliant
submits that EastLink's conduct is unjustly discriminatory and that it provides
EastLink and its business partner, Rogers Wireless, an undue or unreasonable
preference. Alliant submits that
EastLink has failed to establish that its conduct is not contrary to the
standards required under either section 9 of the Broadcast Distribution
Regulations or subsection 27(2) of the Telecommunications
Act.
74 Therefore, Alliant
respectfully requests that the Commission order that EastLink immediately
withdraw its refusal to accept Alliant advertising on its TV listing channel and
that EastLink be ordered to provide a line with access to its TV listing channel
for advertising purposes on the same terms and conditions that EastLink provides
itself and other businesses, including telecommunications service
providers.
75 Thank
you.
76 THE CHAIRPERSON: Thank you, Mr.
Fitzpatrick.
77 Ms
MacDonald.
OPENING REMARKS BY / REMARQUES D'OUVERTURE
PAR
78 MS MacDONALD: My name is Nathalie MacDonald, and I am
the Director of Regulatory Matters on behalf of EastLink.
79 Here with me is Mr.
Barry Scott, who is the Director of Advertising Services with
EastLink.
80 With regard to this
application, the Commission really has two issues to determine. The first is which legislation applies
in determining Alliant's complaint against EastLink, the Broadcasting Act or the
Telecommunications Act.
81 Second, a determination
as to whether EastLink's refusal to advertise Alliant services on the listing
service is in breach of that legislation.
82 The Commission has
determined under the Broadcasting Act that an undue preference or disadvantage
will exist where it is shown that the preference or disadvantage has or is
likely to have a material adverse impact on the complainant or any other
person.
83 It also examines the
impact that the preference has had or is likely to have on the achievement of
the objectives of the Broadcasting Act.
84 Under the Broadcasting
Act, the onus is on Alliant to prove this claim.
85 Under the
Telecommunications Act, in order for an undue preference or disadvantage to
exist, there must be a finding that the establishment or continuance of a
competitive market is being unduly impaired by EastLink's
actions.
86 The Telecommunications
Act includes a reverse onus provision, which means that if the application is
determined under this Act, EastLink must establish that any preference or
disadvantage is not undue.
87 While it is EastLink's
position that EastLink is not in breach of either piece of legislation, in our
opinion the Broadcasting Act governs the TV listing
service.
88 As stated throughout
the submissions and interrogatory responses, the first issue in determining
which legislation applies is whether the relevant services are programming
services or non‑programming services.
89 The Commission
precedent indicates that such a determination should also be made on a
case‑by‑case basis.
90 The Broadcasting Act
applies to programming. A program
is defined as sounds or visual images, or a combination of sounds and visual
images that are intended to inform, enlighten or entertain, but does not include
visual images, whether or not combined with sounds, that consist predominantly
of alphanumeric text.
91 "Predominantly" has
been defined as that which is more influential or
powerful.
92 The Commission has
recognized that even where a moving image only occupies a quarter of the screen,
in some cases that service may be characterized as a program if the moving image
is the focus of attention.
93 In the case of
EastLink's listing service, while it may be true that a subscriber initially
goes to that service to check the listings, once you are on that service, the
more influential or powerful component of that service is on the right side of
the screen, which has the visual images and the audio sounds, and that includes
the full motion Barker programming, as well as the pictorial images of the
advertisements that are located on the listing service.
94 In determining whether
the service is predominantly a programming service, the Commission must look to
that part of the service which is more influential or powerful once a viewer is
looking at the screen. It is
notable that the focus of this application deals with the services on the right
side of the screen, which are not predominantly
alphanumeric.
95 Furthermore, in
EastLink's opinion, the evidence before the Commission does not support a
finding that EastLink is in breach of section 9 of the Broadcasting Act. Alliant has not established that the
lack of advertising of its services on EastLink's listing service is likely to
have a material adverse impact on Alliant, another person, or an impact on the
broadcasting objectives.
96 There is no evidence
before the Commission that the Broadcasting Act objectives are impacted by this
issue. Nor has Alliant provided any
evidence of a material adverse impact to Alliant or any other person if it
cannot advertise on the listing service.
97 The Commission has
before it an argument by Alliant that may suggest that the refusal to provide
access to advertising is not fair, and statements that it will likely have an
adverse impact on Alliant. The
principles of equity and fairness, or the appearance of equity and fairness, is
not the key to the test to establish whether an undue preference exists. The key is the undue preference
provisions and the test of those provisions.
98 In assessing whether
the impact, if any, is material, EastLink submits that the Commission must first
look at whether there is any evidence before the Commission to suggest that this
is the case. If there is evidence,
is it substantial enough to indicate that Alliant is materially impacted by the
lack of advertising?
99 Various facts should be
considered. We are talking about a
listing service which, in the scheme of advertising, is not a key advertising
medium for large companies like Alliant.
This listing service is typically directed to very small local companies
who have that as a resource for their advertising.
100 EastLink would submit
that this listing service, if anything, is only a small supplement to Alliant's
overall advertising market and budget.
101 If the Commission looks
at the facts presented in light of the full picture, we submit it will become
clear that a case of material impact cannot be made out. In fact, as stated in EastLink's
previous submissions, the impact to EastLink by having Alliant place advertising
for its services on the listings channel would be a more material negative
impact to EastLink.
102 This is a situation
where EastLink's direct competitor, Alliant, is seeking access to EastLink's
subscribers. While Alliant may
state that they aren't seeking access to EastLink's cable subscribers, that they
are seeking access to the viewers, EastLink submits that this is really the same
thing. Any incremental additional
viewers is not the sole basis upon which Alliant is looking to advertise its
services.
103 EastLink's concern is
that Alliant's intention is to leverage individual products in order to
successfully win back EastLink customers for Alliant‑bundled products. We think it is important for the
Commission to note that this type of discretion is applied by various companies
who have access to advertising vehicles.
104 The decisions made by
such companies are the same. They
are based on business decisions.
105 This issue is not about
EastLink causing harm to Alliant, it is about EastLink governing its business
and making decisions to prevent the erosion of its customer base to its
competitor, who has numerous services and packages available to target
EastLink's customers.
106 While Alliant raises
the issue of the Yellow Pages being analogous, EastLink says this is not at all
the same situation.
107 The purpose of the
Yellow Pages is to provide information to consumers about various businesses
that operate in a given area. It is
to provide information to consumers.
108 The focus of the Yellow
Pages is to ensure the most complete document available for consumers to access
phone numbers. That is not the
focus of the listing service. It is
to a directory publisher's advantage to get as much access, even if it includes
advertising its competitors' services.
109 The listing service is
not about that. The listing service
is provided to EastLink's cable subscribers, and it is not a predominant means
of advertising competitors' products.
110 These same factors must
be considered, as well, if the Commission finds that this application is
governed by the Telecommunications Act.
While the reverse onus applies to the Telecommunications Act, the test
requires substantial evidence that the continuance of a competitive market is
being unduly impaired.
111 The issue of the
establishment of a competitive market is not relevant, since Alliant is the
incumbent for its telecommunications services, so such a market is already
established.
112 Given that the test
requires such a high threshold in order to find that a preference is undue,
EastLink submits that the evidence clearly does not satisfy this test. The facts currently before the
Commission already establish that if a preference exists, it is not an undue
one.
113 Alliant has provided no
indication of harm ‑‑ financial harm or otherwise ‑‑ to Alliant by the
failure to list its services. In
fact, Alliant is seeking to advertise all services; however, it has never
advertised all services in the past, it has only advertised its Mobility
product.
114 EastLink, therefore,
asks that in arriving at a determination in this proceeding the Commission
continue to focus on the requirements that any preference or disadvantage must
be clearly substantial or material.
The mere fact that a company does not have one avenue on which to
advertise its services does not equate to such a finding, unless the effect of
that denial will have a significant impact on the company.
115 We ask that the
Commission not just look at the issue of Alliant's denial on this service, but
also to look at the other avenues which Alliant has at its disposal, many of
which EastLink does not have.
116 The facts, when
reviewed as a whole, will establish that there is no undue preference in favour
of EastLink or undue disadvantage to Alliant by EastLink's refusal to provide
advertising services on the listing channel.
117 Thank
you.
118 THE CHAIRPERSON: Thank you, Ms
MacDonald.
119 Mr. Millington,
please.
QUESTIONS BY / QUESTIONS
PAR
120 MR. MILLINGTON: Thank you, Madam
Wylie.
121 I am going to start my
questions with Alliant and Mr. Fitzpatrick.
122 Are you familiar with a
CRTC decision that was referenced in EastLink's response to Interrogatory No. 1
on February 10th? It is the
complaint by Wagg Communications against Shaw Communications, CRTC Decision
2003‑518.
123 MR. FITZPATRICK: Yes, somewhat.
124 MR. MILLINGTON: In that decision there was a
determination as to whether the Shaw TV listings channel was a program or
predominantly an alphanumeric broadcast, and in that case there was a split
screen, 50/50, as there is here.
Half of the image was pictorial and half was alphanumeric, as is the case
here.
125 In that case there was
a still image on the non‑alphanumeric side of the channel. In this case we have a full‑motion video
from time to time.
126 So we have a very
similar situation ‑‑ split screen, 50/50, a TV listing channel, a
combination of image and alphanumeric content, and in the Wagg Communications
case the image was a still image, and in this case it is a video
image.
127 In the Wagg
Communications case, the Commission determined that the TV listing channel was
not predominantly alphanumeric and determined that it was a program and subject
to the BDU regs.
128 Can you help me in
distinguishing why the determination wouldn't be the same in this particular
instance?
129 MR. FITZPATRICK: Thank you, Mr.
Millington.
130 I believe that the
Commission does have the authority, and obviously it is recognized that they
have to adjudicate every case on its own merits. I believe that the Commission will
receive submissions that will enlighten the discussion with respect to what is
predominant in the TV listing channel and consider each case on its
merits.
131 In this particular
case, I have some difficulty with the philosophy that if the TV listing channel
does, for a period of time, include a particular ad which distracts and draws
attention, and then a minute later it is gone and there is some other doll ad
that is a black‑and‑white text ad ‑‑ that because there is a video image at
some time during the run of the day that may catch and draw one's attention,
that that defines the predominant characteristics of the
channel.
132 I feel that the
predominant characteristics of the channel should be determined by what the
viewers go to the channel for ‑‑ what is its utility.
133 The main purpose of
going to the TV listing channel is to determine what is coming on TV. That is the main reason people avail
themselves of the service to begin with.
That is the reason for being, largely, of the
channel.
134 In my view, I feel that
that is significant. In fact, it
can be heavily weighted in determining what the predominant characteristic of
the channel is.
135 I am speaking largely
from personal experience. I have
viewed the channel ‑‑ and I am saying that four points share it in Halifax,
for example ‑‑ when I want to know what is coming on TV. I am not terribly interested in ads
about a real estate agent who is operating in Antigonish or other things of
local interest, for example.
136 The TV listing channel
is used, I suspect, a lot by people who are using cable television from out of
town ‑‑ hotel guests ‑‑ and, really, I don't think it is reasonable to
assume that they would have a high degree of interest in things like local
advertisements. They go to the
channel because they want to see what is coming on TV.
137 I have a very strong
feeling that that is the predominant nature of that particular
service.
138 The advertising
flickers from minute to minute, it changes from minute to minute, it has
different characteristics in terms of its sound, its sight. Some are video, some are still, some are
quite distracting, some are not so distracting.
139 To define the pith and
substance of the channel's predominant characteristic by a flickering, highly
distracting ad at one particular point in time, I think, is not to look at the
channel in its totality.
140 MR. MILLINGTON: Let's accept the fact that people go to
the TV listing channel to look up TV channels, and once they are there ‑‑
the test really doesn't talk about why you go to the channel, it talks about
what happens once you are watching the channel, and it goes to what your eye is
drawn to. That is what you are
essentially being attracted to.
141 Could you comment on
what would be the purpose of advertising on that side of the channel? Why would people pay for advertising on
the video side of the channel? Why
would Alliant be interested in advertising on that side of the channel if there
wasn't some expectation by the advertiser that the viewer's eye, the viewer's
attention, would be drawn to that part of the screen?
142 MR. FITZPATRICK: First of all, I think the primary
strength of this powerful advertising medium is the fact that there are a lot of
hits, if you will, to use an analogy from the Internet industry. A lot of people go there, so there is
broad exposure in terms of the audience that will be viewing that channel. That is a reason why you would want to
advertise there.
143 In terms of whether you
present an ad that captures the attention, it varies from minute to minute. Some ads, you are quite right, are very
fetching, and people put on ads that will capture your attention. That should not define the channel in
its totality.
144 There are long periods
of time when there are ads which are still imagines, which, to the average
viewer, are not particularly captivating, with a
voiceover.
145 To suggest that,
because there might be a catchy ad every 15 minutes, that should define the
nature of the channel, I don't agree with that.
146 In terms of the
advertising strength and the effectiveness of the medium and why one would want
to advertise there, it is obvious.
A very large number of viewers watch it. Not just subscribers, viewers. Hotel guests view this
thing.
147 In terms of exposure,
it is very attractive from an advertising medium perspective. It is very cost effective as
well.
148 If you were to run
comparable ads on a network television channel, that would be far, far more
expensive than running the service on the EastLink TV listing
channel.
149 Also, it depends on who
your market is. If you want to
specifically target cable TV viewers with a specific product, this is the place
to go. This is, by far, I would
submit, a very attractive and cost effective way of targeting into a very
defined market.
150 MR. MILLINGTON: What would be the cost difference
between running an ad on the TV listing channel as compared with regular
broadcasting programming, like on the CBC?
151 MR. FITZPATRICK: I would defer to my friend, Ms
Harley.
152 MS HARLEY: I don't have specific numbers to quote,
but certainly it would be more cost effective, obviously, than buying network
programming.
153 We are in the habit of
buying a number of different media to get our message across, and this would be
a much more cost effective way.
154 I think one of the
points that strikes me as I reflect on this is that people do go ‑‑
consistent with what Paul has told us ‑‑ people do go to a listings channel
to find TV listings. The reason
that we advertise there is, because of the nature of the EastLink TV listing
channel, it is a rolling or a scrolling listing, it is not an interactive guide
that we advertise on. So when you
are waiting for information, you have the opportunity to view information that
is on that part of the screen.
155 Our hope is to provide
information that is attractive and compelling enough to draw their
attention.
156 In some cases you do
continue to watch the scrolling guide.
It really depends on the advertiser to come up with something that is
eye‑catching and attractive and relevant enough.
157 And I think the
relevancy issue is very important here.
Looking at it from an advertising perspective, an ad is only going to be
effective if you reach the right person, at the right time, with the right
message.
158 If I happen to tune in
to this channel when I am in Halifax and several ads scroll by that have
absolutely no relevance to me in my personal situation, I am going to ignore
them and I am going to continue to watch the listing
guide.
159 So we do look at it as
a very cost effective means to provide information that we hope will be
compelling enough to catch the attention, as people are waiting for the listing,
which we would assume is the prime reason.
160 Think of your
experience as you watch these scroll by.
I may go there to find out ‑‑ you know, I am waiting for a program
to come on Discovery tonight. While
I am waiting for that channel to come up, something else may catch my eye. But once I find that, I'm
gone.
161 I am still there to get
information on that listing, and once I have it, then I exit that service. I don't tune in to say, "Gee, I wonder
what ads are on today."
162 MR. MILLINGTON: What percentage of your advertising
budget would you devote to a TV listing channel annually?
163 MS HARLEY: It would be a small portion. We have used it for a number of services
in the past, but it would be a very small portion, again because of the cost
effectiveness.
164 Our advertising budget
is spread around Atlantic Canada.
The EastLink service is only available to a portion of that, but it
reaches over 200,000 ‑‑ I believe the number is around 230,000
customers. So, from that point of
view, the cost is commensurate with reaching those people.
165 MR. MILLINGTON: Could you provide us within the next,
say, couple of days with what the price differential is that you would pay for
the mobile advertising ‑‑
166 MS HARLEY: Compared to some of our other forms of
advertising?
167 MR. MILLINGTON: Say for broadcast on the CBC, or
something that is also a television broadcast, just so we can see the price
comparison in terms of the difference.
168 As well, I would like
to know what percentage of your overall advertising budget would be directed to
the TV listing channel.
169 That should be fairly
simple to get hold of, I would think.
170 MR. FITZPATRICK: Yes, we can do that, Mr.
Millington.
171 I would like to add, as
well, to what my friend Ms Harley has said, and I think the Commission should
not lose sight of this.
172 I don't think it is
particularly instructive ‑‑ it is helpful but not determinative to look at
a dollar figure in terms of what is paid for the TV listing channel advertising
versus the global budget.
173 What you should
consider is, how powerful is this advertising medium. How cost effective is this advertising
medium.
174 You are hitting,
potentially, every TV viewer who subscribes to the monopoly cable TV service in
these areas, who is looking at the channel
daily.
175 Using the Yellow Pages
as an analogy, how often do you pick up the Yellow Pages? Once a week? Once a month? It varies from person to person, but the
television advertising channel is a very powerful medium and we should not
determine its overall significance on the basis of what percentage of the
overall budget it occupies.
176 Mr. Millington, we will
undertake the budget information, as you have requested.
177 MR. MILLINGTON: Thank you.
178 I would like to turn
now to a point that was also raised by Ms MacDonald, which has to do with the
test under the BDU regs, specifically the requirement to show a material adverse
impact by both the complainant or another party, and also the material adverse
impact on the objectives of the broadcasting policy for
Canada.
179 In your response to
Interrogatory No. 4 on February 10th, on page 3 of 3, under subsection (b),
Alliant states:
"Concerning the material adverse
impact (eg. financial impact, et cetera), Alliant is unable to quantify in terms
of market share loss or financial impact EastLink's refusal to accept its
advertising." (As
read)
180 There seems to be an
admission ‑‑ and I think you said as much this morning ‑‑ that it is
very difficult for you to quantify what the impact is on
EastLink.
181 I am interested in how
the inability to advertise wireless services can have a material adverse impact
on the objectives of the Broadcasting Act, which is the second part of the
two‑step test.
182 MR. FITZPATRICK: Thank you, Mr.
Millington.
183 I will respond
initially with a broad, general, principle overview. The Commission has the discretion,
obviously, to apply the undue discrimination test on a case‑by‑case basis, and
to tailor it to the facts as presented in each unique
case.
184 We admit that in this
particular case the quantification of a finite or a definite financial impact is
difficult to do. It is just the
nature of the case. It is a
principle‑based type of case.
185 Does that mean that you
cannot commit undue discrimination or incur undue harm simply because it cannot
be easily quantified on a financial basis?
I suggest not.
186 I think that the
Commission has the authority under the legislation and ought to review each case
on a case‑by‑case basis to determine whether, as a matter of principle, in this
particular case, for example, the type of behaviour is acceptable according to
the proper norm of conduct to expect here.
187 In terms of the policy
considerations, for example, Mr. Millington, that you have made reference to,
the broadcast policy talks about ‑‑ one element of it is that distribution
undertakings should provide the efficient delivery of programming at affordable
rates. I believe, in the answers to
interrogatories, that we alluded to that policy, operating a broadcast
distribution undertaking. We
submitted that a broadcast distribution undertaking's denial of programming to a
company, in this case Alliant, based on the fact that the company is competing
against the distribution undertaking in another industry, surely cannot be
deemed to be an efficient delivery of programming.
188 I feel that when you
consider the efficient delivery of programming, it doesn't go to a pure
cost‑base analysis. It needs to go
to whether the policy is being implemented and being respected on a broader
principle base level as well.
189 On that level, I think
that the strength of the case from Alliant's perspective is, when you look at it
from a principle basis, we can see that the type of behaviour that EastLink has
engaged in here is not, in my view ‑‑ in Alliant's view ‑‑ the type of
activity that should be condoned by the regulator.
190 MR. MILLINGTON: But if we are under the Broadcasting
Act, help me with the relevance of advertising telecom services to the
objectives of the Broadcasting Act?
191 MR. FITZPATRICK: It would be relevant as regards the
general manner in which the undertaking is being run: on the basis of public interest
considerations, on the basis of whether the public and other commercial actors
in Canada and in the Canadian environment are receiving fair and equitable
treatment from the broadcast distribution undertaking.
192 So, from that
perspective, I believe that the policy consideration and the policy issue is a
relevant one.
193 Does that answer your
question, Mr. Millington?
194 MR. MILLINGTON: That's your
answer.
195 MR. FITZPATRICK: I don't know, Mr. Stephen, if you want
to supplement that. I don't know if
you have anything further to add.
196 MR. STEPHEN: I think part of the issue here is that
we see that EastLink is using its BDU to leverage itself against us in
telecommunications, and while it is hard to define that in terms of what has
been considered to date by the Commission, in terms of previous decisions, it is
still a relevant factor.
197 While the case law is
very limited, in my view, in terms of these types of complaints, I think it is
appropriate for the Commission to give due consideration to
it.
198 In the past, the few
cases that I have read on the broadcasting side that deal with this issue really
don't go to the substance of cross‑competition across different sectors, and
using one sector, i.e., the BDU, to leverage against telecom, but the principle
was established in the regulations that there wasn't to be undue
preference.
199 Now, the cases to date
have dealt with undue preference specific to broadcasting issues, so this is a
broader discussion, in which case, I would say, the case history at this point
has not dealt with these types of issues.
200 So I think it is sort
of a new item for consideration, but still within the general philosophy of what
is undue preference, which is in the regulations.
201 Part of our argument is
that it should be considered in a broader context, consistent with the
regulations, as opposed to perhaps some of the specific few decisions that have
dealt with section 9 in the past.
202 MR. MILLINGTON: I have a question for EastLink, and I
would like to pose it a bit hypothetically, if you will indulge
me.
203 We will start with the
assumption that the TV listing channel is determined to be predominantly
alphanumeric, and therefore subject to the Telecom Act.
204 In paragraphs 23
through 25 of your reply dated January 7, 2005, you set out a number of
advantages and alternatives that Alliant enjoys in terms of its position in the
market and how it all comes to the market in terms of advertising, and its
incumbency and all of the elements that go along with that
incumbency.
205 I am wondering what
your position would be if we weren't talking about Alliant but we were talking
about a new entrant, a company that is not connected to a large established
telecom company, one that didn't have the financial resources and the avenues to
market its services that Alliant currently enjoys. What would your company's position be
with respect to accepting advertising from a company for telecom services on the
TV listing channel?
206 MS MacDONALD: I guess the first thing we would say is,
keeping in mind that these sorts of issues have to be dealt with on a
case‑by‑case basis, the facts that would go to make an argument of undue
preference in one case may not exist in another case. So, on the face of it, receiving a
request ‑‑ and Barry may have something to say about the receipt of those
requests, but, on the face of it, I would have to say that we would basically do
the usual process of receiving requests, and have a look at it, where EastLink
would receive any requests and look at various impacts, including the content of
the ads and the obligations we might have with regard to some of the standards
for advertising.
207 Part of that assessment
will factor in business impacts.
208 In a case where it is a
smaller company that may not have the resources, that may also compete ‑‑ I
am not saying that EastLink would choose to refuse that advertising; what I am
saying is that, in the present case that we have before the Commission, there is
a real issue with the targeted and focused marketing that Alliant is undertaking
in EastLink's marketplace for all services.
209 And part of that issue,
really, goes to the fact that Alliant is an incumbent in the local wireline
market, and it also has a longstanding history of incumbency in the Internet
market, with its dial‑up and its moving into high‑speed as
well.
210 The fact is that the
landscape in our serving areas, where we have our broadcast services, has to
factor in the fact that there are bundles being offered by competitors, and the
power that Alliant exerts in directing and targeting EastLink's customers
through other avenues continues today, notwithstanding the fact that the listing
service today isn't being offered to Alliant.
211 I guess we would say
that that makes this particular case one where we really think we have the right
to take the position we have taken.
212 So I guess, to
summarize, I would say that we would have to look at it on a case‑by‑case basis,
and it is very, very clear in this case that there is no undue harm being caused
to Alliant. In fact, any individual
service that is targeting the same customer that has an Alliant service has a
very high likelihood, when the customer moves to that service, of taking all of
the same services with it, and that is where the concern
lies.
213 We have seen that. There was a discussion here about
Mobility, but the end effect of Alliant seeking to advertise Mobility on the
listing service is to poll EastLink's customers for local wireline, for Internet
service, and basically to move that customer into an Alliant
bundle.
214 So with each
advertisement that might have the likelihood of taking an EastLink customer, it
is really taking a customer who will have a full suite of
services.
215 So the impact is quite
significant, and that is the business analysis that goes into making this kind
of decision. We really think that,
as a company, we have the right ‑‑ or we should have the right to make that
decision, where there is no harm to a company like
Alliant.
216 MR. SCOTT: In actual fact, we have been presented
with a very similar case where reconnect companies have come forward to us
wanting to promote on our listing channel.
We would look at that, as Nathalie said, really in the scope of the total
impact on our business generally.
Do we want to promote these kinds of companies, or companies that may
have an image in the marketplace.
Do they impact others in the company, or just one small piece of the
business that we are very competitive in.
217 It is sort of a
cross‑company scope. In actual
fact, the company that did come forward did not, for whatever reason, purchase
services from us, but did purchase local radio advertising and, at the end of
the day, it caused some confusion in our organization because the general
consumer was having some difficulty differentiating reconnect services with
ourselves, and I would suspect even Alliant.
218 So that would be a case
where we didn't have to get into the conversation of whether we would accept
their advertising or not, but just the sheer fact of having another entrant or
another telecom service in the marketplace did create some
confusion.
219 So I guess I would say
that we do assess them based on other things, not just whether we are
competitors or whether they have the type of business that we are trying to be
associated with.
220 I think the key element
is that, as Nathalie said, it is really the cable subscribers that receive this
TV listing service, and, being a family organization, we take very seriously
what we put into people's homes.
221 So there is content and
general attractiveness about the advertising and the business that we do
consider, as well, that may or may not be competitive with
us.
222 MR. MILLINGTON: Was this reconnect company the only
other telecom operator that approached you for advertising on the TV listing
channel?
223 MR. SCOTT: I would have to say yes. From time to time we have had dialogue
with other Mobility dealers ‑‑ Telus, for example ‑‑ but it never
ended up in a sale for us. It never
ended up in an actual purchase.
224 But we actively engage
every day in conversation with businesses in our province, and I would say,
except for maybe Telus, that would be the other potential.
225 MR. MILLINGTON: So you have never had to actually face
the question as to whether you would take the advertising of a small operator
that doesn't have the characteristics of a lion, if that is what I am
understanding you to say.
226 And you don't know, or
you can't tell me what you think the disposition of the company would
be?
227 MR. SCOTT: As it relates to a reconnect, or just
generally?
228 MR. MILLINGTON: Generally.
229 MR. SCOTT: I guess that I can't totally answer your
question because of the fact that it would be how competitive we are and the
impacts on the other company.
230 I guess I would have to
have a little more detail on what a new incumbent would look like and the
resources they have.
231 MR. MILLINGTON: I don't want to put words in your mouth,
but in terms of a competitive company, would it be fair to suggest, then, that
the more it became like Alliant, in the sense of being bigger, more established,
offering a greater competitive threat, the more likely you would be to not
accept the advertising?
232 MR. SCOTT: Again, I am not trying to skirt the
issue, but I think, really, it is about the risk. It would be about the risk and the
impact on the business.
233 Obviously, I guess what
we are saying is, if a company is larger, has more resources, has been
entrenched, or has been entrenched for a certain amount of time, they would be
potentially a bigger threat to us.
So, if that is the scenario that we are thinking about, then it would
probably be a clearer decision than for somebody who was not going to
compete.
234 MR. MILLINGTON: So as the company became a greater risk
to EastLink's business, the greater the likelihood of the advertising being
refused. So one could
speculate ‑‑ and, again, this is hypothetical, but if initially the
decision was taken to allow the advertising from this new entrant, as that new
entrant became more successful and more competitive, and perhaps took a larger
market share, the decision might be revisited, and then the advertising venue
might be closed off to them.
235 MS MacDONALD: If I may, Mr.
Millington ‑‑
236 MR. MILLINGTON: Go ahead.
237 MS MacDONALD: That kind of question actually does get
to the crux of the issue. I would
say that the real issue is, is there an undue preference. Is there a real likelihood of
substantial impact to the company.
238 All of those different
kinds of ways of saying the test.
239 In a situation where
you have an incumbent or a company that is entrenched, that has already got its
business, is established ‑‑ the market is competitive, and in those kinds
of situations, then the undue preference question is already answered. There isn't one.
240 So for us to say, "That
makes sense," more likely, if another company does come along and they are
entrenched, as opposed to being a new entrant or a small family operation, or
what have you, we would say that, then, when you look at the legislation, those
tests don't result in finding an undue preference.
241 That is why we are
taking this position here, because we really don't see that there is any harm in
taking the position we have taken with Alliant. We don't see that there is harm to
Alliant, to other parties, to the broadcasting objectives, and even under the
Telecom Act. We don't see that the
continuance of the competitive market is going to be impaired or likely to be
impaired by this action.
242 That is where we say
that we have the right.
243 So while it might sound
not very nice to describe it ‑‑ EastLink isn't allowing advertising, et
cetera ‑‑ when you really look at what the issues are under the
legislation, and you really look at the circumstances that Alliant has
presented, and the circumstances on the Telecom Act that we presented that say,
"Look, there is no harm," then I think we have the right to make that decision,
and that would be the scenario where we could make that
decision.
244 MR. MILLINGTON: But we are talking about a much smaller
entity, a new entrant, a company that does not have the financial wherewithal of
an Alliant. You would agree, then,
I think, that the competitive landscape would be much different, and therefore
your disposition would likely be different.
245 MS MacDONALD: I would have to say that that probably
is correct.
246 If we were making a
decision to refuse any kind of access, we would have to say: What are the circumstances? Are we allowed to do
this?
247 And then we would look
at the tests. We would say: Under this test we are looking at the
undue preference issue.
248 It is that type of
situation. We don't want to be at
the Commission for making a decision that is in breach of the
regulations.
249 So with small entrants
the circumstances may very well be different, in which case we would have to
grant the advertising. It is just
that it would be based on a case‑by‑case situation, which Barry
discussed.
250 MR. MILLINGTON: One final question and then I will let
you go.
251 What kind of market
share do you think would be relevant to you making a change in the disposition
of the availability of the advertising if you are starting off with somebody who
is not viewed as a competitive threat?
At what level do you think you would revisit that decision and say that
maybe it is not appropriate any longer?
252 You have to remember
that this group would be targeting customers of Alliant probably as much or more
than EastLink. So, in terms of the
competitive threat, it would be not fully directed at
EastLink.
253 I am just wondering,
again, if you have an idea of what level of market share would trigger your
revisiting of the decision.
254 MS MacDONALD: I wouldn't say that we have an
established policy of denying access.
It is not a situation where we could refer to a list and look to
that. So I certainly can't speak to
what criteria and at what point EastLink would say, "No, we are not going to
accept this advertisement."
255 What I can say is that
the experience in the marketplace with Alliant, and the fact that EastLink is a
new entrant on the local wireline side, is a key factor. Alliant may claim that they may have
some kind of harm that they have experienced by not advertising on the listing
service, but the reality is, there is no evidence of that harm, notwithstanding
that they claim it is difficult to calculate.
256 The reality is, Alliant
not getting a few extra customers because they haven't advertised on the listing
service ‑‑ it's a totally different impact on EastLink losing multiple
services, per customer, when we have invested the capital to upgrade our system
to provide a phone service.
257 So we would have a
customer and, based on the investment, we would lose the opportunity to cover
that investment every time a customer was
taken.
258 Now we recognize that
Alliant is out there in other mediums, and more significant mediums, and more
predominant than EastLink, and I would say that their advertising is probably
tenfold that of EastLink's. They
have those routes, and that is why we are saying it is not a preference for
Alliant.
259 I know that I am not
answering your question about the new entrant and the market share they would
have, but, really, our experience today is being faced with Alliant, so we
really haven't put our minds to what our guidelines are on accepting
advertising, in terms of what the market share of a potential competitor
is.
260 In many respects our
advertising listing service is very much a small business service. If you look at the listings, in most
cases you are going to find John Doe's Tractor Service, or whatever it may
be.
261 In fact, in most cases
the listing service is not a service where people are seeking it out and making
contact, it is a call‑driven service where our sales people are going out and
looking for the business.
262 I would just say that
those factors are relevant to saying that while EastLink may not necessarily
know what it is going to do the next time around, where this is on a
case‑by‑case basis, our experience with Alliant is at the forefront, and that is
why we are here today.
263 MR. MILLINGTON: But the new entrant would be viewed as a
competitive threat sometime before it ever approached the size of
EastLink.
264 Long before it ever got
to your size, or your market share, it would be viewed as a competitive threat
to you.
265 MS MacDONALD: One example that might be somewhat
useful is to illustrate that EastLink did accept the advertising of Alliant
Mobility dealers.
266 Now, I know that
Alliant's position is that this is coincidental with EastLink adding a Rogers
cellular add‑on to our bundle; however, that is not actually the key basis for
EastLink making its decision.
267 Coincidentally, on
October 1st Alliant purchased DownEast Mobility. EastLink was accepting ads from Alliant
Mobility, and while at that time, no, it wasn't a direct competitor, we were
certainly dealing with an Alliant‑based entity. But the distinction is that, with the
purchase of DownEast Mobility, and with the view of what is happening in the
marketplace, Alliant is getting more and more focused on its value
packages ‑‑ on its bundles.
268 When Alliant purchased
DownEast Mobility, it became pretty obvious that the Alliant Mobility product,
which I think at one point ‑‑ and it may still be ‑‑ was offered at
$10 extra in a bundle, was a pretty sweet deal and a pretty good incentive to
pull other customers over.
269 We did not cancel
Alliant Mobility's contract. What
happened was that the nature of the contracts were of a short‑term duration and
they expired.
270 It was our
understanding, from what we were told, that, as a result of the work stoppage
they did not renew, and then, as time went on, our marketing department became
aware that this Mobility product was actually being leveraged. The call centres are receiving the calls
and upselling the customers to other services, and it is actually
hurting.
271 And when I say that,
that is the intention of the products, and Alliant's annual reports would
suggest that bundles are the way to go.
272 I would just say that
EastLink is not necessarily inclined to deny a competitor, but when you have the
strength behind Alliant pulling multiple services over through integrated call
centres, that's when we start saying, "Wait, what are we
doing?"
273 Another point I would
mention is that with the listing service we would say that this service is
available to small‑time businesses and that sort of thing, as well as larger
companies, but our customers ‑‑ we wouldn't say that there is a customer
disadvantage. Our customers, I
would say, don't typically expect that we are going to be advertising our
competitors' products.
274 That is just another
point to make, as well.
275 MR. MILLINGTON: Thank you, Ms
MacDonald.
276 Those are my questions,
Madam Wylie.
277 THE CHAIRPERSON: Thank you, Mr.
Millington.
278 Commissioner
Cram.
QUESTIONS BY / QUESTIONS
PAR
279 COMMISSIONER CRAM: First, I want to talk to you, Mr.
Fitzpatrick, about your concept of, if I can call it, intent and purpose, in
terms of this particular channel.
280 It seems to me that
under the Act it is whether it is to be defined as a programming service. Your distinction is that it is the
intention of the service to inform as to TV listings, and the purpose of the
subscriber is to see the TV listings.
281 I don't see where
intent and purpose fit into the definition of program under the Act. It says, "sounds or visual images, or a
combination of sounds and visual images."
It doesn't talk about what you were talking about, intent and
purpose.
282 MR. FITZPATRICK: Thank you, Madam
Commissioner.
283 COMMISSIONER CRAM: I'm sorry, I didn't read the whole
definition. It says that it is
intended to inform, enlighten and entertain, but it doesn't seem to have intent
and purpose in the definition.
284 MR. FITZPATRICK: Yes, I agree with
that.
285 I guess we were trying
to determine what the pith and substance of the service is about, what the
general nature of the service is, or what the predominant nature of the service
is. While we feel that the intent
and purpose is important in terms of why the person goes there, the reason a
person goes there, I would submit, dictates what they do when they get
there.
286 So, to that extent, I
would submit that it may have some
significance.
287 But I would also point
out that we keep talking about the content in terms of what is on the
screen. We have to recognize, as
well, that the only content on the screen is the TV listing information
itself. The advertising content
changes constantly, and while there may be some aspects of the advertising
content which may be distracting and which may focus the attention, it may not
be that way two minutes later, when there is some other kind of ad on which is a
still picture ad, advertising perhaps some mundane product. I don't mean that in a pejorative sense,
but in terms of a visually stimulating sense.
288 I think we reiterate
our submission that the intent and purpose is significant to determine why the
person is going to go to the channel, and what they are going to do when they
get there. But I will leave that to
the side. I think that is a
significant point.
289 In terms of whether
there are more eye‑catching advertisements versus the ad channel, in some cases
there will be, but in other cases there will not be. There is a balancing of the whole that
has to be done when you try to capture under one categorization what the nature
of the service is.
290 COMMISSIONER CRAM: I am sure you have read the Wagg
Communications decision that was referred to by counsel. It appears to me that the only
difference between the two services, at least if I look at the Wagg decision, is
that the service here in question has audio, and it doesn't appear in this
decision that there is audio.
291 So it would seem to me
that this is Wagg times two, because the audio here is about the
ads.
292 Would you agree with me
or not?
293 MR. FITZPATRICK: I agree that, in terms of the content,
both ads are very similar.
294 I think that the
Commission ‑‑ I always feel that the law is an evolving creature and will
remain open to listen to new arguments and to look at new perspectives, and to
appreciate new arguments and new perspectives, and to
reflect.
295 I do agree, on the
basis of the Wagg decision, that the way the Commission characterized the
channel in that particular case is very similar to ours. I don't know what arguments were made
before the Commission at that particular hearing. I don't know what factors were
considered.
296 Based on our assessment
of the situation, in terms of what the predominant nature of EastLink's TV
listing channel is, we feel that we have interesting arguments to make in that
regard. I am not sure they are
novel arguments, but they are the way we see it.
297 We see this as a very
powerful advertising medium. From
our perspective, certainly, we feel that the alphanumeric content of it is the
predominant content of it, albeit it that it may be interspersed with
distractions from time to time from more eye‑catching content that may flicker
across the screen.
298 COMMISSIONER CRAM: The second area that I wanted to talk
about is that you did not limit your application ‑‑ and I don't suppose,
depending on the decision we make, that it would be limited ‑‑ to merely
advertising Mobility services on this service. You would agree that if there was a
decision in your favour, it would probably mean that you could advertise bundles
on this service?
299 MR. FITZPATRICK: The way the policy position was stated
to Alliant was that the decision had been made not to carry any advertisements
of any products, so I guess we are pushing back based on that statement of
policy on EastLink's part, and that is essentially what we are seeking in this
particular case.
300 The Commission does
have, I suspect, and I submit, within the purview of its jurisdiction to order a
reinstatement of rights, if you will, on a limited or on some prescribed or
conditional basis.
301 We are essentially
wanting to be on a level playing field with other commercial entities that may
wish to advertise on this broadcast medium.
302 It is interesting the
way the discussion has gone. There
seems to be an understanding that the broadcast mechanism may be used by a
telecom operator as a private manner in which to run its advertising, and to use
it as a tool to discriminate against its telecommunications competitors. I have some difficulty with that. I think the ability to broadcast
television images is a very powerful one in our society, and one which should
not be taken lightly and considered to be a private domain. It is one that should, at least,
consider other public policy types of factors and
considerations.
303 COMMISSIONER CRAM: Thank
you.
304 MR. STEPHEN: I would also like to add that the
concern over bundles ‑‑ there are some significant barriers that Alliant
faces with respect to the promotion of bundles, through regulatory requirements.
So if there are concerns over, for
instance, promoting local services ‑‑
305 Right now, as you
probably will recall, there is a ban on us having any special promotions on
local services.
306 Similarly, if the
bundles contain local services, they require CRTC
approval.
307 So if we were to use
that, clearly, the Commission would have already preapproved those bundles to
begin with.
308 COMMISSIONER CRAM: Ms MacDonald, I was listening to you
talking about the reason why you would be entitled, in your reply to questions
by Mr. Millington, to refuse this advertising, and you talked about Alliant's
incumbency and the fact that they are already entrenched and their
size.
309 Of course, my immediate
question is, I didn't think that Alliant became entrenched any more so between
June and October of 2004. In fact,
I would have said, given the strike, that they became less entrenched and less
incumbent maybe.
310 I need to know what
happened. Is it only that you found
out that they had changed their marketing
strategy?
311 Is that it really? It isn't incumbency, it isn't
entrenchment, it is just the fact that you found
out ‑‑
312 MS MacDONALD: I think the decision would more
appropriately have been based on various factors.
313 I would say,
definitely, that the primary concern that prompted EastLink to make this
decision had to do with the activity of leveraging cellular services in order to
target other products and services in bundles.
314 The other part of it is
the business analysis of that decision.
On a smaller scale, yes, EastLink can't deny that we have a cooperative
arrangement with Rogers, so there is an add‑on to that product. And certainly I can't deny that that is
not, as well, a criteria or didn't factor into the analysis, but the key issue
really boils down to what that cellular product was doing, and it was being
leveraged in the value packages.
315 I might note Mr.
Stephen's comments with regard to the regulatory hurdles that Alliant faces as
the incumbent with bundles, but the reality is, whether a bundle includes local
or not, the bundles that Alliant offers with cellular also include the
Internet. As of today, Alliant
cannot unbundle their Internet product from their local wireline
product.
316 So, when a customer
buys cellular and they say, "I can get that product for an extra $10 if I put my
services into a bundle," if they want to take the Internet service, they will
also take local phone.
317 So any loss of an
Internet customer from EastLink is the loss of an Internet and a local phone
customer, notwithstanding the current bundling rules.
318 I guess in the
practical sense it is hard to say that on this day we decided that this was what
happened. But the fact is, there
was an end to the existing contract.
Of course, time passes.
Companies are looking at what Alliant is doing in the marketplace. They are targeting value packages. Value packages are everywhere. They are on every
medium.
319 Alliant's own
interrogatories make it clear that they advertise in every medium available to
them.
320 So the listing service
really is the only medium that they, according to their interrogatory answers,
don't have available to them.
321 I guess our decision
really came about based on Alliant using its cellular product to leverage those
other products, and that was the result of our own internal analysis of what was
happening. What's happening when
those customers call Alliant to get the Mobility product?
322 That became more and
more clear on October 1 when the press release announced that Alliant was now
acquiring DownEast Mobility, which was a major ‑‑ we saw it as a major move
to integrate its Mobility product into its services.
323 COMMISSIONER CRAM: Thank you. I have one more small
issue.
324 Ms Harley, when you
provide those numbers to the Commission for price comparisons, could I also have
a comparison ‑‑
325 You were talking about
national sales. I would like a
comparison to local news ‑‑ and the lowest share local news and the highest
share local news, because it would be by audience share, wouldn't
it?
326 MS HARLEY: Yes. We will provide some information,
certainly, to help you make an informed decision.
327 I think another key
factor will be not only to compare the price of advertising, but I would submit
that the most important factor in assessing your advertising success is what is
the cost per sale.
328 It is hard to track
that directly. We have not, for
example, put a specific phone number or a specific tag in the ads to date to
know specifically which medium drives which sales, but the way that I evaluate
our advertising is that national media is very expensive.
329 Regional media is very
expensive.
330 But if that drives more
sales, then it becomes effective.
331 When you take the
relatively low cost of this, of course, if it drives in 100 sales, my gosh, that
becomes a very effective medium.
332 So, in that case, you
could argue that there is significant harm.
333 COMMISSIONER CRAM: Thank you.
334 Thank you, Madam
Chair.
335 THE CHAIRPERSON: Thank you, Commissioner
Cram.
336 Commissioner
Noël.
QUESTIONS BY / QUESTIONS
PAR
337 COMMISSIONER NOËL: I will not touch on the definition of
alphanumeric programming because I think it has been discussed at
length.
338 You mentioned that you
cannot quantify the harm, in terms of market share lost, the financial impact,
the harm caused by the decision of EastLink not to allow you to advertise on
their listing service.
339 If we take the view
that this is a programming service and, therefore, it is to be analyzed under
the broadcasting regulations ‑‑ the BDU regs ‑‑ don't you feel that
the complaint could be premature at this point?
340 MR. FITZPATRICK: I'm sorry, could you elaborate on
that?
341 COMMISSIONER NOËL: If we take the view ‑‑ and I will
not re‑discuss it because it has been done by Commissioner Cram and Mr.
Millington, but if we take the view that the listing service is a programming
service, it is not predominantly an alphanumeric service, and therefore it falls
under the BDU regs, section 9 ‑‑
342 You say in your letter
of 10 February, in answer to Interrogatory No. 4, page 3 of
3:
"Concerning the material adverse
impact (eg. financial impact, et cetera), Alliant is unable to quantify in terms
of market share loss or financial impact EastLink's refusal to accept its
advertising." (As
read)
343 Don't you think, given
that hypothesis, that your complaint is premature?
344 MR. FITZPATRICK: I guess what I said initially was that,
in terms of determining the type of harm that may be caused due to inappropriate
discrimination, there may be types of circumstances which do not lend themselves
to easy quantification, but that the Commission should reserve the overriding
discretion to consider perhaps unique situations that may arise, where there is,
I guess on a logical basis, a degree of harm being caused, a degree of advantage
being bestowed, or disadvantage being inflicted, which would permit the
Commission to look at that without getting into the specific quantification
issue, and to exercise a discretion in response to that.
345 COMMISSIONER NOËL: In paragraph 9 of your February 23rd
submission you mention market research that identified cable television's
viewers as a target market for the cellular services. Why did you choose not to file that
market research?
346 MR. FITZPATRICK: I guess we didn't consciously consider
whether we should or we shouldn't be filing it. There has been research done in terms of
our cellular services and the types of markets that would be most receptive to
certain types of cellular services, and that was the basis on which our earlier
cellular advertising carried on the TV listing channel was predicated
on.
347 Sue or Rick, I don't
know if you wish to elaborate on that.
348 MS HARLEY: I think Paul is right, we didn't
consciously decide to exclude it.
That would have been done as part of a more comprehensive study, of which
this would have been one of the findings.
349 If you wanted us to
share a specific response to that question, we certainly could go back and have
a look at doing that, but we wouldn't want to be
putting ‑‑
350 COMMISSIONER NOËL: On that I would refer you to Mr.
Millington.
351 You mentioned during
your presentation that the TV listing channel is for TV listing and not
necessarily for advertising. I
heard Mr. Fitzpatrick say that.
352 Why would you want to
advertise on a TV listing station if, in your view, it is not for advertising
that people go for it, but for TV listings?
353 MR. FITZPATRICK: I made reference to the number of hits
that would be made on that particular channel. So, from that perspective, it is a
powerful advertising methodology.
354 I recognize the
subtlety of which is the more significant.
I would submit that Alliant, in looking at the cost benefit analysis of
the various options that it has to sell its services ‑‑ the TV listing
channel, even if you accept that the reason people are predominantly going there
is to see what is coming on TV, based on the cost of it and based on various
other circumstances, we see some benefit in doing that.
355 I still don't agree
that that should define the pith and substance or the predominant characteristic
of the channel, but it is a feather ‑‑ or it is an arrow in the quill, if
you will, of the marketing department, and there is some benefit, particularly
when you consider the vast number of people who go there every day and the
relative cost of advertising in that medium.
356 COMMISSIONER NOËL: There is something that bothers me,
too. You
mentioned ‑‑
357 MR. FITZPATRICK: Madam Commissioner, I don't know if my
friend Ms Harley has something to add to that.
358 COMMISSIONER NOËL: I'm sorry.
359 MS HARLEY: If I may, I think it is a very important
point when you are looking at what do customers go there
for.
360 I think, for me, a
simple test would be, if you take the advertising out of the TV listings, would
you still go to the TV listings? I
would think the answer would be yes.
361 But if you took the TV
listings out of the TV listings channel and just left the advertising, would you
go there? Probably
not.
362 The reason we advertise
there is that people do go to the listings to find out what is coming on. The cellular telephone market is still
very much a growth business, and we hope to catch people who are willing to
receive that message as they are waiting for their listings to scroll
by.
363 For example, if you and
I were sitting here watching it and an ad scrolled by, to use Ms MacDonald's
example, for a tractor, I am not in the market for a tractor, so I am probably
going to glance and go right back to the
listings.
364 But if I am in the
market for a cellphone or a Mobility service, I may very well watch that for a
moment, because I am in the right place, I am at the right time. I am a target customer for that service,
which is what advertising is really all about, trying to get your message to the
right target audience at the right time.
365 COMMISSIONER NOËL: Thank you.
366 There is another thing
that puzzled me, and that is the fact that you mentioned that TV listings are
looked at by out‑of‑town people, hotel guests. Why would you be interested in
advertising your wireless product, or any other products, to transient
people?
367 MR. FITZPATRICK: It goes more to the issue of what is the
predominant characteristic of the channel.
368 There are people who
have absolutely no interest in local advertising, who use the channel for the
purpose of obtaining TV listings.
369 So the point is not
geared toward the effectiveness of the channel as an advertising medium in those
cases, but more what is it being used for and what is the person doing when they
go to the channel.
370 COMMISSIONER NOËL: On another point, Mr. Stephen, do you
offer a standalone Internet service at the present time, or do you have the
intention of offering a standalone Internet service that is independent of the
purchase of the local service by the customer?
371 MR. STEPHEN: There are a number of variations. For instance, on dial‑up, clearly that
is independent of ‑‑
372 COMMISSIONER NOËL: No, DSL. High‑speed.
373 MR. STEPHEN: In the case of DSL, it can be purchased
through people who resell our loops for the use of ‑‑ let's say CLECs using
our loops. You can get it that
way.
374 But in terms of the
functionality, it still does require an appropriate loop.
375 COMMISSIONER NOËL: So if I live in Halifax and I want to
purchase Sympatico ‑‑ I guess it would be marketed under Sympatico
high‑speed. If I want to purchase
Sympatico high‑speed, I would have to take the local loop from
you.
376 MR. STEPHEN: Or from somebody who has the equivalent
loop.
377 COMMISSIONER NOËL: But would I still need the Sympatico
service if I am not your customer for the local loop?
378 MR. STEPHEN: I think this goes to the issue referred
to as dry loops.
379 COMMISSIONER NOËL: Yes.
380 MR. STEPHEN: And we will be offering that, yes. We are working toward that now, to
separate it out so that the loop would be available.
381 And that is
particularly of interest, particularly with the Mobility segment, where a
growing number of customers have Mobility only. So they certainly are interested in
being able to ‑‑
382 COMMISSIONER NOËL: But you haven't filed with the telecom
side of our organization for a tariff for a dry loop.
383 MR. STEPHEN: We have made a commitment in proceedings
before the Commission and have indicated that by year end, this year, we will
have a service in place for a dry loop.
384 COMMISSIONER NOËL: You were mentioning that the listing
service is interesting because of the number of hits, because people go there
often.
385 I can understand, I
think, that advertising is much less expensive ‑‑ although we haven't seen
figures, it is probably much less expensive on that type of service than it is
on ATV, or ATV through Bell Globemedia, which is one of your favourites, or any
of those conventional TV stations.
But there are stations that are known for the number of hits, and I am
thinking of the Weather Channel.
People go there every morning just to know what they are going to
wear. It can produce a high number
of hits, too.
386 That is just a
suggestion.
387 I have no more
questions.
388 THE CHAIRPERSON: Thank you, Commissioner
Noël.
389 Ms MacDonald, in
response to Question 7 of the Commission's interrogatories you refer to the
two‑pronged test that has to be met for a finding of undue preference under the
Broadcasting Act, which, I take it, is the jurisdiction that you think our
decision should be based on.
390 MS MacDONALD: I'm sorry, are you
referencing ‑‑
391 Part one would be the
determination of what is the jurisdiction, and part two would be the undue
preference ‑‑
392 THE CHAIRPERSON: We are assuming that your position is
that it is under the Broadcasting Act that we should be making our
decision.
393 MS MacDONALD: Yes.
394 THE CHAIRPERSON: At Question 7 you refer to the
two‑pronged test in a finding of undue preference under the Broadcasting Act,
the first being a material adverse impact and the second being that it is
harmful to the achievements of the objectives of the broadcasting policies set
out in the Broadcasting Act.
395 MS MacDONALD: Yes.
396 THE CHAIRPERSON: With regard to the first one, I take it
from your comments that you feel, as a regulated industry, that it is your right
to decide what the material impact will be and what the harm will be, depending
on the incumbency and the strength of the person who wants to
advertise.
397 MS MacDONALD: I guess I would say at the outset that
when a regulated company is faced with a question that causes that company to go
and look to the regulations and say, "Okay, what are we going to do here," that
initial question is determined by that company. Just in terms of the initial analysis,
obviously we are here today, so there is a view that that determination is in
need of Commission analysis.
398 One of the things I
would note with regard to that test is that, while the Broadcasting Act applies
to programming, and we are taking the position that it really is a programming
service, we would also point out that in our previous submissions, I think they
were the January 7th submissions, we referenced the fact that in a past
proceeding the Commission recognized that advertising vehicles ‑‑ that BDUs
do not have market power in advertising.
399 So while I would say
that we are here doing an analysis of whether or not Alliant has faced an undue
preference, when you really look at what Alliant is looking for ‑‑ they can
speak about the fact that the listings channel is a scarce resource. We would say that radio is really not
that much different from what the listings channel offers. It is hour‑long rotations, every
listener is listening.
400 If you take the
position that what you see visually on the listings channel is not really that
fancy, then what you are getting is the audio.
401 So we would say that
radio is a great market, and it is another alternative that
is ‑‑
402 THE CHAIRPERSON: My question was much narrower than
that. My question was, is it your
position that when advertising is offered and it conflicts with your company's
goals, it is your privilege, or right, to decide whether there will be an
adverse impact?
403 You mentioned various
things, such as the strength of the company, whether it is entrenched, whether
it is an incumbent, what the material impact will be on them if you refuse the
advertising. And presumably you
know if you will accept it.
404 For example, let me
pose something interesting. What if
they gave you ads that you felt were completely ineffective? Would you put them
on?
405 MS MacDONALD: Basically what I would say is that we,
as a business receiving the first request to place an ad, do, at the outset,
have the discretion to make the decision.
And when I say that, I am not saying that it is our privilege to refuse
in all cases. Any refusal has to be
subject to our obligations, and when we go to the Broadcasting Act we have to
make that initial analysis, because we couldn't be coming to the Commission to
ask for clarification every time we have to make a decision like
that.
406 I would say that the
undue preference provisions in the Broadcasting Act are set out, and obviously
there is room for interpretation as to at what point a company is granting
itself a preference that is undue, or causing a disadvantage that is undue to
another company.
407 Because that requires a
real analysis at a subjective level, I think it is appropriate that we have to
make that decision. Otherwise we
wouldn't be able to make any decisions and we would have to ask the Commission
every time if what we were doing was correct.
408 THE CHAIRPERSON: The second prong of the test is whether
there is likely to be an impact in the achievement of the objectives of the
broadcasting policies set out in the Act.
In your response to Question 7, you say that the objectives of the
broadcasting policy for Canada do not appear to be relevant to the issue of
providing advertising space on the listing service.
409 We know that
advertising is programming, and that one of the objectives of the Broadcasting
Act is that distribution undertakings which are regulated should provide the
efficient delivery of programming at affordable rates, using the most effective
technologies available at reasonable costs.
410 If you go to the
definition of programming, it talks of sounds and visual images that are
intended to inform and enlighten.
411 What would be your
position to a suggestion that, indeed, the objectives of the Broadcasting Act
are engaged, in that it is beneficial for your subscribers, which is a large
proportion of the population in the area you serve, to be enlightened and
informed about the alternatives they have in telecom
services?
412 MS MacDONALD: I guess the first thing I would say is
that it would have been nice to have been involved in the drafting of the
objectives when that particular provision was drafted.
413 Maybe it wouldn't have
been, but ‑‑
‑‑‑ Laughter / Rires
414 MS MacDONALD: However, when I read that provision, and
when it is read in context with all of the other provisions, for the purpose of
this application and this issue, while we have to look at what the definition of
programming is, how I would interpret that particular provision is that it
really seems more appropriately directed to the efficient delivery of
programming services to consumers through the most effective technologies
available at reasonable costs.
415 Some very clear
examples of that that I would see would be the provision of programming
services ‑‑ broadcast distribution services ‑‑ to our own end
customers, our subscribers.
416 And efficient
technologies and costs, that gets into the cost of upgrading to digital cable
and these sorts of issues.
417 I think that a more
appropriate interpretation really lends itself to that interpretation of that
particular provision.
418 Again, I would say that
while, in a very strict sense, the definition of program ‑‑ we accept that
the listing service is ‑‑ I would not say that that provision as easily
lends itself to an interpretation ‑‑
419 THE CHAIRPERSON: I was suggesting that the advertising is
programming, as well, that enlightens and informs, and I was asking you what is
your view as to whether the objectives of the Broadcasting Act are engaged,
seeing that advertising is programming that informs and enlightens, which is one
of the definitions.
420 MS MacDONALD: I would say that if you look at the
perspective, if you assume that this provision applies to advertising, if we
accept that, then EastLink is providing advertising consistent with that
provision.
421 The fact that EastLink
has denied such advertising to Alliant doesn't mean we are in breach of those
objectives. The question of denying
advertising to Alliant calls upon the undue preference
provisions.
422 So we can be consistent
with this provision if we assume that this provision applies to the
advertisements.
423 THE CHAIRPERSON: I was strictly looking at the second
prong and the statement that the objectives of the Broadcasting Act are not
engaged in this discussion, and suggesting that perhaps they are, since
advertising is enlightening information, because it is programming, and the more
the subscriber receives, the better informed and enlightened they
are.
424 I think that humane
treatment requires a break. We will
take a 10‑minute break and then proceed with the questioning from the
parties. Thank
you.
‑‑‑ Upon recessing at 1140 / Suspension à
1140
‑‑‑ Upon resuming at 1157 / Reprise à
1157
425 THE CHAIRPERSON: Order, please. We will now proceed with the next phase
of our hearing, which is the opportunity for parties to question each
other.
426 Mr.
Fitzpatrick.
EXAMINATION /
INTERROGATOIRE
427 MR. FITZPATRICK: Thank you, Madam
Commissioner.
428 Ms MacDonald, I guess a
simple two‑part question. One, why
did EastLink stop carrying Aliant cellular telephone advertisements; and two,
isn't it clear that it was to cause harm to Aliant as a telecommunications
competitor?
429 MS MacDONALD: The answer to the first question is, as
I had stated earlier today during the proceeding, first of all, the contracts
that the Aliant Mobility dealers had had expired and a few months had gone by
before they had approached EastLink to request advertising, and during that
intervening period, EastLink made a business decision which incorporated various
elements but the key reason was based on the activity that Aliant was taking in
the marketplace in promoting its bundles, using the cellular service to leverage
those bundles, and it became a business decision not to continue the
advertisements of the mobility product.
430 Part of that analysis
came as well when, on October 1, Aliant announced the acquisition of DownEast
Mobility, which really lent credence to the fact that the mobility products were
being integrated and marketed more in the Aliant bundles and, as I had stated
previously, that led to the concerns and the reality that Aliant's provision of
advertising was directed directly to EastLink's cable subscribers and it would
present an excellent opportunity to win back customers from EastLink to Aliant
for multiple services.
431 The second part of the
question ‑‑ if you could repeat the question.
432 MR. FITZPATRICK: I guess the gist of it is that it would
appear that the reason for the decision was to cause harm to Aliant as a
telecommunications competitor.
433 MS MacDONALD: In answer to that, no, EastLink's
decision was not intended in any way to cause harm to Aliant as a
telecommunications carrier. When
EastLink makes a decision with regard to its services, the decision in this
particular case was based on protection of EastLink's own customer base due to
the very, very likely risk of erosion of multiple
services.
434 As we said, while
EastLink disputes that there is any significant harm to Aliant, the action on
our part was not intended to cause harm, and if anything, the erosion of our
customer base after significant investments to upgrade our plant for the
provision of telecommunications services, including high‑speed internet and
telephone, would cause a more significant impact to EastLink than the loss of
the potential additional customers that Aliant might gain by advertising in a
listing service.
435 MR. FITZPATRICK: Is it EastLink's position that it is
acceptable for it to use its powers and abilities as a broadcast distribution
undertaking specifically to assist itself in a separate industry, i.e.
telecommunications, and in using that power as a way of gaining an advantage
over their competitors in that industry?
436 MS MacDONALD: Well, I would suggest that EastLink is
fully entitled to promote its multiple services and that was established in a
previous Commission decision that was referenced in EastLink's submissions on
January 7th, wherein the Commission determined that BDUs do not have market
power in advertising vehicles and therefore combining multiple services in
promotion was acceptable, notwithstanding the fact that the incumbent phone
companies at that time did have restrictions on joint
marketing.
437 So it is actually a
good example, even though the scenario of that decision was different, in that
cable companies were permitted to joint market their services because they did
not have market power in advertising, while at the same time, at that time, the
joint marketing restrictions were in place for incumbent phone
companies.
438 So there you have cable
companies able to joint market products with no undue preference or
discrimination against the incumbent telcos and I would say that that is not
really that much different than what we have here. EastLink is promoting its services on
the listing and in this particular instance has refused Aliant access to
EastLink subscribers to target its services.
439 MR. FITZPATRICK: In its submissions, EastLink makes
repeated statements, I guess trying to portray this as a bit of a David and
Goliath battle, with Aliant being the larger of the two and having more
wherewithal in terms of the marketing abilities and
whatnot.
440 In the press release
that was announced on December the 6th with respect to the Rogers Wireless
partnership, it makes reference, for example, to Rogers being Canada's largest
integrated wireless voice and data network, providing advanced voice and
wireless data solutions to customers from coast to coast, et cetera, et cetera,
the world standard for wireless communications ‑‑ the accommodation of
Rogers Wireless and Microcell has 5.5 million wireless customers and offices in
Canadian cities across the country.
441 Based on that sort of
partnership, isn't it true that in partnering with Rogers Wireless, it is
inappropriate to try to characterize this as a bit of a David and Goliath battle
and that really we are dealing with more of a contest of equals, certainly
vis‑à‑vis the wireless industry?
442 MS MacDONALD: I guess I would say that if we are
dealing with a contest of equals, I would say that further supports in any case
that there is no undue harm to Aliant.
I mean the wireless market is competitive and references to the
subscriber numbers nationally of Rogers ‑‑ I mean Ontario covers a very
large base and I would say that most of the subscribers are ‑‑ you know,
there is probably a very large density of the subscribers in those areas. I don't have their numbers
locally.
443 But in any case, I
would say that that does not go to prove an undue preference in favour of one
company or an undue disadvantage because we still need to address the issues of
substantial impact or harm and we don't see that
here.
444 MR. FITZPATRICK: I guess EastLink's relative power as a
BDU is influenced by its dominance in that particular
industry.
445 Could you share what
percentage of the cable TV subscriber market that EastLink would hold where it
operates in Nova Scotia and P.E.I.?
446 MS MacDONALD: I am sorry, could you clarify what the
intention is for the information?
447 MR. FITZPATRICK: Yes. Well, we are trying to determine the
impact of being denied the ability to advertise on this particular channel and I
am submitting that EastLink's relative power as a BDU, as a monopoly service
provider in certain areas of its operating territory, influence how other people
are impacted, i.e. Aliant.
448 I am just wondering if
you could share what percentage of the cable TV subscriber market that EastLink
holds where it operates in Nova Scotia and
P.E.I.
449 MS MacDONALD: I guess in response to that question,
our publicly stated subscriber numbers are on our Web site, in the range of
around 230,000 cable subscribers across both operating ‑‑ both provinces,
but in any event, I don't see how the issue is relevant to Aliant's claim that
EastLink is giving itself an undue preference or Aliant has experienced an undue
disadvantage. I am just not sure
what you are looking for but I don't have the other statistics that you were
requesting.
450 MR. FITZPATRICK: But would you have rough approximations
of the market that EastLink would have in terms of the cable TV subscriber
market?
451 MR. SCOTT: Are you looking for specifically the
size of the adult population that may have access to the service or us compared
to maybe our other entertainment competitors like Bell ExpressVu or Star
Choice? Like
what ‑‑
452 MR. FITZPATRICK: I am looking for in terms of the cable
TV market, in terms of people who purchase cable TV, where EastLink
operates. Do you have 100 per cent
of the market, do you have 90 per cent of the market, do you have 50 per cent of
the market? I am just trying to get
a ‑‑
453 MS MacDONALD: I think that is really getting into, you
know, information that we ‑‑ the reality in EastLink's serving territories
where we offer our cable service is that there are national competitors that are
competing in our serving territories, Bell ExpressVu, Star Choice. Bell ExpressVu is a very large
competitor. We don't have breakout
numbers of the percentage of our market to present here today but likewise,
throughout both provinces, there are other BDU
competitors.
454 So I know the focus of
this proceeding speaks to EastLink being the only cable provider but that is in
a landmine market. I mean there are
national competitors in the wireless satellite markets as
well.
455 MR. FITZPATRICK: Do you know for example whether Bell
ExpressVu carries third‑party advertising on its TV programming ‑‑ TV
listing channel?
456 MS MacDONALD: We would probably not have sought that
out because we would never expect to receive any advertising from Bell ExpressVu
on their services.
457 MR. FITZPATRICK: In interrogatory number 5 that had been
directed to EastLink, it asked EastLink to explain the rules and limitations
that may exist pertaining to the type of advertising permitted on EastLink's
services, and in its response, EastLink made reference to the programming
content guidelines with respect to, for example, illegal programming content or
obscenities and profanities, things of this nature, and also mentioned that it
would be subject to certain CRTC rulings with respect to format or type of
advertising permitted on listing channels.
458 Is EastLink's position
then that there are no rules that apply regarding standards of conduct that
EastLink must follow vis‑à‑vis using its power and discretion as a BDU for
anticompetitive purposes?
459 MS MacDONALD: I would say that the rules applicable to
any BDU with regard to anticompetitive purposes are governed by the Broadcasting
Distribution Regulations on the undue preference provisions, and under those
provisions, as discussed, BDUs must govern themselves such that they don't grant
an undue preference.
460 So on a case‑by‑case
basis, any claim that a BDU is engaging in such conduct would have to be
addressed on that case‑by‑case basis, which is why we are here today. So yes, there is definitely a
requirement to govern yourselves according to the legislation that regulates us
as a BDU.
461 MR. FITZPATRICK: So the undue preference provisions are
essentially the only safeguard there in that respect?
462 MS MacDONALD: Well ‑‑
463 MR. SCOTT: As it relates to content or as it
relates to the type of customer coming forward?
464 MR. FITZPATRICK: As respects, for example, engaging in
anticompetitive behaviour in terms of the type of advertising that it may
accept.
465 MS MacDONALD: We would say that the regulator, the
CRTC, which is governed by the legislation, whether it be the Broadcasting Act
or the Telecom Act, those provisions are applicable to us.
466 And as it pertains to
anticompetitive conduct, unless one was trying to argue that the legislation
applicable to a regulator is not relevant, then you are outside the scope of
that but we are here today dealing with the legislation that is applicable and
therefore we are dealing with the undue preference provisions which would serve
as the protections from that type of behaviour that would be defined as
potentially anticompetitive.
467 MR. FITZPATRICK: Next question: If an advertiser wishes to target
advertising specifically toward cable TV viewers, not cable TV subscribers, what
avenues exist in Nova Scotia and P.E.I., and maybe just as an add‑on, don't you
agree that Aliant can legitimately wish to target cable TV viewers without being
specifically interested in whether they are EastLink subscribers or
not?
468 MS MacDONALD: First of all ‑‑ I will answer one
part of that and perhaps I will leave it to Barry to speak to other alternatives
to target multiple subscribers, but first of all, we would take the position
that while Aliant is claiming that it is seeking access to viewers which would
suggest an expanded scope of the general population, our position is that that
is not the case.
469 Aliant is seeking to
target EastLink's subscribers and I make reference to your earlier comment that
hotel guests ‑‑ which would be in your interrogatory responses or
submissions ‑‑ was described as one set of viewers that aren't
subscribers.
470 Earlier today, you had
indicated that hotel guests would never be interested in the listings because
they are local services and they would typically not have an interest in
products and services advertised on that channel.
471 So what I am getting at
is that while Aliant is claiming that the viewers are what they are interested
in and trying to expand the scope beyond EastLink subscribers, we would say that
many of those viewers are irrelevant and not interested in the products offered
on the listing service.
472 And therefore, we think
that the real key here is that these are EastLink subscribers and any additional
viewers in the household would be a very small incremental
basis.
473 MR. SCOTT: It has been our experience also when you
talk about the travellers to hotels is that the majority of people that come to
our serving area that are staying in motels really don't ever end up in business
for us. They are ‑‑ as
somebody mentioned earlier, they are transient and really don't ever end
up ‑‑ a percentage do but the majority really don't end up ever buying
services locally. They are
basically a travelling community.
474 I mean it is well known
that specifically Halifax, our biggest serving area, is an area that is managed
regionally from other areas of Canada for most services. So I mean that is just the economics of
the city. So it has never really
been a target for us.
475 MR. FITZPATRICK:
Understood.
476 MS MacDONALD: And for that customer base, there are
numerous other avenues, and I don't know if Barry can speak more to that, in
terms of the other avenues to target a large audience at a low cost, which is
what Aliant is claiming the listing service is to achieve. For example, radio is one example and I
don't know if Barry wants to expand on some of that.
477 MR. SCOTT: Well I guess, as marketers, I mean
everybody is really challenged in getting and targeting and, as Susan had said,
making sure the message is in front of the right target, but the key here is
that you are coming forth wanting to promote on a service that we know. Part of the high value of that would be
because it will be going right into cable households that are already buying
services from us.
478 I think other mediums,
as in radio and other mediums that are very targeted, that can be purchase
targeted in various targeted fashions, can achieve those kinds of
results.
479 I would say that our
services, except for being targeted towards specifically for cable customers or
cable households, it is very hard to use our medium to target because we don't
have time of day viewing, we don't have any of the other types of things that
are very inherent to traditional mediums like radio and newspaper and
traditional broadcasting.
480 I mean we don't offer
those types of things that allow marketers to pick a particular segment and find
out what their attributes are and match the medium to get to them. So our product, specifically the listing
service, doesn't really function that way.
We are a mass approach, high rotation, but we can't
target.
481 MR. FITZPATRICK: I appreciate that. I don't think it really addresses the
question. The question was that if
you were attempting to target cable TV viewers as a market, I suggested that
Aliant could legitimately wish to target those viewers without being
specifically interested in whether they are EastLink subscribers or customers or
whatever. I mean many other people
other than subscribers of EastLink watch cable television in Nova Scotia, for
example.
482 MR. SCOTT: I guess the challenge we have is that we
are not aware of the information that might drive that thinking. We know that there is some information
through Stats Can that talks about in a home, what people may be residents or
non‑residents that could be viewing cable services, but we don't have the
data.
483 MS MacDONALD: The other thing is cable TV viewers
watch cable, and so there are various avenues through cable as well, and I guess
we would continue to ask the question, on what basis is a lack of access to
cable TV viewers ‑‑ which I would suggest is EastLink subscribers ‑‑
on what basis is Aliant experiencing harm because it is not accessing
them?
484 The other argument is
if you are talking about viewers and not subscribers and if we accept that you
really are looking at viewers, well then you are talking about a general
population of people, which can be achieved through billboards, newsprint,
radio.
485 Radio is a perfect
example of a similar type of ‑‑ in fact, if you assume that the listing
service, the visual is not that fancy, the audio is what is there, and radio is
on a one‑hour rotation, has similar price points, the listener is sitting there
listening to the ads throughout the course of their listening
period.
486 So I guess I would say
there are numerous opportunities available to reach the general
public.
487 MR. FITZPATRICK: You are basically saying that there is
nothing unique about ‑‑ is that what you are saying, in terms of the
vehicle of going through the cable, targeting specifically the cable TV viewer,
there are other mediums in which to target the same people? Is that essentially what you
are ‑‑
488 MS MacDONALD: I would say there are other mediums to
target the general population of consumers, which is if you are saying that
viewers expand, but I would say the unique thing about what Aliant is looking
for is that they want EastLink's subscribers, not viewers, and we maintain that
view.
489 THE CHAIRPERSON: Mr. Fitzpatrick, you have time to ask
one more question that you can't live without asking.
490 MR. FITZPATRICK: I don't know that there is
one.
‑‑‑ Laughter / Rires
491 THE CHAIRPERSON: Does that mean you are
finished?
492 MR. FITZPATRICK: Can I just take one second here to look,
Madam Commissioner?
‑‑‑ Pause
493 MR. FITZPATRICK: I guess one final question, Ms
MacDonald.
494 You state in response
to interrogatory number 10 that EastLink's right to sell advertising on this
channel includes the right to make decisions about the impact of that
advertising space on its business.
495 What impact do Aliant
telecom advertisements or telecommunications services have on EastLink's BDU
business?
496 MS MacDONALD: Well, I guess when answering that
interrogatory, we were speaking to the impact on EastLink's business, not
narrowly defining it on the BDU business, and we would say that that continues
to be relevant, is all of EastLink's business, which goes to the questions that
were answered earlier today about EastLink losing
customers.
497 And in fact, I guess
there is also a very good potential for an impact on our BDU business in terms
of the Aliant value packages, and assuming that a customer moves to Aliant for
triple services of cellular and local service and high‑speed internet, then that
same customer may very likely have little incentive to even have a cable service
from EastLink, they may go with Bell ExpressVu, and from time to time, I know
that there is a combined marketing effort for the Bell ExpressVu product. So there is definitely that real risk as
well.
498 But I would say that
one of the relevant issues is that it is all of our business, it is our
investment to upgrade our plant.
Just like Aliant is concerned about its telecom business and claiming
that that is at risk, we would say that it is our telecommunications services as
well.
499 THE CHAIRPERSON: Thank you,
Mr. Fitzpatrick.
500 Ms
MacDonald.
EXAMINATION /
INTERROGATOIRE
501 MS MacDONALD: I just have a couple of
questions.
502 I just wanted to have
some clarification because I want to be clear on what services Aliant is
actually looking to advertise. I
note that initially the application seemed to indicate a request for all
services, but then in answer to interrogatory 5, Aliant specifically stated that
it is not seeking advertising services for its potential broadcasting service or
for telecommunications services at this time other than wireless. So I just wanted some clarification on
that.
503 MR. FITZPATRICK: Well, I guess the refusal that we had
received at Aliant back in October was a broad‑based refusal to accept any kind
of telecommunications services. So
I guess ultimately that is the decision that we are attempting to push back
on.
504 In terms of the types
of services that Aliant would be interested in advertising going into the
future, of course, Aliant would have an expectation and a desire to be treated
the same with the same rules and terms and conditions applying to Aliant as
would be applied to any other commercial party that sought to advertise on that
particular channel.
505 In terms of specific
short‑term advertising plans, I can't speak to that. Maybe Ms Harley
can.
506 I know though that in
relation to the advertising that had been denied in the fall of 2004, I believe
that would have been cellular.
507 Aliant acknowledges
that the Commission has broad discretion in terms of any remedy or relief that
they may wish to grant in this particular case and we defer to the Commission's
judgment as to whether that should be on a conditional or limited basis or on a
broad basis.
508 MS MacDONALD: Okay. So when Aliant stated that it would
expect an incumbent BDU to not advertise its competitors ads and therefore
Aliant wouldn't be seeking that, what was the intention in making that
statement?
509 MR. FITZPATRICK: Sorry?
510 MS MacDONALD: Sorry, in the answer to Aliant's
interrogatory that ‑‑ I think it was interrogatory number 5. Aliant states
that:
"Aliant reference to any other services
in paragraph 20 of its complaint is relative to EastLink Communications'
representative statement that EastLink will no longer accept any Aliant
advertising on any of its cable television channels in Nova Scotia and
P.E.I. Aliant may in the future
wish to advertise any of its telecommunications services and should not be
restricted from advertising or limited to advertising any particular category of
telecommunications service. Aliant
has no intention of advertising any broadcasting services or any expectation
that an incumbent BDU would accept Aliant's advertising cable services on the
listings channel. Further, Aliant
does not have any plans to advertise any telecommunications services other than
wireless." (As read)
511 So I just wanted to
confirm that that was correct.
512 MR. FITZPATRICK: Well, that was ‑‑ certainly as of
the time of the interrogatory response, Aliant did not have and does not have
any cable services to offer, but as a philosophical point, drawing the analogy,
for example, of the CBC advertising policy where like industries are not
expected to carry like industry advertising, we would expect that there would be
a stronger case to make with respect to carrying cable TV types of
advertisements on the EastLink channel.
513 Going forward though,
in terms of the types of advertising that maybe Aliant may seek to carry or put
on the TV listing channel, we would not wish to place any fences around that at
this point. We would ‑‑
ideally, we are seeking to have full and open access, equal with anybody
else.
514 MS MacDONALD: But according to that statement, Aliant
had made the decision, at least at the time of drafting that response, that it
had no intention of offering other telecommunications
services ‑‑
515 MR. FITZPATRICK: Mm‑hmm.
516 MS MacDONALD: ‑‑
correct?
517 MR. FITZPATRICK: That is my
understanding ‑‑
518 MS MacDONALD: At the time that that response was
prepared.
519 MR. FITZPATRICK:
‑‑ and I don't know if you can ‑‑
520 MS MacDONALD: So I guess that would raise the
question: How is failure to
advertise then on those channels a material impact to Aliant and how is it
negatively impacting Aliant when Aliant didn't see at the time of drafting that
response that it was a relevant avenue to list those other telecommunications
services?
521 MR. FITZPATRICK: If I might, at the time the response was
done, we were looking at what are our plans. We had no plans to go beyond mobility
products. That is not to say that
we feel that we should be limited to mobility only. That just says that at a point in time
there were no specific plans for future services, whether it be broadcast or
other telecommunications services, and I think that is what we were trying to
get at.
‑‑‑ Pause
522 MS MacDONALD: I just have another couple of questions
with regard to your mobility service.
523 Aliant did purchase
DownEast Mobility on October 1 of 2004.
Is it safe to say that the business case is moving more toward promoting
of individual services in the value packages rather than a stand‑alone
basis?
524 MS HARLEY: Could you just repeat that again? I am sorry, I want to make sure I
understand your question.
525 MS MacDONALD: Aliant has acquired DownEast Mobility
services. The advertisements for
the value packages include mobility products.
526 MS HARLEY: Yes.
527 MS MacDONALD: Is it safe to say then that the business
case is moving toward more promotion of individual services in the value
packages as a part of the value package as opposed to on a stand‑alone
basis?
528 MS HARLEY: Are you asking if we are going to
promote value packages or the individual
services?
529 MS MacDONALD: I guess the question is, is Aliant
moving more toward ‑‑ does Aliant promote stand‑alone
services?
530 MS HARLEY: Absolutely. We would continue to promote them as
appropriate to the particular product or service that we are promoting at the
time. However, we are very strongly
committed to providing value packages to our customers as
well.
531 MS MacDONALD: Okay. And so with regard to Aliant's call
centre, customers who purchase or are interested in purchasing DownEast, is
Aliant's call centre trained to deal with the promotion of all the value package
services?
532 MS HARLEY: Our call centres don't handle anything
for DownEast. DownEast is a
storefront only. If you are
interested in obtaining services from DownEast, you go into one of their stores
and you deal with them. We do not
handle their telephone calls.
533 MS MacDONALD: Okay. I have no further
questions.
534 THE CHAIRPERSON: Thank you,
Ms MacDonald.
535 Mr. Millington, do you
have further questions?
536 MR. MILLINGTON: No, I don't, Madam
Chairman.
537 THE CHAIRPERSON: Commissioner
Cram?
538 COMMISSIONER CRAM: No, thank you.
539 THE CHAIRPERSON: Commissioner Noël?
540 COMMISSIONER NOËL: I have one question, Ms MacDonald. You mentioned earlier that the
Commission considers that at the present time you don't have market power in
advertising for your listing channels.
541 If in the future, as a
result of a potential change of view of the Commission or otherwise your company
or you as a cable company were to gain market power in advertising, do you feel
that you could use that market power to block your telecom competitors and use
your inventory for promoting your own telecom services?
542 MS MacDONALD: Just to clarify on the comments with
regard to no market power in advertising, the point to be made there is that
there are numerous other advertising sources out there that are
available.
543 I don't see EastLink
ever having to ask that question because EastLink is not in the business of
creating more avenues for, you know ‑‑ EastLink has what it has, and the
other avenues that are out there, that have been touched upon in submissions,
continue to exist. So in that
respect, I don't see EastLink ever having to pose that
question.
544 COMMISSIONER NOËL: There are proceedings before the CRTC on
the broadcasting side which could result ‑‑ it is a potential result of
those proceedings to allow the cable operators to use the local avails. In that case, if hypothetically the CRTC
was to consider to allow the cable operators to use the local avails, they would
gain market power in advertising.
545 At that point, in those
circumstances, do you feel that you could use that market power to block your
telecom competitors and use your inventory for promoting your own telecom
services?
546 MS MacDONALD: I think the answer to that question
really goes back to the question of when EastLink Advertising receives a request
for advertising from a company, EastLink has to do an analysis within the
criteria, be it content as well as business decisions, and so EastLink would
then be in a position to have to make a decision based on all the information
before it at the time and each of those decisions would be based on a
case‑by‑case basis.
547 COMMISSIONER NOËL: Which doesn't answer my question. Would you use the market power available
to you in those circumstances to block your competitors and use it for the
promotion of your own telecom services?
548 MS MacDONALD: Going back to what I had stated
previously, I don't think that EastLink would make proactive decisions to use
their resources to block competitors and I use the example of ‑‑ there was
some discussion about new entrants or small competitors, et cetera, entering
markets and potentially seeking advertising from EastLink.
549 I think the real issue
is the nature of the competitor and then the issue becomes one of ‑‑ a
question of is EastLink going to be engaging in activity that would equate to an
undue preference under the legislation if we do this or if we do that, and so
that analysis would factor into it.
550 COMMISSIONER NOËL: Thank you.
551 THE CHAIRPERSON: That completes this phase now. So we will now hear from both of you in
final submissions.
552 Would you like five
minutes to gather your thoughts or are you ready?
553 MR. FITZPATRICK: I am ready to proceed, Ms
Commissioner.
554 THE CHAIRPERSON: Madam MacDonald? Miss MacDonald?
555 MS MacDONALD: Yes, I am
ready.
556 THE CHAIRPERSON: You are ready.
557 Go ahead,
please.
CLOSING REMARKS / REMARQUES DE
FERMETURE
558 MR. FITZPATRICK: Thank you, Madam
Commissioner.
559 Aliant submits that
this is all about EastLink as a BDU being able to use the authority of that
position to discriminate against third parties that compete against it in
another industry.
560 This is not about
incidental or unintentional discrimination or discrimination that has simply
evolved over time based on historical patterns like the WIC and Shaw Cable
situation. This is about targeted,
intentional, singling out of Aliant for discrimination so as to cause it harm
and to give an advantage to EastLink and its business
partners.
561 Aliant submits the harm
to Aliant is real and significant due to the fact that EastLink is a monopoly
cable TV provider where it operates.
562 Aliant submits EastLink
has not offered any compelling reason why discrimination toward Aliant is
acceptable or justifiable on the basis of public
policy.
563 Aliant submits each
case of discrimination must be judged on its own merits and in regard to the
particular facts presented.
564 Finally, Aliant
respectfully requests that the Commission grant the relief as requested by
Aliant.
565 Thank you, Madam
Commissioner.
566 THE CHAIRPERSON: Thank you,
Mr. Fitzpatrick.
567 Miss
MacDonald.
CLOSING REMARKS / REMARQUES DE
FERMETURE
568 MS MacDONALD: There is sufficient evidence on file and
before the Commission to determine the applicable legislation at this
point. EastLink maintains its
position that the Broadcasting Act does apply and that the service clearly is a
programming service.
569 EastLink directs the
Commission to its submissions filed on January 7th and on February 23rd as well
as our interrogatory responses. We
feel that these documents fully support EastLink's position that there is no
material adverse impact on Aliant or any other person nor is there an impact on
the policy objectives of the Broadcasting Act in EastLink denying Aliant
advertising on its listing service.
570 If the Commission
determines that the Telecom Act applies, EastLink submits that the evidence
before the Commission and arguments made in EastLink's submissions also
establishes that any preference or disadvantage is not undue. The fact is that pursuant to the test
under the Telecommunications Act, the establishment or continuance of a
competitive market is not unduly impaired.
571 To suggest there is
even a minor impact to Aliant for failure to advertise on the listing service is
an exaggeration given the minimal role the service would play in Aliant's
overall advertising and marketing objectives.
572 So the facts do not
come close to establishing any undue impairments to the competitive market. In fact, the answer to Aliant's
interrogatory 5 makes it clear that at least at that point in time, Aliant had
no intention of advertising its other telecommunications services, which would
lead one to clearly question how can there be harm when they didn't even think
at the time of answering that response that they planned to advertise their
other telecommunications services.
573 In assessing this
issue, EastLink notes that some individuals may have a personal level of
distaste for a decision to refuse Aliant advertising. However, such an opinion does not equate
to a breach of the legislation.
574 The Commission may ask
whether a decision dismissing this application will result in BDUs denying all
companies' requests for advertising services.
575 The fact is each case
must be determined on an individual basis.
576 The fact is that
EastLink's decision will not result in a material impact to Aliant's business
nor will it result in a substantial lessening of competition or the undue
impairment of a competitive market.
577 We ask the Commission
to keep in mind the following facts when analyzing the issue of undue
preference.
578 The listing service is
a service only received by EastLink cable subscribers. Even if Aliant speaks of viewers who may
watch the service, the target is EastLink's subscribers. Mr. Fitzpatrick admitted that the hotel
and out‑of‑town viewers are not interested in the advertisements. This brings the focus back to
subscribers, not general viewers who may not be
subscribers.
579 The advertising is
typically filled by smaller local companies who may not have budgets to do more
significant broadcast advertising.
For larger corporations, this service is typically a supplement or a
secondary service to the core advertising plan of a large
company.
580 Aliant Mobility had
been the only division to place ads on the service. Aliant Telecom never advertised its
services on this service.
581 The primary advertising
medium Aliant uses are the more significant broadcast mediums such as local
broadcasters, national broadcasters as well as newspaper, radio and other print
media.
582 Aliant's interrogatory
responses indicate they access all advertising vehicles except the listing
service and I think this is important in establishing whether there really is
any negative impact or undue harm to Aliant.
583 This can't possibly be
a key impact in Aliant's overall advertising strategy nor would we expect that
having this access will change the focus of Aliant's advertising plans in any
relevant manner. This is merely a
supplementary advertising avenue.
584 The Commission also
recognized BDUs do not have market power in advertising vehicles. Decision 98‑9 referred to at our January
7th submissions specifically references this
decision.
585 The Commission did not
impose joint marketing restrictions on BDUs at a time when incumbent telcos did
have those marketing restrictions and we would say that that is a somewhat
analogous situation. EastLink is
promoting some of its services and while at the same time it is not promoting
Aliant's service on the listings channel.
586 Aliant has provided no
information to indicate any financial harm by the lack of advertising. EastLink submits this is because in the
big scheme, the impact to Aliant is minimal, and in any case, it is not
undue.
587 Radio ads are no
different in many respects. Aliant
acknowledged themselves that the visual on the listing service is not that
stimulating. The other component of
a listing service is an audio component.
We would say, therefore, that radio provides a very equivalent
alternative avenue to the listing service, among others such as billboards,
newspapers, et cetera, which are referred to in the
submissions.
588 If there is such a
significant impact for failure to advertise, then why has there been such little
interest to advertise the other services?
589 While there may be
little impact, the reverse is true for EastLink if EastLink is forced to
advertise Aliant's services.
590 Aliant's position is
that it may not be able to gain new cable viewers to purchase its services, but
if Aliant does advertise on the listings, any gain in customers is most likely
to be a loss of more than one of EastLink's services per
customer.
591 The fact is that any
service Aliant offers is now tied into Aliant bundles. The value packages are being heavily
promoted. Even if Aliant only
advertises its cellular services, Aliant personnel do promote Aliant's value
packages.
592 Value packages include
internet service. Each time a
customer takes an Aliant bundle that may have a cellular component or an
internet component, that customer is taking Aliant's local
service.
593 EastLink's loss of the
number of customers Aliant seeks to gain on the listing service will be a
greater impact to EastLink.
EastLink has expanded and upgraded its cable network to provision
high‑speed internet and telephone service.
To upgrade for telephone, EastLink has had to invest more
capital.
594 A loss of even a small
number of customers to EastLink's telephone service would more significantly
impact EastLink's business and recovery on investment than the small incremental
gain Aliant may obtain in listing advertising on the listing
service.
595 Aliant is not so
dependent on each individual customer since Aliant has been able to recover its
investment for those customers through its rate base. Aliant is the incumbent in a local
telephone market and EastLink is the entrant. Surely, there is no risk of harm
there.
596 Aliant's dial and
high‑speed services make Aliant the dominant internet provider in its
territory. In any case, there is no
risk that the continuance of this competitive market is likely to be unduly
impaired.
597 Furthermore, Aliant has
even stated in its interrogatory responses that it does not intend to advertise
its other services, which have been touched on
before.
598 EastLink's position is
that even advertising the mobility service places EastLink's business at risk
since Aliant leverages its mobility to sell the other products in its value
packages. While Aliant may not have
the benefit of advertising in a listing service, it has numerous other avenues
to promote its services.
599 Aliant may have many
preferences and EastLink does not have the benefit to bring these matters to the
Commission. Many of these are
referred to in EastLink's submissions with regard to specialized deals with
dealers, technology stores where EastLink is not able to offer its
advertisements.
600 Aliant has denied
EastLink access to previous advertising vehicles that Aliant had at its
disposal, both of which have been referenced in our
submissions.
601 There are numerous
scenarios. In fact, there are a lot
of scenarios where Aliant has developed relationships with forums and public
avenues that at least EastLink is denied access to and these are forums and
public avenues that would put EastLink in direct contact with
customers.
602 So we would say that
Aliant has numerous resources that make it obvious that they are not suffering
any harm.
603 EastLink's actions are
no different than most other companies with advertising vehicles available to
them, including Aliant. The public
policy of the CBC also illustrates this point.
604 EastLink also believes
that its customers would not expect to see us promoting our competitors'
services, Aliant services, on our listing service.
605 THE CHAIRPERSON: Miss MacDonald, you have one minute
left.
606 MS MacDONALD: Okay.
607 THE CHAIRPERSON: Wind up.
608 MS MacDONALD: The Yellow Pages example that we touched
on is not relevant. We would say
that the Yellow Pages go to all consumers and it is in any directory publisher's
business interest to maximize on that.
609 Finally, we note that
many companies that apply similar policies are regulated by the CRTC. Any decision should result in minimal
Commission intervention and this is supported and referenced in our submissions,
paragraph 17 of the January 7th submissions.
610 It would be difficult
for the Commission, as stated in that decision, and companies to ensure
equitable access for all competitors and it would be likely that the Commission
would have to involve itself extensively in complaint
resolution.
611 We ask that the
Commission consider these principles in assessing the
application.
612 To conclude, for all
the reasons set out, we do not think that Aliant, under the Broadcasting Act,
has proven undue preference nor do we think ‑‑ and we think there is
sufficient evidence under the Telecom Act that there is no impairment or
likelihood of impairment of a competitive marketplace.
613 THE CHAIRPERSON: Thank you,
Miss MacDonald.
614 Mr. Millington, there
was some material that was to be filed.
Perhaps you would address the time frames that we are looking
at.
615 MR. MILLINGTON: Would it be possible to get it by the
end of the day tomorrow?
616 MR. FITZPATRICK: (Nods assent).
617 MS HARLEY: (Nods assent).
618 MR. MILLINGTON: There was the advertising budget and the
relative cost of TV listing advertising vis‑à‑vis standard
broadcasting.
619 Could you send that to
procedures and send it by email to Paul Godin? You have his email
address.
620 MR. FITZPATRICK: Certainly,
Mr. Millington.
621 MR. MILLINGTON: Thank you.
622 THE CHAIRPERSON: Thank
you.
623 That completes the
process. I wish to thank my
colleagues for their support, the staff for their invaluable help, our court
reporter and stenographer for theirs, and last but not least the participants
for their cooperation.
624 The oral part of this
process is now adjourned.
‑‑‑ Whereupon the hearing adjourned at 1245
/
L'audience est ajournée à