ARCHIVED -  Telecom Decision CRTC 95-16

Telecom Decision

Ottawa, 15 August 1995

Telecom Decision CRTC 95-16

CANADIAN ASSOCIATION OF MESSAGE EXCHANGES INC. V. BELL CANADA - MARKETING OF PAGING SERVICES

I BACKGROUND

By letter dated 25 January 1995, the Canadian Association of Message Exchanges Inc. (CAM-X) applied, pursuant to Part VII of the CRTC Telecommunications Rules of Procedure, for an order requiring Bell Canada (Bell) and Bell Mobility Paging (Bell Mobility) to cease any and all joint marketing ventures.

In its application, CAM-X stated that the sales facilities and staff of Bell Phonecentres are being used for the promotion and sale of the paging products and services of Bell Mobility. CAM-X submitted that this situation raises the same issues as were addressed in Cellular Radio - Adequacy of Structural Safeguards, Telecom Decision CRTC 87-13, 23 September 1987 (Decision 87-13), and Rogers Cantel Inc. v. Bell Canada - Marketing of Cellular Service, Telecom Decision CRTC 92-13, 29 June 1992 (Decision 92-13), and that the safeguards established in these Decisions should be extended to the marketing and promotion of paging products and services. CAM-X also submitted that the practices in question grant Bell Mobility an undue preference contrary to subsection 27(2) of the Telecommunications Act (the Act), to the detriment of competitors.

In its 27 February 1995 answer, Bell confirmed that Bell Mobility equipment and services are available in the company's Phonecentres. However, Bell disagreed that this gives rise to the same concerns as were addressed in Decisions 87-13 and 92-13. In this regard, Bell noted that, in contrast to the cellular service market, which was in its infancy when the restrictions in Decision 87-13 were put in place, the paging market is mature, with a large number of competitive service providers. Bell also noted that it had previously stated that it would be open to proposals from other paging service providers to engage in joint promotional activities with Bell. Bell further noted that a number of competitive products are offered in Phonecentres, including telephone sets, facsimile equipment and answering machines, but that such activities in no way constitute unjust discrimination. Bell indicated that the costs associated with the promotion and offering of Bell Mobility equipment in the Phonecentres are borne by Bell Mobility. Bell submitted that there are no reasons to justify restrictions on the promotion and marketing of paging equipment and services.

Bell noted that the Commission previously dealt with issues similar to those raised by CAM-X in Withdrawal of Autotel I VHF and Pagecall Services and Related Matters, Telecom Letter Decision CRTC 88-7, 26 August 1988, which stated that:

The Commission is of the view that since the paging business is subject to a significant degree of competition in the operating territory of BC TEL, it would not confer an undue advantage to permit BC TEL ... to act as an agent to sell Pagecall equipment through Phone Marts, provided BC TEL is appropriately compensated.

In its 8 March 1995 reply, CAM-X submitted that the concerns addressed in Decision 92-13 are as applicable to paging services as to cellular service. CAM-X submitted that the paging marketplace is not a level playing field in spite of widespread competition, because Bell, in using its position as the monopoly provider of local network services, is giving its affiliate, Bell Mobility, an undue or unreasonable preference and subjecting CAM-X's members to an undue or unreasonable disadvantage. CAM-X requested that the Commission (1) instruct Bell to remove all paging product information and paging product order processing related to, or offered by, Bell Mobility from any and all areas operated by Bell, and (2) direct Bell to provide a complete list of paging providers to customers upon enquiry.

II CONCLUSIONS

The Commission notes that the concerns addressed in Decisions 87-13 and 92-13 were (1) the potential for cross-subsidization of an affiliate's activities by monopoly service revenues, (2) the referral of customers by a monopoly service provider to its affiliate, (3) the joint marketing and advertising by a monopoly service provider of the products and services of its affiliate, and (4) access by the affiliate to the monopoly service provider's customer information.

With respect to the potential for cross-subsidization of Bell Mobility activities by Bell revenues, the Commission is of the view that the risks of such cross-subsidization are minimized because the paging market is too competitive for any targeted or predatory pricing strategy by Bell to be profitable. Moreover, the split rate base regulation contemplated in Review of Regulatory Framework, Telecom Decision CRTC 94-19, 16 September 1994, will act as an additional safeguard against such cross-subsidization. The Commission also notes Bell's statement that Bell Mobility, not Bell, bears the costs of marketing paging products and services in the Phonecentres.

With respect to the referral of customers by Bell to Bell Mobility and the joint marketing and advertising of Bell Mobility's paging products and services by Bell, the Commission is of the view that these practices do not raise the same concerns as they do with respect to the marketing of cellular services. In this regard, the Commission considers that the paging marketplace is a mature and competitive market, with a large number of service providers. The Commission also notes Bell's stated willingness to consider joint marketing with other paging service providers.

With respect to access by Bell Mobility to Bell customer information, the Commission notes that Article 11 of Bell's Terms of Service narrowly restricts the circumstances in which Bell may disclose confidential customer information to another telephone company or to a company involved in supplying the customer with telephone or telephone directory-related services. The Commission notes that, among other things, Article 11 prohibits the disclosure of such information for the purpose of marketing.

In light of the foregoing, the Commission does not consider it appropriate to extend to the paging market the safeguards contained in Decisions 87-13 and 92-13. The Commission does not consider that the current arrangements between Bell and Bell Mobility with respect to paging products and services constitute an undue or unreasonable preference to Bell Mobility, nor do they subject CAM-X members to an undue or unreasonable disadvantage, contrary to subsection 27(2) of the Act.

Accordingly, the application of CAM-X is denied.

Allan J. Darling
Secretary General