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ARCHIVED -  Telecom Order CRTC 97-1646

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Telecom Order

Ottawa, 12 November 1997
Telecom Order CRTC 97-1646
On 8 August 1997, Videotron Communications Ltd. (Videotron) filed an application under Tariff Notice (TN) 2 for approval of tariff revisions regarding a promotion for its high-speed Internet access service.
File Nos.: 8622-T12-01/97 and Videotron TN 2
Part VII application:
1. TELUS Multimedia's application submitted that Videotron was offering a non-tariffed service promotion exclusively to the residents of the Edmonton subdivisions of Greenfield and Rhatigan Ridge.
2. TELUS Multimedia noted that these were the same neighbourhoods where TELUS Multimedia is licensed to conduct the Edmonton portion of its broadcasting distribution undertaking (BDU) trials.
3. Videotron had proposed to cable subscribers in Greenfield and Rhatigan Ridge an arrangement whereby it promised to offset the tariffed monthly Internet access fee of $34.95 for 12 months by rebating the subscriber's regular monthly cable television services bill by the same amount in return for the customer signing a 12-month cable services contract.
4. TELUS Multimedia argued that Videotron was offering an illegal rebate in violation of subsections 25(1) and 27(2) of the Telecommunications Act (the Act) and requested that the Commission declare such arrangements a violation of the Act and order Videotron, pursuant to section 51 of the Act, to cease providing the service under such arrangements.
5. TELUS Multimedia noted that Videotron, as an alternative option, was making available for 12 months a free Videoway terminal and one free pay-per-view movie per week to subscribers who signed a 12-month contract for cable television.
6. TELUS Multimedia noted that this alternative option was not addressed by its application.
7. TELUS Multimedia submitted that the actions taken by Videotron in Greenfield and Rhatigan Ridge would serve to thwart the objectives which the Commission intended to achieve when it issued a licence to TELUS Multimedia for a BDU trial in these neighbourhoods.
8. In its answer, Videotron acknowledged that it was providing the said arrangement and admitted that when it originally conceived what it calls "The Benefit of Change" promotional campaign it had considered and determined, at the time, that a tariff would not be required for the promotion.
9. Upon review, Videotron determined that its original position was incorrect and accordingly, filed TN 2 under which it asked for approval of the promotional offer.
10. Videotron took exception to TELUS Multimedia's assertion that Videotron's actions will thwart the objectives which the Commission intended to achieve when it issued a licence to TELUS Multimedia.
11. Videotron argued that the success or failure of these trials depends solely on TELUS Multimedia's ability to deliver the promised services.
12. Videotron further noted that, like any other service provider, it will continue to campaign actively to retain its subscribers in all of its service areas and added that this behaviour is inherent to the competitive market structure that both TELUS Multimedia and the Commission have endorsed.
13. In reply to Videotron's answer to the Part VII application, TELUS Multimedia argued that TN 2 was an acknowledgement that the promotional campaign was not in accordance with approved tariffs and in violation of the Act.
14. In its reply, TELUS Multimedia also announced that it intended to respond more fully to TN 2 under the regular rules of procedure.
15. With respect to the relief sought by TELUS Multimedia in its Part VII application, the Commission notes that Videotron, recognising that approval of a tariff for its promotion was required, filed a proposed tariff.
16. The Commission finds that it would not be in the public interest to order Videotron, as requested by the application, to cease providing the service.
17. The Commission therefore denies the application filed by TELUS Multimedia.
Tariff Notice 2:
18. TELUS Multimedia, in an intervention filed against TN 2, argued that the tariff notice was designed deliberately to interfere with the field trials by locking up cable subscribers prior to TELUS Multimedia rolling out its service trials.
19. TELUS Multimedia also argued that the purpose of the promotion was unclear, that the promotional period was unreasonable and that the promotion was prejudicial to Videotron's new Internet subscribers outside of the promotion neighbourhoods.
20. Videotron, in reply to TELUS Multimedia's intervention, asserted that the purpose of the promotion was to obtain a critical mass of subscribers to test the ability of its network to handle a concentration of Internet subscribers.
21. Videotron noted that it selected the neighbourhoods in question since their residents appeared to be more inclined to use the Internet than other residents in the city.
22. Videotron argued that the Internet access market in Alberta is very competitive as already noted by the Commission in the orders granting forbearance to TELUS Communications Inc. and TELUS Communications (Edmonton) Inc. Planet Service.
23. Videotron reiterated that this service promotion does not jeopardise TELUS Multimedia's trial and that TELUS Multimedia could not expect to operate its trial in a competitive vacuum.
24. Videotron denied the assertion that it had effectively locked-up subscribers prior to TELUS Multimedia introducing its service trial noting that the promotion provided for a $100 early termination fee, which in view of the promotional benefits, should not prevent subscribers from switching service providers.
25. The Commission notes that the sign-up period for the promotion filed under TN 2 expired 30 July 1997.
26. The Commission considers it would not be in the public interest to deny the service promotion and order Videotron to take corrective action.
27. The Commission notes that TELUS Multimedia's trials are taking place in a competitive market.
28. The Commission is nevertheless concerned with both the narrow geographical focus of the promotion and the selection of the neighbourhoods in question.
29. The Commission is of the view that denying the $100 early termination fee imposed by Videotron would help to eliminate the disincentive to migrate to other service providers such as TELUS Multimedia and, accordingly, would alleviate some of these concerns.
30. The Commission notes Videotron also requested ratification of past charges in relation to the promotion under subsection 25(4) of the Act claiming that it had made an honest mistake when it failed to file a tariff at the outset.
31. The Commission considers that it would be in the public interest to approve TN 2 and to ratify, pursuant to subsection 25(4) of the Act, the past charging of a rate otherwise than in accordance with a tariff approved by the Commission.
32. In light of the foregoing the Commission grants interim approval to Videotron's TN 2, with the exception of the $100 early termination fee, which is denied.
33. The Commission hereby ratifies the past charging of a rate under subsection 25(4) of the Act.
34. The Commission orders Videotron to issue forthwith revised tariff pages reflecting the above.
Laura M. Talbot-Allan
Secretary General
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