ARCHIVED -  Decision CRTC 99-75

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Decision CRTC 99-75

Ottawa, 1 April 1999

Télécâble Blouin inc.
Lac-des-Écorces; Ferme-Neuve; Kiamika; Lac-des-Íles; Lac-du-Cerf; Mont Saint-Michel; Notre-Dame-de-Pontmain; Notre-Dame-du-Laus; and Sainte-Anne-du-Lac, Quebec – 199803995 – 199804092
– 199804100 – 199804117 – 199804125
– 199804133 – 199804141 – 199804159
– 199804167

Électro-Vision (La Tuque) inc.
La Tuque, Quebec – 199804026

Applications processed by Public Notice CRTC 1998-102 dated 28 September 1998


The Commission approves the applications by Télécâble Blouin inc. (Télécâble Blouin) and Électro-Vision (La Tuque) inc. (Électro-Vision) to transfer the effective control of each licensee by transferring all of the issued and outstanding shares to Télébec ltée (Télébec).

The Commission also approves the proposal to link, by optical fibre, the communities listed above served by Télécâble Blouin (except Lac-des-Écorces) to its undertaking serving Lac-des-Écorces. To do this, the applicant will delete the local head ends of the undertakings serving the eight other communities.

Approval of these applications represents an exception to the Commission's head start policy. Pursuant to that policy, telephone companies are generally prohibited from holding licences for broadcasting distribution undertakings until rules have been established to remove barriers to effective competition in the local telephone business in Télébec's territory.

In approving these applications, the Commission has taken into consideration the fact that La Tuque is located outside of larger urban centres and the communities served by Télécâble Blouin are small and widely dispersed. The Commission has also taken into account the particular circumstances of the two companies' existing principal shareholders. Moreover, the Commission has attached particular importance to Télébec's commitments to counteract any competitive advantage that it might have enjoyed as the sole provider of telephone and cable distribution services in these communities.

In order to minimize the potential for anti-competitive practices, the Commission expects that the licensees will not engage in joint marketing and bundling of their broadcasting services with the telecommunications services offered by Télébec.

The parties

1. Télécâble Blouin operates nine Class 3 cable distribution undertakings serving some 2,800 subscribers in small rural communities in the Hautes Laurentides region. Électro-Vision is licensee of a Class 3 cable undertaking serving approximately 4,860 homes in the Haut Saint-Maurice area.

2. The principal shareholders of both companies wish to retire. They stated that they have been trying to sell their respective companies for several years and that Télébec’s proposal is the first serious offer they have received. Télécâble Blouin’s owners, who operate their undertakings alone, claimed that the financial investment needed to adapt to technological developments is too significant and the period of return on such investments is too long for a family business.

3. Télébec provides telephone service mainly in northern and remote regions of Quebec. The company’s territory covers some 750,000 square kilometres with over 179,000 network access lines (at December 1997) in 300 municipalities. Télébec is the second largest independent telephone company in Quebec and is ultimately owned and controlled by BCE Inc.

The Commission’s head start policy

4. In its 19 May 1995 report to the Government entitled Competition and Culture on Canada’s Information Highway (the Convergence Report), the Commission determined that telephone companies may apply for licences for broadcasting distribution undertakings as soon as rules have been established to remove barriers to effective competition in the local telephone business. The need for transitional protection of the core cable business stemmed essentially from concerns about the market power of the telephone companies and the head start they might obtain in packaging telephony and entertainment services. The Commission did indicate that it would permit exceptions in the case of unserved communities or regions, or where participation by the telephone company is in the form of a joint venture with the licensee of an existing broadcasting distribution undertaking.

5. In Regulatory Framework for Québec-Téléphone and Télébec ltée, the Commission stated that it considers that local competition should be permitted in Télébec’s territories. Subsequently, the Commission stated that it intends to issue a public notice to establish the terms and conditions for local competition in the markets served by Télébec.

The applications

6. In the present cases, all of the communities in question are served by a cable distribution undertaking. Moreover, the existing owners have clearly indicated that they are not interested in entering into a joint venture with Télébec as they wish to retire.

7. La Tuque is located outside of larger urban centres and the localities served by Télécâble Blouin are widely dispersed communities with low populations. Given the high cost of infrastructure required to provide service in these areas, Télébec argued that purchasing existing cable systems and modernizing their networks is more cost efficient than constructing new cable networks. Télébec claimed that approval of these applications would enable it to provide up-to-date communications services at reasonable costs to these widely-dispersed, low population density areas.

8. In these territories, Star Choice Communications Inc. and Bell Satellite Services Inc. (ExpressVu), through their direct-to-home satellite distribution undertakings, offer some alternative choices for subscribers to the existing cable distribution licensees. Residents in these communities can, therefore, select the broadcasting distribution service provider of their choice.

9. As part of its application, Télébec made commitments to alleviate any competitive advantages that might result from being the sole provider of telephone and cable distribution services in the same communities. Télébec stated that:

· the costs of upgrading the transmission and distribution networks will not be directly or indirectly paid by its cable subscribers or by its telephone customers;

· it will maintain the distribution undertakings as structurally separate entities, operated independently of Télébec’s operations and those of any other company or undertaking directly or indirectly controlled by Télébec; and

· it will include, in its quarterly report on inter-corporate transactions, information on the Télécâble Blouin and Électro-Vision transactions.


10. The Commission notes that there was no opposing intervention to these applications from cable television licensees operating in Quebec. In the only intervention to these applications, the Office diocésain de pastorale du diocèse de Trois-Rivières expressed concern that the community programming service might not be maintained if the Commission approved the transfer of ownership of Électro-Vision.

11. In reply, Télébec stated that it is committed to offering a community channel on Électro-Vision's undertaking. It also made a commitment to provide cable access to the schools and libraries in Électro-Vision’s territory.

12. Furthermore, Télébec made a commitment, as part of its application, to provide a still image programming service in compliance with the Exemption Order Respecting Still Image Programming Service Undertakings. This service will promote local activities and regional community development.

The Commission’s decision

13. The location of the undertakings is an important factor in the Commission’s decision. The Commission agrees that the infrastructure needed to provide cable service in these areas is very costly. Moreover, the Commission notes that the present owners are not interested in investing the significant funds required to improve the existing services and wish to retire. Furthermore, the Commission notes that these owners have apparently been trying to sell these systems for some time. The Commission is satisfied that Télébec has the resources needed to improve the distribution systems and to provide residents of these low population density areas with access to distribution services of high quality.

14. In approving these applications, the Commission has also attached particular importance to the commitments made by Télébec to ensure that it does not enjoy undue competitive advantage as the sole provider of telephone and cable distribution services in these communities. The Commission expects Télébec to adhere to these commitments (see paragraph 9 of this decision). In addition, the Commission expects that the broadcasting services provided by the licensees will not be marketed, promoted, or billed jointly with Télébec's telecommunications services, and that no joint reference to the telecommunications services provided by Télébec will be made in a single mailing, single brochure or any other joint promotional material.

15. In the circumstances, the Commission considers that an exception to its head start policy is warranted.

16. With regard to concerns that Télébec might use revenues from the cable distribution undertakings to cross-subsidize its telephone services or, conversely, cross-subsidize the cable services with revenues from its telephone operations, the Commission notes that section 9 of the Broadcasting Distribution Regulations prohibits cable systems from benefiting from, or conferring an undue advantage on any person.

Bundling of telephony and entertainment services

17. In a separate letter also issued today, the Commission advised Télébec that, pursuant to the Telecommunications Act, the Commission was of the preliminary view that Télébec should not bundle telephony and entertainment services until the Commission determines that barriers to competition in the local telephony business are sufficiently overcome in Télébec’s territory to allow broadcasting distribution undertakings to operate in that territory. The Commission asked Télébec to provide its observations on this preliminary view within 15 days of today’s date.

Related CRTC documents

  • CRTC 1995 Report to the Government: Competition and Culture on Canada’s Information Highway: Managing the Realities of Transition
  • Telecom Decision CRTC 96-5: Regulatory Framework for Québec-Téléphone and Télébec ltée
  • Telecom Decision CRTC 97-21: Implementation of Regulatory Framework for Québec-Téléphone and Télébec ltée

Secretary General

This decision is to be appended to the licences. It is available in alternative format upon request, and may also be viewed at the following Internet site:

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