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ARCHIVED - Public Notice CRTC 2000-81

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Public Notice CRTC 2000-81

 

See also: 2000-81-1

Ottawa, 9 June 2000
  Revised policy concerning inside wire regime; Call for comments on proposed amendments to section 10 of the Broadcasting Distribution Regulations
  In this notice, the Commission announces its revised policy concerning the inside wire regime. This policy emerges from the Commission's consideration of comments received in response to Public Notice CRTC 1999-124. The Commission also calls for comments on proposed regulatory amendments necessary to give effect to the revised policy.
  Introduction

1.

Section 10 of the Broadcasting Distribution Regulations (the regulations) issued in December 1997 provides for a transfer of ownership model with respect to inside wire. This was part of a broader Commission policy intended to remove barriers to competitive access that could result from cable ownership of inside wire (see Public Notice CRTC 1997-150, which introduced the new regulations).

2.

Section 10 of the regulations currently stipulates the following:
  (1) Subject to subsections (2) and (3), if a licensee owns the inside wire, it shall offer it for purchase to a customer when the customer's oral or written notice to terminate basic service is received.
  (2) In the case of a single-unit dwelling, the licensee's offer under subsection (1) shall be at a price of not more than $5.
  (3) If the customer is the owner or operator of a multiple-unit dwelling, the licensee shall offer to the customer for purchase the inside wire of each subscriber residing in the multiple-unit dwelling.
  (4) If a customer decides not to purchase the inside wire, the licensee owning the wire may remove it within seven days after the date of the termination of service.
  (5) If a licensee decides not to remove the inside wire under subsection (4), the licensee shall not later interfere with the ability of any person to use the wire.

3.

As announced in PN 1997-150, the Commission subsequently established a working group of the CRTC Interconnection Steering Committee (CWCISC) for the purpose of resolving any issues associated with implementation of the new transfer of ownership regime, including such matters as:
 
  • processes for customer transfer between competitive distributors, including such things as development of service intervals, process maps, ordering and billing, and information exchange standards; and
 
  • agreement on alternative demarcation points, with particular reference to multiple-unit dwelling (MUDs), and on a valuation of inside wire and other related equipment in MUDs.

4.

Following some months of discussion by the working group, and after the expenditure of considerable time and resources by all parties to develop effective implementation procedures for the new regulations, the Canadian Cable Television Association (CCTA) announced that its members were not offering up the inside wire for sale to customers, as required by section 10,in either single- or multiple-unit dwellings.

5.

On 1 February 1999, in response to the position taken by the incumbent licensees, a number of new entrant licensees filed an application pursuant to section 12 of the Broadcasting Act (the Act). The application requested that the Commission reach a determination that the CCTA's members were in deliberate non-compliance with section 10 of the regulations, and that it take various forms of action in response to such non-compliance.

6.

The Commission notes that it was not for some time following the filing of this application that the incumbent licensees, through the CCTA, proposed an alternative means to achieve the objectives of section 10 of the regulations. Specifically, on 19 May 1999, the CCTA filed a request that the Commission amend section 10 of the regulations. Among other things, the CCTA contended that, contrary to the intended purpose of the current rules, section 10 causes unnecessary confusion for customers cancelling service with a licensee and creates inconvenience for existing customers. The CCTA also submitted that owners of MUDs have expressed concern and dissatisfaction with the current regulations.

7.

The Commission views the apparent non-compliance with the current transfer regime by certain, if not all, incumbent cable licensees to be an extremely serious matter. The Commission emphasizes that licensees are required to comply with the regulations pertaining to their broadcasting activities at all times, and it expects them to comply with all applicable policies and regulatory frameworks governing them.

8.

In its approach to the issues surrounding inside wire, the Commission's intention has always been to enable customers to use the service provider of their choice. This has been a fundamental element of the Commission's efforts in both broadcasting and telecommunications and is a linchpin in its efforts to promote the competitive provision of all communications services. The Commission remains committed to end-user choice.

9.

Notwithstanding the very serious nature of the Commission's concerns, because the CCTA proposal sought to explore an alternative method of attaining the objective described above, the Commission decided that it would be appropriate to initiate a proceeding to consider whether it could better meet its regulatory goal in all the circumstances. Accordingly, on 29 July 1999, the Commission issued Public Notice CRTC 1999-124 calling for comments on the CCTA's proposal.

10.

Under the CCTA's proposal, one that it characterizes as a "non-interference model", section 10 of the regulations would be amended to read as follows:
  (1) A licensee shall not restrict or otherwise interfere with a customer's use of the inside wire.
  (2) A licensee that owns the inside wire of a single-unit dwelling shall not charge for use of the wire.
  (3) A licensee that owns the inside wire of a multiple-unit dwelling may charge for the use of that wire in accordance with such terms as may be agreed to by the parties or determined by the CRTC.

11.

In support of its proposed amendments, the CCTA enunciated four principles that, in its view, should be used in interpreting and implementing a new transfer regime. The four proposed principles are:
 
  • where the licensee owns the inside wire, it shall retain ownership of it, i.e., there is no transfer of ownership of the inside wire;
 
  • the licensee that owns the inside wire will be prohibited by regulation from interfering with a customer's use of it;
 
  • there will be no charge for use by another licensee of the inside wire in single-unit dwellings; in circumstances to be identified by the CRTC through the CISC process, there will be a charge (also to be determined by the Commission) for use by another licensee of the inside wire in multiple-unit dwellings; and
 
  • all licensees will refrain from damaging another licensee's distribution system, cable drops, customer service enclosures and panel boxes.
  Positions of the parties

12.

Twenty-seven comments were submitted in response to PN 1999-124. The incumbent cable distributors argued that the Commission should accept the CCTA's proposal to establish a non-interference regime for inside wire, and that the elimination of ownership issues would significantly improve the practicality of the inside wire regime. They also stated that customers would be able to receive service from the distributor of their choice, and that ownership of the inside wire would remain with a party that is regulated by the Commission.

13.

The incumbent cable distributors further submitted that it would now be appropriate for the Commission to direct the CISC to consider the circumstances under which charges should apply for the use of inside wire in MUDs and the amount of such charges. The incumbents believe that progress by the CWCISC working group on the matters of facility access, network integrity and customer service intervals would be significantly enhanced if the Commission were to make an express policy determination in respect of access to the demarcation point in MUDs. The incumbents believe that no licensee should be required to grant another licensee access to its panel box. They further submitted that the CISC should be directed to complete its work on disconnection procedures and service intervals within four months of the Commission's decision on the CCTA's application.

14.

The new entrants opposed the CCTA's application. Generally, the new entrants suggested that section 10(3) of the regulations should be given a plain language interpretation, and that the landlord or owner of a MUD should be the party who purchases the wire. They submitted that the CCTA's proposal that there be no ownership transfer represents an attempt by incumbents to retain control of a facility that has bottleneck characteristics.

15.

They further submitted that the CCTA's proposal should be rejected since it ignores the industry trend towards customer ownership. They also argued that it leaves the issue of assigning value in MUDs unresolved; is based on a leased access model previously rejected by the Commission; makes no business sense; leaves open the possibility of the cable company reclaiming the wire; and increases risk of cable companies signing exclusive contracts.

16.

The new entrants further submitted that the Commission must ensure their efficient and non-discriminatory access to the incumbent cable distributors' panel boxes or other facilities located where the inside wire connects to the demarcation point. They argued that the Commission must also extend the winback restrictions to make these restrictions effective in a MUD environment.

17.

The building owners and building managers who offered comments on this matter submitted that the CCTA had failed to provide justification for the amendments and that its application should be dismissed. They proposed that section 10 be amended to require that the inside wire be offered for purchase by the owner of the property at a reasonable price.

18.

Friends of Canadian Broadcasting strongly opposed the CCTA's request. This organization urged the Commission to take the opportunity afforded by this review to reaffirm its commitment to end-user choice, including specifically the option to purchase the inside wire.
  Commission's position with respect to the CCTA's non-interference model

19.

The Commission considers that the CCTA's proposal has merit. The Commission has reached this determination, notwithstanding the arguments raised by interveners, and despite the Commission's very serious concerns about the apparent non-compliance by the CCTA's membership with existing regulations. In the Commission's view, the proposal represents a clear acknowledgement by the cable industry of the Commission's underlying concern that continued control by incumbents of inside wiring constitutes a major barrier to competition and consumer choice.

20.

The Commission suggests that considerable time and resources might have been saved had the CCTA come forward with its non-interference proposal as part of the process that led to creation of the new regulations in 1997. While late in coming, the cable industry's willingness to accept a requirement not to interfere with or restrict a subscriber's use of the inside wire would achieve the Commission's purpose of ensuring access to inside wiring by competing broadcasting distributors. It would also eliminate what the cable industry contends, and the Commission agrees, is a transfer regime that can lead to unnecessary inconvenience and annoyance for subscribers and providers alike.

21.

The Commission sees further benefit in a non-interference model, in that it would eliminate the need, in single-unit dwellings, to ascertain whether the homeowner or the licensee owns the inside wire. As noted by the CCTA, the non-interference model would also be preferable to the transfer regime currently in place because it would address concerns respecting legal liability for abandoned wiring.

22.

Accordingly, the Commission proposes to amend section 10 of the regulations by replacing the current text with that set out in the appendix to this notice. In a later section of this notice, the Commission announces the procedures to be followed by those wishing to submit written comments on the proposed amendment.

23.

The proposed amendment to the regulations would permit a charge for the use of inside wire. The Commission notes in this regard that the cable industry has generally advocated a charge only for the wiring installed within MUDs, and even then, only for wiring that is new or is less than five years old. The cable industry proposal specifically excludes any request for compensation for the wiring installed in single-unit dwellings. The Commission further notes that the CWCISC was negotiating a rate for the wiring newly or recently installed in MUDs just before the suspension of the group's activities. Accordingly, the Commission requests that the CISC cable working group meet to develop an appropriate rate, and that such a rate be in place within two months of the coming into effect of the regulatory amendment proposed herein. Alternatively, if consensus is not reached within that period, the Commission requests that the CISC submit any dispute to the Commission for resolution. The Commission considers that the value proposed by the CCTA in the proceedings leading to PN 1997-150 (i.e. $15 per suite) is a reasonable basis for commencing negotiations on an acceptable lease rate.

24.

The Commission notes that, in light of this proposed amendment and of the other determinations discussed above, further consideration of the application by various new entrant licensees for relief, filed pursuant to section 12 of the Act, is unnecessary.
  Other matters

25.

The Commission notes that a number of other matters were raised during the course of this proceeding, relating to the broader issue of customer access and the promotion of effective competition in broadcast distribution. These are discussed below.
  Access to customer service enclosures

26.

A number of parties claimed that the lack of access to the customer service enclosures (CSEs) and distribution panels owned by the incumbent distributors poses a significant barrier to entry and permits incumbent distributors to frustrate the new entrants' effective servicing of newly acquired customers.

27.

CSEs are secured (locked) metal boxes that are usually attached to the exterior of a single-unit dwelling and serve as the point of interconnection between the inside wire and the serving company's external distribution plant. They serve the same purpose as the larger distribution panels housed in MUDs. Access to these locked enclosures is a highly contentious issue and is among the matters addressed in the fourth of the principles enunciated by the CCTA in its proposal.

28.

In PN 1997-150 that accompanied the new regulations, the Commission noted that these enclosures belong to the cable licensees. Although the Commission has not compelled these licensees to offer new entrants access to these panels and enclosures, it agrees that such access is sometimes necessary. It is possible that the CCTA's fourth principle is necessitated by incidents where these enclosures have been opened without authorization, either as a matter of course or where the incumbent has failed to appear at a pre-arranged appointment.

29.

The Commission understands that, in the case of some undertakings, licensees permit access to their CSEs without requiring a co-ordinated visit by a member of their staff. The Commission expects licensees to ensure that this practice continues where it has been implemented. At the same time, the Commission reminds all parties that they must respect the integrity of property they neither own nor control. In light of the importance of respecting the integrity of this equipment, but also with a view to ensuring expedient transfer of service in a competitive environment, the Commission considers that further measures are required.

30.

Accordingly, in order to facilitate timely joint visits for transferring service, all licensees are required to accommodate requests by other distributors for access to CSEs or distribution panels within 24 hours of receiving such a request and to provide them with a 2-hour appointment window. In reaching its decision to introduce this policy requirement, the Commission has taken into consideration the requirement's impact on distribution undertakings of differing size and resources.
  Winback restrictions

31.

A second collateral issue raised in this proceeding relates to the allegation that incumbent providers are able to circumvent the Commission's winback policy, particularly in the case of MUDs. The new entrants argued that when they claim a customer in a MUD and notify the incumbent provider to cancel service, other tenants or occupants of the building are often mass marketed by the incumbent.

32.

In the Commission's view, this tactic does not involve the direct marketing of the customer who has cancelled service, and thus falls outside the scope of the winback restrictions. Nevertheless, given the state of competition in broadcast distribution, the Commission considers that measures are necessary to prohibit the use of customer information for sales and marketing purposes following a cancellation. The Commission notes that, in the telecommunications context, it has required the establishment of carrier services groups (CSGs) in order to prevent the use of competitive information in a manner that would confer an unfair and ultimately anti-competitive advantage on incumbents. The Commission recently required cable companies to establish CSGs for handling information with respect to Internet services and Internet service providers.

33.

Consistent with that approach, each of Rogers Communications Inc., Shaw Communications Inc., Vidéotron ltée and Cogeco Câble Canada inc. is required to establish a services group that isolates competitively sensitive customer/competitor information from the sales and marketing function. The Commission considers that the following information, at least, should be handled through the services group when received from a competing licensee or its agent:
 
  • billing name and address;
  • choice of licensee;
  • date of request; and
  • transfer date.

34.

All other incumbent cable licensees are required to develop and have in place, within two months of the coming into effect of the regulatory amendment proposed herein, a non-disclosure agreement that the licensee shall enter into with all competing licensees in respect of the handling of such information. The Commission requests parties, through the CISC process, to develop a standardised form for such agreements.
  Call for comments

35.

The Commission invites written comments on the proposed amendment to the regulations appended to this notice. The Commission will accept comments that it receives on or before 10 July 2000.

36.

The Commission will not formally acknowledge written comments. It will, however, fully consider all comments and they will form part of the public record of the proceeding, provided that the procedures for filing set out below have been followed.
  Procedures for filing comments

37.

Interested parties can file their comments on paper or electronically. Submissions longer than five pages should include a summary.

38.

The "hard copy" should be sent to the Secretary General, CRTC, Ottawa, K1A 0N2.

39.

Parties wishing to file electronic versions of their comments can do so by eMail or on diskette. The Commission eMail address is procedure@crtc.gc.ca

40.

Electronic submissions should be in the HTML format. As an alternative, those making submissions may use "Microsoft Word" for text and "Microsoft Excel" for spreadsheets.

41.

Please number each paragraph of the comment. In addition, please enter the line ***End of Document*** following the last paragraph. This will help the Commission verify that the document has not been damaged during transmission.

42.

The Commission will make comments filed in electronic form available on its web site at www.crtc.gc.ca in the official language and format in which they are submitted. This will make it easier for members of the public to consult the documents.
  Examination of public comments and related documents at the following Commission offices during normal business hours
  Central Building
Les Terrasses de la Chaudière
1 Promenade du Portage, Room G-5
Hull, Quebec K1A 0N2
Tel: (819) 997-2429 - TDD: 994-0423
FAX: (819) 994-0218
  Bank of Commerce Building
1809 Barrington Street
Suite 1007
Halifax, Nova Scotia B3J 3K8
Tel: (902) 426-7997 - TDD: 426-6997
FAX: (902) 426-2721
  405 de Maisonneuve Blvd. East
2nd Floor, Suite B2300
Montréal, Quebec H2L 4J5
Tel: (514) 283-6607 - TDD: 283-8316
FAX: (514) 283-3689
  55 St. Clair Avenue East
Suite 624
Toronto, Ontario M4T 1M2
Tel: (416) 952-9096
FAX: (416) 954-6343
  Kensington Building
275 Portage Avenue
Suite 1810
Winnipeg, Manitoba R3B 2B3
Tel: (204) 983-6306 - TDD: 983-8274
FAX: (204) 983-6317
  Cornwall Professional Building
2125 - 11th Avenue
Room 103
Regina, Saskatchewan S4P 3X3
Tel: (306) 780-3422
FAX: (306) 780-3319
  Scotia Place Tower Two
19th Floor, Suite 1909
10060 Jasper Avenue
Edmonton, Alberta T5J 3R8
Tel: (780) 495-3224
FAX: (780) 495-3214
  530-580 Hornby Street
Vancouver, British Columbia V6C 3B6
Tel: (604) 666-2111 - TDD: 666-0778
FAX: (604) 666-8322
  Secretary General
  This notice is available in alternative format upon request, and may also be viewed at the following Internet site: http://www.crtc.gc.ca
 

 

JUS-601743

(SOR/DORS)

REGULATIONS AMENDING THE BROADCASTING DISTRIBUTION REGULATIONS

AMENDMENT

1. Section 10 of the Broadcasting Distribution Regulations1 and the heading before it are replaced by the following:

Inside Wire

10. (1) A licensee that owns an inside wire shall, on request, permit the inside wire to be used by a subscriber, by another licensee, or by a broadcasting undertaking in respect of which an exemption has been granted, by order under subsection 9(4) of the Act, from the requirement to obtain a licence.
(2) The licensee that owns an inside wire may charge a just and reasonable fee for the use of the wire.
(3) The licensee that owns an inside wire must not remove it from a building if a request for the use of the wire has been made and is pending under subsection (1), or while the wire is being used in accordance with that subsection.

COMING INTO FORCE

2. These Regulations come into force on the day on which they are registered.
_____________________________

1SOR/97-555

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