ARCHIVED - Broadcasting - Commission Letter to Rogers Cable Inc. Alleging a Breach ofSection 9 of the Broadcasting Distribution Regulations by Pacific Place Cable Ltd.
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LetterOttawa, 7 April 2000
Our File: CCB# 980728CC085L-3
Pamela Dinsmore and
Jon Markoulis
Dear Ms. Dinsmore and Mr. Markoulis: On 10 July 1998, Rogers Cable Inc. (Rogers) filed a complaint against Pacific Place Cable Ltd. (Pacific Place Cable) alleging that Pacific Place Cable had entered into an exclusive agreement to supply cable television services to a multi-unit dwelling building called the Europa owned by Henderson Development (Canada) Ltd. (Henderson) located at 505 Abbott Street in Vancouver. Rogers argued that the agreement constituted an undue preference contrary to section 9 of the Broadcasting Distribution Regulations (the Regulations). Positions of Parties In its complaint to the Commission, Rogers noted that on 6 June 1990, Henderson's predecessor, Interville, purchased from Concord Pacific Holdings Ltd. (Concord Pacific), now Pacific Place Holdings Ltd. (Pacific Place Holdings), a parcel of land located at the International Village lands in the City of Vancouver. Article 9 of the Purchase Agreement granted Concord Pacific the exclusive right to supply, or designate the supplier of, cable television services to Henderson's multi-unit dwelling. On 27 April 1998, Henderson wrote to Pacific Place Holdings requesting that Rogers be permitted to provide cable service to the Europa. That request was denied. In a letter dated 11 May 1998, Concord Pacific noted that "[a]fter reflecting upon the competitive offerings of Rogers and PPC [Pacific Place Communications], and possibly other Vancouver broadcasting distribution undertakings, Interville [Henderson's predecessor] chose to contract with PPC." In this same letter, Concord Pacific stated that it "considers neither itself nor Henderson is under any obligation to provide access to Rogers or any other broadcasting distribution undertaking to service the Henderson Building." Rogers pointed out that in Public Notice CRTC 1997-150, dated 22 December 1997, the Commission gave examples of circumstances that could constitute instances of undue preference or disadvantage. One such instance was the following:
Rogers stated that since the Henderson building is under construction, it is technically feasible that Rogers' cable be installed at this time. Pacific Place Cable denied that it had breached section 9 of the Regulations and stated that the dispute is between Henderson and Concord Pacific Group Inc. and is a matter involving private contractual rights. It alleged that it is inappropriate for Rogers to request that the Commission determine the enforceability of the contract. Pacific Place Cable stated that Concord Pacific and Henderson entered into an agreement in 1990 for the sale of the property in Vancouver and that agreement set out the terms and conditions of the transaction. The rights and obligations that were incurred by Concord Pacific were reflected in the amount that was paid by Henderson. One of the obligations that Concord Pacific accepted was to provide communications services to the Europa, which was, at the time, approximately one-half completed. Pacific Place Cable alleged that Henderson was trying, through the subterfuge of a complaint by Rogers, to terminate an otherwise valid agreement. Rogers clarified that its concern was not about the agreement between Henderson and Concord Pacific, but that Pacific Place had subsequently accepted Concord Pacific's designation as the exclusive supplier of cable television services to the residents of the Europa. Rogers maintained that it is the acceptance of this exclusive arrangement that constitutes the conferral of an undue preference on Pacific Place Cable, contrary to section 9 of the Regulations. Rogers sought as a remedy that, as a condition of providing service to the residents of the Europa, the Commission require Pacific Place Cable to ensure that all residents of the building have access to cable television services from a broadcast distribution undertaking of their choice. Pacific Place Cable disagreed with Rogers' position that the subsequent acceptance by Pacific Place Cable of Concord Pacific's designation constitutes an undue preference. It argued that section 9 of the Regulations does not provide for any such interpretation since it is the licensee that is prohibited from giving the undue preference. Pacific Place Cable asserted that agreements that were concluded in accordance with corporate decisions and made prior to the coming into force of the CRTC regulations cannot in any way constitute subversion of a Commission policy or regulation. The Commission's Decision In Public Notice CRTC 1997-150, the Commission stated its view that, in the case of a multiple-unit dwelling where it is technically feasible to provide competitive access to individual units, an exclusive contract between the building owner and a BDU would generally constitute an undue preference in contravention of section 9 of the Regulations. The Commission considers this complaint to raise a special circumstance in that the exclusive contract between Pacific Place Cable and Henderson is appropriate when examined in the context of the hearing that led to the licensing of Pacific Place Cable. In granting this licence (Decision CRTC 96-224, dated 13 June 1996, which was issued prior to the establishment of the regulations that introduced the undue preference provision set out in Section 9 of the Regulations) the Commission noted the applicant's statement that upon the expiry of the existing contracts with the individual strata councils, they would be free to negotiate with competitors for the provision of cable television services. The applicant stated at the hearing that the typical contract period is five years. Based on its careful consideration of the record, the Commission finds that the specific facts of this case support a denial of Rogers' complaint. The Commission notes that, at the time of licensing, Pacific Place Cable was permitted an exclusive arrangement until the end of the contract period in order to recover its costs. Given the contract period of five years, and the commencement of the exclusive arrangement in May of 1998 (the date of the letter in which Pacific Place Holdings denied Henderson's request to permit Rogers to serve) the exclusive arrangement should terminate in approximately May of 2003. In light of these facts, the Commission does not consider that Pacific Place Cable has conferred an undue preference upon itself in relying upon this prior Commission decision. However, the Commission reiterates its expectation that, following expiry of this exclusive arrangement, other distribution undertakings will be permitted to serve individual suites in the Europa. Sincerely,
Ursula Menke |
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