ARCHIVED - Broadcasting - Commission Letter to Torstar Corporation Alleging Breaches ofSections 21(3) and 9 of the Broadcasting Distribution Regulations Against Cogeco Cable Inc.
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LetterOttawa, 31 May 2000
Our File: CCB #990412CC326L
Mr. David C. Wetherald and
Mr. Christian Jolivet Re: Complaint by Torstar Corporation Alleging Breaches of Sections 21(3) and 9 of the Broadcasting Distribution Regulations Against Cogeco Cable Inc. Dear Mr. Wetherald and Mr. Jolivet: On 9 April 1999 Torstar Corporation ("Torstar"), filed a complaint against Cogeco Cable Inc. ("Cogeco"), alleging that Cogeco has conferred an undue preference on Rogers Cablesystems ("Rogers"), and subjected Torstar to an undue disadvantage, in violation of section 9 of the Broadcasting Distribution Regulations("the Regulations"). In its initial complaint, Torstar also alleged that Cogeco was not in compliance with its obligation to provide access to third party exempt programming services (Section 21(3) of the Regulations). Torstar, the parent company of Torstar Electronic Publishing, operates an exempt programming service known as Toronto Star Television ("TSTV"). TSTV is an exempt programming service that is distributed on various Toronto-area cable systems. Torstar has requested access to the various Toronto-area cable systems owned by Cogeco serving Oakville and Burlington, Ontario. Cogeco has not provided access to TSTV on the grounds that another exempt programming service, Northern Response Canada ("Northern") was ahead of TSTV under the "first come, first served" policy established in Access Rules for Broadcasting Distribution Undertakings, Public Notice CRTC 1996-60, 26 April 1996. Torstar stated that Cogeco has misapplied the "first come, first served" policy in denying access to TSTV on the grounds that another exempt programming service, Northern, was ahead of TSTV. At the same time, Cogeco continued to distribute the exempt programming service, The Shopping Channel ("TSC"), which is owned by Rogers. As a result, Torstar alleges that Cogeco has conferred an undue preference on Rogers and Northern. Positions of Parties Torstar argued, among other things, that the "first come, first served" requirement was not intended to allow a person to stand indefinitely in the way of other parties who are prepared to proceed. Further, Torstar submitted this requirement should apply not simply to the first person to express interest, but rather to the first person who expresses an interest and is ready, willing and able to provide service in a reasonably expeditious period. Torstar noted that following Northern's expression of interest, dated 23 May 19961, a number of issues had to be resolved to Northern's satisfaction before it was prepared to commit to entering into an access agreement with Cogeco. In contrast, Torstar stated that its expression of interest, dated 26 June 1996, was unconditional and that it would launch within 90 days of finalizing a carriage agreement, would accept carriage on a restricted channel and would agree to pay whatever rate the Commission deemed to be appropriate. Cogeco argued, among other things, that it has complied with the access rules and the Regulations. Cogeco also stated that it has no direct or indirect interest in any of the exempt programming services involved and has no incentive to discriminate with respect to Torstar's service. In its submission to the Commission dated 3 June 1999, Cogeco stated that "Northern was the first interested party to file a request on May 23, 1996. Cogeco gave the opportunity to all interested parties in July 1998 to execute its standard affiliation agreement and Northern was the first party to execute the agreement on January 6, 1999." As part of the Commission's process, TSC and Northern were provided with an opportunity to comment and Torstar was given an opportunity to reply. TSC stated that it was unable to comment on the timing issues related to the addition of a third-party exempt programming service, but stated that Cogeco was carrying both TSC and Northern and has fulfilled the Commission's access requirements. Northern argued that the facts clearly indicate that no undue preference was granted to Northern, nor was an undue disadvantage imposed on Torstar. Among other things, Northern stated that its letter to Cogeco dated 23 May 1996 demonstrates that its expression of interest was subject to Commission decisions that were yet to be released at the time. Northern has stated in the 23 May 1996 letter that "We understand that access decisions will depend on the number of new specialty services that the CRTC licenses, the final rate structure determined for exempt services and the ultimate trigger date for first come first serve applications". Northern stated that it and Cogeco were negotiating in good faith towards reaching an agreement at all times after Cogeco forwarded a draft Affiliation Agreement to Northern, Torstar and other interested parties in 1998. The Commission's Decision The Commission notes that section 21(3) of the Regulations is limited to circumstances where the distribution undertaking in question, or its affiliate, has an ownership interest, directly or indirectly, in the exempt programming undertaking. Given that Cogeco has no interest in TSC, section 21(3) does not apply. However, in Public Notice CRTC 1997-150, dated 22 December 1997, the Commission also indicated that the following circumstance could constitute an undue preference or disadvantage:
The Commission noted that, for example, two cable companies and their affiliates, or two telephone companies and their affiliates, would be of "similar type". TSTV, owned by Torstar, is an "independently-owned exempt programming service". TSC, on the other hand, is owned by Rogers Communications, which is the parent company, and therefore an affiliate, of Rogers Cablesystems. Since Western is a "similar type of entity" to Rogers, in terms of carriage status for Western, TSC is considered to be cable-owned, rather than independently-owned. The Commission notes that in situations where a licensee distributes services of an exempt programming undertaking in which a similar type of distribution undertaking has control of 15% or more of the exempt undertaking, there is no automatic requirement for the licensee to make an equal number of analog channels available for the distribution of the services of other exempt programming undertakings. Such a requirement could be imposed, however, where there is evidence of undue preference or undue disadvantage. Therefore, there is a rebuttable presumption that the distributor make available a channel to at least one independently-owned exempt programming service on a "first come, first served" basis. It is to be noted that the distributor in this case has not attempted to rebut this presumption that is raised by its being a similar type of entity. Turning to whether the "first come, first served" policy has been offended, the record of this proceeding demonstrates that Cogeco received its first expression of interest from a third party exempt service (Northern) on 23 May 1996, approximately one month after the issuance of Public Notice CRTC 1996-60 and prior to Torstar's first expression of interest on 26 June 1996.2 Formal negotiations do not appear to have begun with Northern until 17 July 1998 (when Cogeco sent both Northern and Torstar a draft affiliation agreement). This delay was the result of, among other things, Northern's interest in awaiting the outcome of the Commission's specialty licensing decisions in 1996, the release of the access rates and the time required for Northern to develop its service. The key issue in this case is whether, on the facts, Cogeco's selection and distribution of Northern's, rather than Torstar's, exempt service was in keeping with the "first come, first served" policy established in Public Notice CRTC 1996-60 and if not, whether there has been a breach of section 9. The Commission considers that, while a great deal of time did pass before a third party exempt service was distributed, which may have served the interests of the distributor, the record does not support a conclusion that the delay amounted to a misapplication of the "first come, first served" policy, or to an undue preference or undue disadvantage. Accordingly, the Commission finds that Cogeco is not in breach of section 9. The selection process may have been protracted, but ultimately it did result in the "first come" party actually being given access. While the Commission is satisfied that in this case no undue preference or undue disadvantage has been conferred, it is of the view that clarification of the "first come, first served" policy is required. Accordingly, the Commission has today released Public Notice CRTC 2000-72 to address this matter. Cogeco's Request for Confidentiality Cogeco requested that the information provided as Schedules to its 3 June 1999 response be treated as if it was provided within the context of dispute resolution and, accordingly be kept confidential by the Commission pursuant to subsection 12(5) of the Regulations. Included in the material is an affiliation agreement that contains commercially sensitive information. Torstar did not object to Cogeco's request for confidentiality in its reply. In the circumstances, Cogeco's request for confidentiality is granted. However, it is noted that the information provided by Cogeco included copies of correspondence between either Cogeco and Torstar or Cogeco and Northern. Copies of a number of these documents were also provided by other parties to this proceeding (including an unexecuted "Standard Affiliation Agreement" sent by Cogeco to Torstar). Accordingly, the confidentiality that is being granted does not encompass such documents provided by Cogeco and other parties. In accordance with Commission policy, all correspondence relating to this matter, with the exception of the above-noted material which has been granted confidentiality, will be placed on a public examination file. Sincerely,
Ursula Menke
cc: David Flynn - Northern Response Footnotes1 See letter from Northern dated 23 May 1996, appended to Cogeco's submission to the Commission dated 3 June 1999. 2 Access Rules for Broadcasting Distribution Undertakings, 26 April 1996, which, among other things, addressed certain matters relating to the distribution of exempt programming services. Access Rules for Broadcasting Distribution Undertakings, 26 April 1996, which, among other things, addressed certain matters relating to the distribution of exempt programming services. |
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