ARCHIVED - Order CRTC 2000-396
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Order CRTC 2000-396
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Ottawa, 12 May 2000 |
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Joint marketing restrictions retained for Northwestel
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| This order denies a Northwestel Inc. application to lift the prohibition against joint marketing its wireline and wireless services. | |
| Allowing the incumbent telephone company and its affiliates to jointly market those services could be an impediment to companies that wish to compete in the north. | |
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1. |
Northwestel Inc. requested on 8 March 1999 that the Commission remove the prohibition against the company's joint marketing of wireline and mobile wireless telecommunications services. Northwestel's subsidiary, Northwestel Mobility Inc. provides cellular services in Northwestel's service territory. |
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Inuvik TV Limited and Utility Consumers Group (UCG) opposed Northwestel's application. |
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The Commission implemented the prohibitions against joint marketing in Cellular radio – Adequacy of structural safeguards, Telecom Decision CRTC 87-13, dated 23 September 1987 and Rogers Cantel Inc. v. Bell Canada – Marketing of cellular service, Telecom Decision CRTC 92-13, dated 29 June 1992, in order to facilitate competitive entry into the then-newly emerging market for mobile wireless telecommunications services. |
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The Commission noted in Review of joint marketing restrictions, Telecom Public Notice CRTC 97-14, dated 25 April 1997, that the joint marketing restrictions are a series of safeguards designed to prevent a wireline telephone company from conferring on itself or its cellular affiliate an undue preference or advantage, contrary to subsection 27(2) of the Telecommunications Act. These safeguards include: |
| a) a prohibition on joint marketing and advertising; | |
| b) a requirement for neutral customer referrals; | |
| c) a prohibition on the exchange of confidential customer information; and | |
| d) a prohibition on the cross-subsidization of cellular services by wireline services. | |
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Northwestel implemented the joint marketing restrictions stipulated in Regulation of mobile wireless telecommunications services, Telecom Decision CRTC 96-14, dated 23 December 1996, as instructed by the Commission in a letter dated 14 February 1997, following the transfer of its wireless operations to Northwestel Mobility. |
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In Joint marketing and bundling, Telecom Decision CRTC 98-4, dated 24 March 1998, the Commission removed the prohibition against joint marketing of mobile wireless and wireline services by the former Stentor member companies and the independent telephone companies. Northwestel was not a party to the proceeding that led to Decision 98-4, and the joint marketing restrictions continue to apply to the company. |
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Telco says joint marketing won't stifle competition in the north |
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Northwestel submitted that joint marketing of wireline and wireless services may permit more cost effective provisioning of telecommunications services in the north, and satisfy customer demands for one-stop shopping. |
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Northwestel also submitted that joint marketing of its wireline and wireless services could not slow the development of wireless competition in the north, because Northwestel and Northwestel Mobility are small compared with their potential competitors, and customers are already familiar with the names of several potential regional and national competitors. |
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Northwestel argued that competitive conditions in its territory are similar to competitive conditions in the territories of many independent telephone companies, where the framework for local competition has yet to be developed, but where nevertheless the Commission has removed the joint marketing restrictions even though no wireless competitor has entered the market. |
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Northwestel submitted that its terms of service, the fact that Northwestel Mobility is a separate affiliate, and the establishment of a Carrier Service Group pursuant to Northwestel Inc. -Interconnection of interexchange carriers and related resale and sharing issues, Telecom Decision CRTC 98-1, dated 11 February 1998, provide sufficient competitive safeguards and consumer protection with respect to confidential customer information. |
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Northwestel also submitted that the current regulatory costing methodology, and revised intercorporate transactions regime provide sufficient safeguards against anti-competitive cross-subsidies by Northwestel to Northwestel Mobility. |
| Interveners offer reasons to retain prohibition of joint marketing | |
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Inuvik and UCG submitted that the joint marketing restrictions on Northwestel should be removed only when: |
| a) regulatory frameworks are in place supporting local and long distance wireline competition; | |
| b) barriers to entry have been eliminated with the development of conditions for interconnection, unbundling, local number portability and the implementation of co-location tariffs; and | |
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c) there is effective competition in both the wireless and the wireline markets in Northwestel's service territory. |
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The Commission notes, based on the record, that there is no effective competition in the wireless or wireline markets in Northwestel's territory. In fact, regulatory frameworks for local and long distance competition have yet to be established. |
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The Commission is of the view that, in the context described above, allowing Northwestel to jointly market its wireline and its affiliate's wireless services could make it more difficult for wireless competitors, and wireline competitors (once the appropriate regulatory frameworks are in place) to gain market share. Lifting the joint marketing restrictions could have the effect of slowing the development of competitive markets for both wireless and wireline services. |
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The Commission recognizes that joint marketing of wireline and wireless services could permit more cost effective provisioning of both wireline and wireless services in Northwestel's service territory. However, these possible benefits of joint marketing are not sufficient to offset the negative effects on the development of competitive markets. |
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Secretary General |
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This document is available in alternate format upon request and may also be examined at the following Internet site: http://www.crtc.gc.ca |
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