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ARCHIVED - Decision CRTC 2001-630

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Decision CRTC 2001-630

Ottawa, 4 October 2001
Rogers Cable Inc.
St. Thomas and Woodstock, Ontario
2001-0471-1, 2001-0472-9

Regional Cablesystems
Sudbury and Timmins, Ontario
2001-0740-1, 2001-0739-3

Applications processed by
Public Notice CRTC 2001-53
dated 15 May 2001

Rate deregulation for cable systems

1. In Public Notice CRTC 2001-53, the Commission announced that Rogers Cable Inc. had given it notice of proposals for basic service rate deregulation for the Rogers cable systems in St. Thomas and Woodstock, Ontario. The proposals were made pursuant to section 47 of the Broadcasting Distribution Regulations (the regulations).
2. Section 47 of the regulations provides for relief from the application of Part 5 of the regulations, including basic service rate regulation for Class 1 systems (generally systems with more than 6,000 subscribers), if, having satisfied certain procedural requirements, it can be demonstrated that:
1) there is competition in the market, and
2) 5% or more of the licensee's basic service subscribers have been lost as of a given date.
3. However, section 47 also provides that the Commission may suspend or disallow a licensee's proposal for relief from basic service rate regulation. If the Commission has not otherwise suspended or disallowed the proposal, and the tests noted above are met, the licensee would be relieved from the requirements of Part 5 of the regulations, including the regulation of increases in the basic rate of its service, and of its obligation to install and provide basic service to any customer in its licensed service area.
4. Unless the Commission intervenes, the regulations prescribe a period of 60 days from notification until the deregulation takes effect. Since Rogers' proposals for basic service rate deregulation under section 47 were the first such applications to be submitted, the Commission wished to thoroughly examine all of the issues surrounding basic service rate deregulation. It therefore suspended the proposals, and issued Public Notice 2001-53, calling for public comment.
The Rogers applications
5. In support of its request, Rogers filed auditors' reports for the St. Thomas and Woodstock Class 1 systems, confirming that the percentage loss of addresses served in both systems, from those served as of 5 September 1997, is greater than 5%. Percentage losses of addresses served were 17% in St. Thomas and 16.3% in Woodstock. Currently, the St. Thomas and Woodstock systems serve approximately 13,000 and 15,000 subscribers respectively.
6. On 30 March 2001, Rogers notified its customers in St. Thomas and Woodstock of its intention to propose basic service rate deregulation in those communities.
The Regional applications
7. Subsequent to the issuance of Public Notice 2001-53, the Commission received applications for basic service rate deregulation from Regional Cablesystems, for its Class 1 systems in Sudbury (approximately 43,000 subscribers) and Timmins (approximately 12,000 subscribers).
8. In support of its proposals, Regional submitted auditors' reports confirming that the percentage loss of addresses served in both systems, from those served as of 1 December 1998, is greater than 5%. As of 6 June 2001, percentage losses of addresses served in Sudbury were 10.87% and in Timmins were 14.58%.
9. On 19 July 2001, Regional notified its customers in Sudbury and Timmins of its intention to propose basic service rate deregulation in those communities.
10. Consistent with its approach to the Rogers applications, the Commission suspended the Regional filings on 27 July 2001, in order to allow Regional to comment on any issues raised in response to Public Notice 2001-53.
Response to Public Notice 2001-53
11. In response to the public notice, the Commission received five interventions. Two were submitted by individual Rogers subscribers, both in disagreement with the proposal, two in support, and one comment from Vision TV, licensee of the specialty television service Vision TV: Canada's Faith Network. The interventions in support were submitted by the Canadian Cable Television Association (CCTA) and Cogeco Cable Inc. (Cogeco).
12. The individual subscribers expressed concerns related to the level of service that they now receive, and about possible future rate increases, should basic service rate deregulation be allowed to proceed.
13. Both the CCTA and Cogeco supported the applications, noting that Rogers had met the objective tests for basic service rate deregulation which are set out in the regulations. The CCTA added that, in the future, the Commission should suspend or disallow such applications only where there is a substantial concern about whether the objective criteria have been met.
14. Vision TV did not oppose the proposals, but did provide some comments with respect to the implications of basic service rate deregulation for Class 1 cable systems. Vision TV suggested that the Commission should examine a new approach to basic distribution, to reduce the potential for very large basic cable offerings at increasingly high prices. Vision TV suggested instead the development of a "Foundation Tier" - a nucleus of public interest services, provided at a reasonable cost, with other groups of discretionary offerings packaged and priced separately.
Rogers' response to the interventions
15. With respect to the individual subscribers who intervened, Rogers stated that it has improved its service in both St. Thomas and Woodstock, and now offers more services and better quality. Rogers further noted that, while services offering direct-to-home (DTH) and wireless distribution systems are available to consumers in both markets, the number of channels delivered by cable and their cost is comparable to, or better than those of DTH. Rogers also noted that there have been only two increases to its basic service rate since January 1997. One increase went directly to the programming service Newsworld, and one was for the addition of two services (CTV NewsNet and CTV SportsNet).
16. In response to Vision TV's comments, Rogers noted that this proceeding is not the appropriate one to deal with the concept of a "Foundation Tier".
The first test: Demonstration of competition
17. The first part of the test, related to the demonstration of competition, has been met. The Commission indicated in Circular No. 427 (22 December 1997), that it would accept 31 August 1997 as the date on which the basic service of another licensed broadcasting distribution undertaking is available to 30% or more subscribers across Canada.
The second test: Loss of subscribers
18. The Commission is satisfied that the filings by both Rogers and Regional meet the second test set out in the regulations.
The Commission's determination
19. The Commission is satisfied that the filings by Rogers and Regional meet all the requirements of the regulations. The Commission further notes that no interventions raised any concerns about the type or validity of information that was filed.
20. For the reasons set out above, the Commission, by majority vote, hereby lifts the suspension of all of the applications noted above, with the result that the proposed rate deregulation of basic service in all of the affected communites will be allowed.
Related CRTC document
. Public Notice 2001-53 - Rate deregulation by Rogers Cable Inc.
Secretary General
This decision is to be appended to each licence. It is available in alternative format upon request, and may also be examined at the following Internet site: http://www.crtc.gc.ca
 

Dissenting opinion of Commissioner Andrew Cardozo

  Whither the consumer?
  I dissent from the majority as I would have approved the applications by Rogers Cable Inc. (St. Thomas and Woodstock) and Regional Cablesystems (Sudbury and Timmins), only on the condition that we address the issue of "big basic" raised so appropriately in the record of this proceeding. It is important that the Commission neither abandon, nor be seen to be abandoning the interests of the consumer. This is a precedent setting decision and surely many more applications will follow soon.
  I believe the Commission should only de-regulate when it is clear that cable companies would not move to "big basic", i.e. loading up the basic tier with an excessive number of services, possibly the more expensive ones, such that those wanting a minimum number of services would be forced to pay a high amount, while additional optional tiers could be a lot cheaper. At this time, it is clear that competition to cable is growing but is far from perfect or totally ubiquitous. Many consumers do not have the option to switch away from cable, in situations where, for example, apartment tenants are not allowed to install exterior dishes, consumers do not have the appropriate line-of-sight to a satellite or low-income consumers are unable to spare the expenses for installation of a dish. Further, satellite technology has yet to evolve; currently, a consumer can only get one signal at a time in a household, and in homes with more than one television set, either all sets have to be tuned to the same channel or, additional set-top boxes are required for each set at additional cost.
  While the Commission could not have ruled on the matter of big basic in this decision, I would have preferred that a new public process would be launched simultaneously. This would assess the issue of big basic, seek views about the need for action by the Commission and examine options for consumer protection if deemed necessary.
  Consumer interventions
  I especially note the pleas of two intervenors. Basic cable subscriber, Robert Trumbley of St. Thomas said of satellite, "to get any decent level of service you will require a decoder for each television set, I would need three". James and Sandra Rose also of St. Thomas, said, "Please do not allow Rogers the ability to set their own rates, (our) cable bill is already far too much for the service (we) are receiving".
  In my respectful view, we have not ensured that consumers in St. Thomas, Woodstock, Sudbury and Timmins are sufficiently protected when they do not have complete access to competitive distributors.
  For these reasons I respectfully dissent from the majority.

Date Modified: 2001-10-04

Date modified: