ARCHIVED - Broadcasting Decision CRTC 2003-24

Broadcasting Decision CRTC 2003-24

Ottawa, 24 January 2003

Complaint by VDN Cable Inc. against Vidéotron ltée alleging failure to provide access to Vidéotron's Customer Service Enclosures

Counter complaint by Vidéotron ltée against VDN Cable Inc. alleging non-authorized access by VDN Cable Inc. to Vidéotron's Customer Service Enclosures

With respect to a complaint filed by VDN Cable Inc. against Vidéotron ltée, the Commission finds that Vidéotron ltée failed to act in accordance with the requirements set out in section 10 of the Broadcasting Distribution Regulations and with Commission policies related to providing access to its customer service enclosures.

With respect to the counter complaint filed by Vidéotron ltée against VDN Cable Inc., the Commission finds that VDN Cable Inc. failed to comply with Commission policies related to the ownership and integrity of customer service enclosures.

The complaints

1.

This decision deals with complaints relating to a dispute that began in January 2002 regarding access by VDN Cable Inc. (VDN) to customer service enclosures (CSEs) owned by Vidéotron ltée (Vidéotron) in multiple unit dwellings (MUDs). CSEs are locked metal boxes that serve as the point of interconnection between the inside wire of individual dwelling units and a broadcasting distribution undertaking's (BDU) external distribution plant. Access to the CSE is necessary to change the BDU from which individual subscribers receive their service. In some instances, new entrants install their own CSE in buildings to facilitate transfers to their distribution systems.

2.

The parties to the complaints operate licensed cable BDUs. They compete with each other in the Montréal area.

3.

VDN was licensed in 1997 and is controlled by Mr. Philip Gale who owns 70% of VDN's shares. VDN's subscriber base consists of approximately 7,000 subscribers in the Montréal area.

4.

Vidéotron is a wholly owned subsidiary of Quebecor Media Inc.¹ Vidéotron's subscriber base is in excess of 700,000 subscribers in the Montréal area.

VDN's complaint against Vidéotron

5.

On 30 January 2002, VDN filed a complaint with the Commission alleging that Vidéotron was contravening the Commission's regulations and policies by restricting competitive access to Vidéotron's CSEs. VDN submitted that, since the beginning of 2002, it had experienced increased difficulty in obtaining access to Vidéotron's CSEs and inside wire. It further stated that, since 7 January 2002, Vidéotron had ignored approximately half of the requests submitted by VDN for disconnections of subscribers from Vidéotron service.

6.

As a specific instance, VDN cited the situation at the Westmount Square Residential Complex (Westmount Square). VDN submitted that Vidéotron had, without any explanation, refused to perform any disconnection after having received proper notification by VDN. VDN also alleged that, on the same day that Vidéotron was refusing to perform the requested disconnections, Vidéotron's sales department started a direct marketing campaign targeting the Westmount Square residents. VDN argued that the campaign was in direct violation of the Commission's policy set out in Revised policy concerning inside wire regime; Call for comments on proposed amendments to section 10 of the Broadcasting Distribution Regulations, Public Notice CRTC 2000-81, 9 June 2000 (Public Notice 2000-81), which requires that sales staff and technical staff performing transfers for competitive service providers be kept separate.

7.

VDN also argued that Vidéotron was directly marketing customers who had already asked to be transferred to VDN, in violation of CRTC Letter Decision CISC Dispute - Rules Regarding Communication Between the Customer and the Broadcasting Distribution Undertaking, 1 April 1999 (the Winback Rules).

8.

In VDN's view, Vidéotron used the delay created by its refusal to do the disconnections as a means to discredit VDN and thereby to convince customers to change their minds and remain with Vidéotron's service. VDN requested that the Commission intervene and order Vidéotron to fulfil its obligations in this matter under Public Notice 2000-81.

Vidéotron's reply to VDN's complaint

9.

Vidéotron denied all the allegations set out by VDN in its complaint. Further, Vidéotron submitted that it was fulfilling all of its obligations under Public Notice 2000-81. Vidéotron further argued that there was not a sufficient case before the Commission to justify an order that Vidéotron fulfil its obligations under Public Notice 2000-81.

CSE Access

10.

In its response letter dated 13 February 2002, Vidéotron acknowledged that it had not fulfilled VDN's requests for disconnections at Westmount Square. Vidéotron referred the Commission to a complaint filed on the same day alleging unauthorized access by VDN to Vidéotron's CSEs. Vidéotron's complaint against VDN is addressed later in this decision.

11.

Vidéotron stated that its policy was not to allow unauthorized access to its CSEs by competing BDUs. Vidéotron submitted that such denial of access was based on the Commission's approval of the cable industry position as set out in New Regulatory Framework for Broadcasting Distribution Undertakings, Public Notice CRTC 1997-25, 11 March 1997 (Public Notice 1997-25) and in Broadcasting Distribution Regulations, Public Notice CRTC 1997-150, 22 December 1997 (Public Notice 1997-150), which expressly excludes a CSE from the definition of inside wire. In Vidéotron's view, the Commission's policy set out in Public Notice 2000-81 is clear and means that Vidéotron retains ownership of CSEs. Vidéotron considered that co-operation with VDN was possible only if the integrity of its property was respected.

12.

Vidéotron acknowledged, however, that mistakes can occur and gave explanations for two cases. First, it cited a case where the call asking for a disconnection had been taken by a new employee at the Hull call centre who had not sent the form to the Vidéotron customer service group (CSG), the party within Vidéotron that was responsible for the disconnection. In the second case, a disconnection had been performed on 15 January 2002. A second fax was received on 28 January 2002 and another technician was sent the following day. The technician discovered that, although the service had been disconnected, the end of the wire had been left inside Vidéotron's CSE, thus preventing VDN from connecting the customer to its service.

13.

Vidéotron noted that, according to its logs, all requests for disconnections had been performed except in the case of Westmount Square, the complex that was the subject of the counter complaint that Vidéotron had filed against VDN on 13 February 2002. Vidéotron further added that, if VDN were to find customers that Vidéotron had not processed other than those at Westmount Square, Vidéotron's management would ensure that all such customers were disconnected within 24 hours.

Winback Rules

14.

Vidéotron submitted that it had a strict procedure regarding subscriber winback. It stated that if a person being called stated that he or she was a recent subscriber to a competing BDU, Vidéotron's staff was to apologize for having called and terminate the conversation immediately.

15.

Vidéotron acknowledged that, in the case of Westmount Square, its sales and marketing department had been active early in January 2002. However, it also stated that it had put in place a team of inspectors to identify which MUDs had become particularly vulnerable to competition. According to a report from its sales and marketing staff, no improper winback activities had taken place at Westmount Square.

16.

Vidéotron also submitted that its CSG had not provided its client lists to outside parties. Indeed, Vidéotron stated that it is precisely because its CSG did not communicate the addresses of clients leaving Vidéotron to its sales staff that its sales department may inadvertently have contacted some of VDN's new customers.

Vidéotron's complaint against VDN

17.

On 13 February 2002, Vidéotron filed a counter complaint against VDN related to the situation at Westmount Square. Vidéotron alleged that VDN had violated Vidéotron's private property by opening Vidéotron's CSEs at Westmount Square. Vidéotron indicated that, on 4 February 2002, it became aware that some of its customers had been disconnected from its CSEs, and that the inside wire related to those customers had been transferred to VDN's CSE. Vidéotron provided a list of 46 apartments from which the inside wire had been transferred to VDN's CSE without Vidéotron's authorization.

VDN's reply to Vidéotron's complaint

18.

VDN acknowledged that it had performed certain disconnections at Vidéotron's CSEs. It indicated that it undertook such actions only after Vidéotron had stopped responding to VDN's requests for disconnections at Westmount Square during the week of 7 January 2002.

19.

VDN submitted that, even though it had performed certain disconnections, it did not damage property belonging to Vidéotron in doing so. VDN further indicated that it had never disconnected a Vidéotron customer without first providing proper notice to Vidéotron, and without first waiting to confirm that Vidéotron was not going to fulfil its responsibilities under the regulations to perform the disconnection.

20.

VDN submitted that the most important issue to be addressed is whether consumers are able to get access to the service provider of their choice. It argued that the actions it took were designed to fulfil the wishes of the 46 tenants involved in the least intrusive manner possible.

The Commission's analysis and determinations

Relevant CRTC regulations and policies

21.

The Commission considers that the following sections of the Broadcasting Distribution Regulations (the Regulations) and its policy documents are relevant to the complaints that are the subject of this decision.

22.

Section 1 of the Regulations defines inside wire as follows:

"inside wire" means the wire that is used by a distribution undertaking for the distribution of programming services that extends from the demarcation point to one or more terminal devices inside a subscriber's residence or premises. It includes the outlets, splitters and faceplates that are attached or connected to the wire but does not include a secured enclosure that it used to house the wire and that is attached to the exterior wall of a subscriber's premises, an amplifier, a channel converter, a decoder or a remote control unit.

23.

Section 10.(1) of the Regulations states:

A licensee that owns an inside wireshall, 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.

(.)

24.

Paragraphs 28, 29 and 30 of Public Notice 2000-81 state:

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 principle² 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.

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.

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.

VDN's complaint against Vidéotron

Breach of section 10 and related policies

25.

Section 10 of the Regulations states that a licensee that owns an inside wire shall permit the inside wire to be used by a subscriber and another licensee. The policy on access to CSEs set out in Public Notice 2000-81 clearly states that all licensees are required to accommodate transfer requests by other distributors for access to CSEs within 24 hours of receiving such a request.

26.

The Commission's determination in this case takes into account Mandatory Order issued pursuant to subsection 12(2) of the Broadcasting Act against Vidéotron Ltée and its subsidiaries, Broadcasting Decision CRTC 2002-299, 9 October 2002 (Decision 2002-299). In that decision, the Commission found that the 8 February 2002 sale of inside wire in certain large MUDs by Vidéotron to Câblage QMI inc., whatever its other intended legal effects, did not allow Vidéotron to escape its obligations pursuant to the Regulations and, specifically, to section 10 thereof and related policies implementing the obligations.

27.

Therefore, while Vidéotron may be correct in stating that the CSE does not fall within the definition of inside wire as set out in paragraph 88 of Public Notice 1997-25 and paragraph 90 of Public Notice 1997-150, Vidéotron is the owner of the CSE and the responsible party to ensure that access is provided to BDU competitors pursuant to the terms of Public Notice 2000-81.

28.

The Commission acknowledges the reasons given by Vidéotron for not having proceeded with VDN's requests for disconnections at Westmount Square. It further notes that, on the same day that it filed its response to VDN's complaint, Vidéotron filed its own complaint alleging that VDN had obtained unauthorized access to Vidéotron's CSEs. Vidéotron's counter complaint is dealt with later in this decision.

29.

The Commission considers that neither of the reasons provided by Vidéotron justifies a breach of section 10 of the Regulations or the failure to comply with the policy set out in Public Notice 2000-81 requiring incumbents to provide access to their CSEs to competing BDUs.

30.

While the Commission considers that VDN has not provided adequate evidence to support its allegation that half of its disconnection requests were not honoured by Vidéotron, the record of this proceeding demonstrates that none of the disconnection requests for Westmount Square were implemented by Vidéotron.

Conclusion

31.

The Commission finds that Vidéotron has failed to act in accordance with section 10 of the Regulations and the policy set out in Public Notice 2000-81. The requirements to provide access to its CSEs and inside wire to a competitive BDU upon receipt of appropriate notice are clear.

32.

Vidéotron is required to report in writing, to the CRTC, within 15 days of the decision, on the measures it has put in place to ensure that competitive BDUs are accorded the required access to its inside wire and CSEs.

The Winback Rules

33.

The purpose of the Winback Rules is to prevent incumbent cable companies from direct marketing customers who have given notice of their intention to cancel basic cable service. The prohibition is in effect from the date of receipt of notice to terminate and for a period of ninety days from the date of disconnection of basic cable service.

34.

VDN submitted that, on the same day that Vidéotron was refusing to perform the requested disconnections at Westmount Square, Vidéotron's Sales Department began a direct marketing campaign targeting those residents.

35.

Vidéotron denied that improper winback activities took place and stated that it had a strict procedure on the matter.

36.

In light of the above, and based on the record of the proceeding, the Commission is of the view that there is insufficient evidence to support a finding that Vidéotron has directly marketed customers who had notified their intention to cancel basic cable service.

37.

The Commission, however, remains concerned with Vidéotron's practice of using inspectors to identify MUDs that have become particularly vulnerable to competition. In the Commission's view, such a practice may open the possibility of identifying a way to bypass the Winback Rules, which preclude the CSG from disclosing disconnections to the sales and marketing department.

Conclusion

38.

The Commission finds that there is insufficient evidence on the record to support a finding that Vidéotron has directly marketed customers who have given notice of their intention to cancel basic service. However, in light of concerns about the use of inspectors to identify MUDs vulnerable to competition, Vidéotron is required to submit a written report to the Commission within 15 days of this decision. The report must set out the measures that Vidéotron has put in place to ensure that its inspectors do not breach the winback provisions set out in Public Notice 2000-81.

Paragraph 33 of Public Notice 2000-81

39.

Paragraph 33 of Public Notice 2000-81 requires Vidéotron to establish a CSG that isolates competitively sensitive customer/competitor information from the sales and marketing function of the company.

40.

VDN alleged that, at Westmount Square, Vidéotron's CSG and its sales department were working together. For example, VDN stated, in its letter dated 25 February 2002, that it was Vidéotron's sales department that alleged that there was an exclusive agreement between VDN and the owner of Westmount Square. This allegation led to Vidéotron's refusal to undertake disconnections that were the responsibility of its CSG.

41.

For its part, Vidéotron stated that no client list had been communicated to those outside the CSG. Vidéotron further stated that it was precisely because its CSG did not communicate the addresses of clients that its sales department inadvertently contacted VDN customers. As mentioned in the previous section, the Commission is of the view that the use of inspectors in MUDs may be a way to by-pass the Winback Rules and obtain confidential information, and has asked Vidéotron to submit a report indicating how it respects the provisions of the Winback Rules.

Conclusion

42.

In light of the above, the Commission finds that the record does not establish non-compliance by Vidéotron with the policy set out in Public Notice 2000-81 requiring Vidéotron to ensure that competitively sensitive customer/competitor information be isolated from its sales and marketing operations.

Vidéotron's complaint against VDN

43.

The evidence on the record of this proceeding demonstrates that VDN opened Vidéotron's CSEs at Westmount Square without proper authorization. Such action was contrary to the policy established in Public Notice 2000-81.

44.

VDN argued that its actions came as the result of Vidéotron's own breach of the policy set out in Public Notice 2000-81, namely its failure to provide access to its CSEs within 24 hours after receiving notice from VDN. VDN declared that it did "not damage any Vidéotron property nor ever disconnected a Vidéotron customer without first providing proper notice to Vidéotron."

45.

The Commission considers that the circumstances at Westmount Square did not justify VDN's actions and did not give it the right to open Vidéotron's CSEs. It considers it unacceptable that competing BDUs avail themselves of self-help remedies that are inconsistent with the Commission's regulations and policies. The Commission has further established procedures that allow interested parties to bring to the Commission's attention alleged instances of inappropriate behaviour and thereby seek corrective action. In this case, the actions of the parties took place outside those established mechanisms.

Conclusion

46.

Earlier in this decision, the Commission concluded that Vidéotron's unilateral decision to cease completing disconnections after having been properly requested to do so by VDN was inappropriate and not consistent with the process set out in Public Notice 2000-81.

47.

While it appears that VDN's action would not have occurred in the absence of Vidéotron's own inappropriate behaviour, the Commission finds that this does not justify VDN's failure to comply with the relevant policies regarding the ownership and integrity of CSEs when it performed disconnections without authorization from Vidéotron.

Other matters

48.

In accordance with Commission policy, all correspondence related to these complaints, other than confidential information, shall be placed on the public file.

Secretary General

2 All licensees will refrain from damaging another licensee's distribution system, cable drops, customer service enclosures and panel boxes