ARCHIVED - Broadcasting Decision CRTC 2004-468
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Broadcasting Decision CRTC 2004-468 |
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| Ottawa, 27 October 2004 | |
Complaint by MTS Allstream Inc. alleging breaches of the winback rules by Shaw Communications Inc. |
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| The Commission allows part of the complaint filed by MTS Allstream Inc. (MTS) alleging that Shaw Communications Inc. (Shaw) had breached the Commission's winback rules. Among other things, the winback rules in effect at the time stipulated that, in instances where a customer, either personally or through an agent, contacts an incumbent cable company for the purpose of cancelling service, the company is prohibited, for a period of ninety days, from directly contacting that customer and from offering discounts or other inducements not generally offered to the public. | |
| The Commission dismisses that portion of the MTS complaint alleging that Shaw failed to comply with the Commission's policy requirement that Shaw, as one of the four largest cable companies, establish customer service groups that isolate competitively sensitive customer/competitor information from the sales and marketing function. | |
| Further, the Commission denies the requests by MTS that: a) the Commission introduce regulatory symmetry between the winback rules that apply to broadcasting distribution undertakings and those that apply to telecommunications undertakings; and b) that the Commission give effect to any direction it might make to Shaw pursuant to the MTS complaint by issuing an order that would be enforceable in the same manner as an order of the court, as provided for under section 13 of the Broadcasting Act. | |
The parties |
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1. |
MTS Allstream Inc. (MTS) is the licensee of a Class 1 cable broadcasting distribution undertaking (BDU) authorized to serve Winnipeg and surrounding Manitoba communities. MTS is a wholly-owned subsidiary of Manitoba Telecom Services Inc., a widely-held public company. MTS began operating its cable BDU on 14 January 2003. It offers a broad range of broadcasting services over telephone lines using digital subscriber line (DSL) technology. As of 31 August 2003, MTS' total subscriber base in Winnipeg was approximately 3,800 subscribers. |
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2. |
Shaw Communications Inc. (Shaw) is a public corporation controlled by Mr. J.R. Shaw and family. Shaw is the parent company of Canada's second-largest owner of cable BDUs, including the largest cable BDU in the Winnipeg area, having approximately 149,000 subscribers. |
The complaint by MTS |
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Winback rules |
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3. |
On 19 March 2004, MTS filed a complaint alleging that Shaw had violated the Commission's winback rules then set out in CISC Dispute - Rules Regarding Communication Between the Customer and the Broadcasting Distribution Undertaking, CRTC letter decision, 1 April 1999 (the winback rules). |
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4. |
These rules required incumbent cable companies having 6,000 or more subscribers to refrain, for a period of 90 days, from: |
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5. |
According to MTS, customer service representatives (CSRs) employed by Shaw offered discounts or inducements, having a value of as much as $1,000, to customers who had called Shaw to cancel their cable service. MTS further alleged that the offers were made within the proscribed 90-day period stipulated in the winback rules. MTS added that it was unaware of whether these discounts and inducements were also made available to the general public. |
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6. |
In its 19 March 2004 letter, and in subsequent letters dated 16 April and 7 May 2004, MTS outlined allegations of 83 such breaches of the winback rules. On 6 July 2004, in response to a Commission request dated 28 June2004 that it provide the dates on which the customers had called Shaw to cancel their cable service, MTS filed amended allegations. Specifically, it noted that most of the customers concerned had cancelled service by contacting Shaw verbally, and that any record of the precise dates on which these calls were made would be the property of Shaw. Nevertheless, MTS supplied the Commission with dates that it stated were those either on which the various customers had MTS service installed or on which such service was due to be installed. |
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7. |
Although MTS was unable, in most instances, to provide the dates on which the customers called Shaw to cancel the service, MTS argued that it was reasonable to deduce that customers would have contacted Shaw to cancel their service at or about the time they expected their MTS service to be operational. In support of this argument, MTS indicated that its own CSRs are specifically instructed to advise customers that they must contact their current BDU so that it will stop billing them for service. |
Customer service group requirements |
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8. |
MTS further alleged that Shaw had failed to comply with the Commission's policy requirements concerning the creation of customer services groups (CSGs), as set out in Revised policy concerning inside wire regime; Call for comments on proposed amendments to section 10 of theBroadcasting Distribution Regulations,Public Notice CRTC 2000-81, 9 June 2000 (Public Notice 2000-81). In that notice, the Commission required each of Shaw, Rogers Communications Inc., Vidéotron ltée and Cogeco Câble Canada inc. "to establish a services group that isolates competitively sensitive customer/competitor information from the sales and marketing function". The Commission considered that, at a minimum, information concerning the customer's billing name and address, its choice of service provider, the date of the customer's request to cancel service, and the date that such cancellation was effected, should be handled through the services group when received from a competing licensee or its agent. |
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9. |
MTS claimed that, over the period since it commenced commercial operations in January of 2003, it had not been made aware of, nor had it been directed by Shaw management to establish contact with, a Shaw CSG. It also stated that it had not been provided a non-disclosure agreement by Shaw. |
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Subsequently, as part of this process, Shaw provided MTS with the name of its CSG contact in Winnipeg. However, MTS questioned whether this individual was an appropriate person for MTS to conduct CSG matters with. It alleged that the person Shaw identified as the CSG contact is currently employed by Shaw in an operational capacity and is responsible for areas of business that directly compete with MTS. |
Regulatory symmetry between the winback rules for telecommunications common carriers and cable BDUs; and application of section 13(1) of the Broadcasting Act |
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In its 6 July 2004 letter responding to the Commission's request for additional information, MTS made reference to Call-Net Part VII Application - Promotion of local residential competition, Telecom Decision CRTC 2004-4, 27 January 2004, in which the Commission amended the winback rules applicable to incumbent local exchange carriers (ILECs) by increasing the restriction against contact from three months to twelve months. MTS noted that the Commission was conducting a review of possible changes to the cable BDU winback rules pursuant to Call for comments on proposed changes to the winback rules for broadcasting distribution undertakings, Broadcasting Public Notice CRTC 2003-21, 25 April 2003 (Public Notice 2003-21). MTS requested that the Commission consider using the opportunity afforded by that broadcasting proceeding to bring about regulatory symmetry between the winback prohibitions that apply to ILECs and those that apply to incumbent cable BDUs. |
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In the same letter, MTS noted the time that had elapsed since its original complaint had been filed. It also noted what it described as Shaw's history of non-compliance with the Broadcasting Distribution Regulations (the Regulations). It argued that, in light of these considerations, the Commission should give effect to any decision it might direct to Shaw pursuant to the MTS complaint by issuing an order, one that the Commission would make enforceable in the same manner as an order of the Court, as provided for under section 13(1) of the Broadcasting Act (the Act). |
Shaw's position |
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Winback rules |
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13. |
Shaw's responses to MTS's complaint were set out in letters dated 8 April, 3 May and 17 May 2004, in reply to the letters by MTS dated 19 March, 16 April and 7 May 2004, respectively. In its responses of 8 April and 3 May 2004, instead of filing evidence to counter each of the MTS allegations, Shaw filed general responses in which it grouped the addresses of the customers concerned into the following categories: a) non-published or incomplete addresses; b) addresses where customers were not Shaw's; c) addresses that were duplicates; d) addresses for which Shaw had no record; and e) addresses at which customers had been provided a digital preview promotion widely available to the public. |
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Shaw indicated in its 8 April 2004 response that, of the alleged breaches it was in a position to investigate, the customers concerned had been provided with a digital preview promotion widely available to the public. Specifically, Shaw stated that, through one of its widespread digital promotions, any Shaw customer with the basic analog service was able to obtain, for three or six months, use of a Shaw Digital Customer Terminal (DCT) to preview the new digital programming services and premium services. Shaw maintained that all digital services were offered free in the first month, after which customers purchased the services or packages they desired. Finally, at the end of the six months, customers were required to purchase their DCT or return it to Shaw. These customers continued to pay for the analog service. Shaw stated that these digital promotions were not uniquely available to existing customers calling Shaw to cancel their service, but were offered to about 5,000 Winnipeg customers. |
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In its 3 May 2004 response, Shaw again indicated that, of the alleged breaches it was able to investigate, the customers identified by MTS had been provided a new "digital" promotion that was available to Shaw customers for a limited time, i.e., from mid-March to May 2004. It stated that, through this promotion, Shaw customers with analog service were able to obtain three or six months use of up to three Shaw DCTs to preview the new digital programming services and premium services. digital customers could also obtain additional DCTs to serve multiple TV sets in their homes on a free trial basis. |
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16. |
In both responses, Shaw stated that its digital promotions were designed to increase Shaw's digital penetration and upgrade customers from their present analog service, and were consistent with the broadcasting policy goals of driving digital penetration. Shaw also argued in its responses that, if there were misunderstandings or miscommunications regarding changes in customer accounts, this would have occurred in the case of an extremely small number of the large volume of calls received by its Winnipeg office. Further, Shaw noted that it had taken immediate steps to ensure that its staff understood the circumstances in which promotions could be extended. Shaw failed, however, to identify the specific allegations to which these circumstances applied. |
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17. |
Shaw did not file any comment in response to the alleged breaches raised in MTS' letter of 7 May 2004. In a letter dated 9 July 2004, however, Shaw dealt directly with two of the 83 allegations made by MTS concerning breaches of the winback rules. In one of these two instances, Shaw argued that a promotional offer extended to the customer in question was not contrary to the winback rules. Specifically, it noted that the offer had been made between 10 and 16 January 2004, whereas the date on which MTS service had been installed or was scheduled to be installed fell well after that period, namely on 6 April 2004. In the second instance, Shaw stated that the promotional offer had been made to the resident or residents at an address to which Shaw had not provided cable service for several years. |
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In its 9 July 2004 letter, Shaw also commented on MTS' use of the date on which MTS service was installed or scheduled to be installed at a residence, rather than the date on which a customer called Shaw to cancel service, for calculating commencement of the 90-day restriction period under the winback rules. Shaw argued that the information concerning these dates was either incomplete or based on estimates. Shaw argued that this rendered the facts unclear, thus making it unfair and difficult to claim that it had breached the winback rules. |
Customer service group requirements |
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19. |
In its letter dated 8 April 2004, Shaw responded to the MTS complaint that Shaw had failed to provide the name of a CSG contact with whom it would coordinate the transfer of customers from one company to the other. According to Shaw, it had no record of receiving any correspondence from MTS on this matter. In each of its letters dated 3 May, 17 May and 9 July 2004, Shaw provided the name and telephone number for its CSG contact in Winnipeg. |
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20. |
Shaw added that the Winnipeg CSG contact is Shaw's field service manager responsible for managing service calls, including those concerning the installation and removal of cable service as specified in the work orders received from Shaw's CSG. Shaw noted that the responsibilities of this CSG contact do not include any duties related to Shaw's sales and marketing activities, and that all information is treated as confidential. |
Regulatory symmetry with the Telecom winback rules and section 13(1) of the Act |
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21. |
In its 9 July 2004 letter, Shaw dismissed, as unwarranted, both the proposal by MTS for regulatory symmetry between the winback rules that apply to broadcasting distribution undertakings and those that apply to ILECs, and the request by MTS that the Commission issue an order, enforceable as an order of the court, as part of any remedial action required of Shaw by the Commission pursuant to the MTS complaint. |
The Commission's analysis and determinations |
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Winback rules |
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In Changes to the winback rules for broadcasting distribution undertakings, Broadcasting Public Notice CRTC 2004-62, 13 August 2004 (Public Notice CRTC 2004-62), the Commission concluded the process initiated by Public Notice 2003-21, and announced that it would retain the current 90-day prohibition against action by incumbent cable BDUs to win back customers who have elected to subscribe to the service of a competing BDU. Among other things, the Commission also determined that incumbent cable BDUs would be prohibited from marketing their service in a given multiple unit dwelling for 90 days from the date that a BDU competitor entered into an access agreement with the building owner. However, since the amended winback rules were put in place following the events that gave rise to this complaint, the Commission has considered the complaint under the winback rules as they existed prior to the amendments. |
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23. |
The relevant portions of the Commission's winback rules, as set out in its 1 April 1999 letter decision, read as follows: |
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.the Commission has determined that, as a matter of policy, it will require that incumbent cable companies refrain from the direct marketing of customers who, through an agent, have notified their intention to cancel basic cable service. Such restriction will be in effect from the date of receipt of notice to terminate, and will continue for a period ending ninety (90) days from the date of disconnection of basic cable service. In instances where disconnection of service occurs in advance of the incumbent's receipt of notice of termination, the restriction will operate for ninety (90) days from the date of disconnection. |
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The Commission has also determined that it will require incumbent cable companies to refrain from offering discounts or other inducements not generally offered to the public where customers personally initiated contact with the cable company for the purpose of cancelling basic cable service. This restriction will be in effect from the date of receipt of notice to terminate and for ninety (90) days from the date of disconnection of basic cable service. |
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24. |
In the present case, in order for the Commission to conclude that Shaw has breached the winback rules, it must be satisfied that Shaw offered inducements within the 90-day restriction period and, if so, that the inducements did not meet the Commission's interpretation of "inducements generally offered to the public". |
| Whether Shaw offered inducements to former customers within the 90-day restriction period | |
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25. |
In only two of its more than 80 allegations of breaches by Shaw of the winback rules, was MTS able to provide the Commission with specific information as to the date on which the customer contacted Shaw to cancel service and the date Shaw called the customer to make a promotional offer. The Commission finds that, in each of those two instances, the evidence clearly demonstrates that the promotions were offered within the 90-day restriction period. |
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In each of an additional 28 instances, in support of its position that Shaw's promotions had occurred within the 90-day restriction period, MTS provided the Commission with two dates, namely the date that MTS service was installed or scheduled to be installed and the date that Shaw contacted the customer with a promotional offer. The Commission notes that the circumstances in these 28 cases differ from the clear fact situations of the two previous instances, since MTS was not able to specify the date on which the customer called Shaw to cancel the service. Nevertheless, the Commission considers that the record in this case supports acceptance of the date on which MTS service was installed or was scheduled to be installed as marking commencement of the 90-day restriction period. Specifically, the Commission is satisfied that it is reasonable and fair to infer that, in all of these 28 instances, there would have been a close correspondence between the date on which MTS service was installed or was scheduled to be installed at a customer's residence and the date on which the customer would have called Shaw to cancel Shaw's service. |
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27. |
Based on the record, the Commission concludes that MTS has successfully demonstrated that the 30 allegations mentioned above relate to instances where promotions were made and/or inducements offered within the 90-day restriction period. |
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28. |
The Commission notes that, in all but the two specific cases raised by Shaw in its letter dated 9 July 2004, Shaw chose to file general responses to the various MTS allegations of breaches of the winback rules rather than respond on a case-by-case basis. Nor did Shaw address specifically the issue of the 90-day restriction period. The Commission is of the view that such generalities are insufficient to refute the allegations that Shaw offered inducements to customers within the 90-day restriction period. With respect to the remaining cases, however, the Commission finds that the information provided by MTS was incomplete and did not allow Shaw a fair or reasonable opportunity to respond. The Commission is thus unable to reach a finding in those cases. |
| Whether the inducements offered by Shaw to former customers meet the Commission's interpretation of "inducements generally offered to the public" | |
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29. |
In paragraph 41 of Complaint by Cablevision TRP-SDM Inc. against Cogeco Cable Inc. alleging contraventions of section 9 of the Broadcasting Distribution Regulations, Broadcasting Decision CRTC 2004-4, 14 January 2004, the Commission clarified that, for an inducement to be considered as generally available to the public, it must be broadly communicated: |
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The Commission is, however, concerned that it is Cogeco's apparent practice to inform clients of "generally available" offers only when contacted by them. It is the Commission's view that "generally available" offers should be broadly communicated and would expect Cogeco to ensure that this is the case. |
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30. |
In its letters responding to the MTS complaint, Shaw stated that, according to its records, in those cases where it was able to investigate alleged breaches of the winback rules, it found that customers had been provided "digital preview" promotions that were widely available to the public. However, Shaw did not provide any evidence to support its contention that these offers were, in fact, broadly communicated or otherwise made generally available to the public. |
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The Commission considers that the record in this case does not adequately demonstrate that Shaw's promotions were consistent with the Commission's view of what constitutes generally available offers. General and unsupported assertions from Shaw that its promotions were "generally available" are insufficient to refute the MTS allegations. Accordingly, based on the record of this proceeding, the Commission finds that Shaw has breached the winback rules with respect to the 30 specific instances mentioned above. |
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32. |
The Commission finds that appropriate remedial action to rectify Shaw's contravention of the winback rules is to require Shaw to: |
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CSG requirements |
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33. |
In Public Notice 2000-81, the Commission required Shaw and certain other large cable operators to establish CSGs for the purpose of isolating competitively sensitive customer/competitor information from the sales and marketing function. The Commission required all other incumbent cable licensees to develop non-disclosure agreements that they were then to enter into with all competing licensees for the purpose of handling such information. |
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In a letter dated 17 January 2003, Shaw replied to various questions put by the Commission regarding the steps it had taken to meet the requirements contained in Public Notice 2000-81. The Commission is satisfied that Shaw has established a CSG to ensure the proper handling of competitively sensitive customer/competitor information. |
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With respect to the MTS concern that Shaw had failed to put MTS in touch with a CSG contact in Winnipeg, the Commission notes that, as part of the current proceeding, Shaw has provided information to MTS concerning the Shaw employee in Winnipeg who is responsible for acting as the CSG contact in that city, and considers that this matter has now been satisfactorily addressed. The Commission also considers that the individual identified by Shaw as its CSG Winnipeg contact appears to appropriately fill that role. |
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As for the complainant's concern that Shaw had not entered into a non-disclosure agreement with MTS, the Commission notes that the second of the two CSG policy stipulations contained in Public Notice 2000-81 concerning non-disclosure agreements does not apply to large incumbent cable BDU companies such as Shaw, as inferred by MTS, but rather to other, generally smaller BDUs. Consequently, the Commission considers that Shaw cannot be in breach of the second aspect of the requirements. Further, based on the record of this proceeding, the Commission concludes that Shaw is in compliance with the CSG requirements set out in Public Notice 2000-81, and therefore dismisses this aspect of the complaint by MTS. |
Regulatory symmetry between the winback rules for telecommunications common carriers and cable BDUs; and application of section 13(1) of the Act |
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During this process, MTS proposed that there be regulatory symmetry established between the winback rules that apply to ILECs and those that apply to cable BDUs. As noted above, the Commission recently undertook an extensive public process to examine the winback rules that apply to incumbent cable BDUs, a process that has culminated with certain amendments to those rules as announced in Public Notice 2004-62. The Commission notes that MTS presented its proposal well after the date by which comments were to have been filed regarding the Commission's review of the winback rules. The Commission also considers that its present deliberations concerning the MTS complaint against Shaw are not the appropriate context to deal with a proposal for additional changes to this Commission policy. Accordingly, the Commission denies the MTS proposal. |
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MTS had further requested that, pursuant to section 13(1) of the Act, the Commission make any order it might issue to Shaw pursuant to the complaint an order of the Federal Court or of a superior court of the province. The Commission notes that, in accordance with section 12 of the Act, such an order would first require that there be a public hearing into the matter. The Commission has concluded that the record does not demonstrate the need for such a measure at this time and, therefore, denies this request. |
| Secretary General | |
| This decision is to be appended to the licences. It is available in alternative format upon request, and may also be examined at the following Internet site: www.crtc.gc.ca |
Date Modified: 2004-10-27
- Date modified: