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ARCHIVED - Telecom Decision CRTC 2004-23

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Telecom Decision CRTC 2004-23

  Ottawa, 2 April 2004
 

Shaw Communications G.P. v. TELUS Communications Inc. - Violation of bundling safeguards

  Reference: 8622-S9-200312710

1.

The Commission received an application from Shaw Communications G.P. (Shaw), dated 23 September 2003, filed pursuant to Part VII of the CRTC Telecommunications Rules of Procedure, alleging, among other things, that TELUS Communications Inc. (TCI) violated the Commission's bundling rules by offering several services, including local exchange and forborne services, as a "Student Bundle" without an approved tariff. Shaw requested that TCI be directed to cease providing the bundle and to comply on a going-forward basis with all Commission decisions in respect of the bundling of tariff services and promotions.

2.

On 23 February 2004, the Commission advised the parties that it would adjudicate the bundling issue set out in paragraphs (iv), (v) and (vi) of the application on an expedited basis, in accordance with the expedited process established in Expedited procedure for resolving competitive issues, Telecom Circular CRTC 2004-2, 10 February 2004. The Commission advised the parties that the remaining issues raised in the application in paragraphs (i), (ii) and (iii) would be adjudicated through its normal process.

3.

A panel of three Commissioners heard the matter, on 26 March 2004. In addition to the oral component of the proceeding and the 23 September 2003 application, the Commission considered the written submissions from the Canadian Cable Television Association, the Canadian Association of Internet Providers and Call-Net Enterprises Inc. filed on 20 October 2003, 22 October 2003 and 27 October 2003, respectively, TCI's answer of 23 October 2003 and its responses to Commission interrogatories on 1 March 2004 and its summary of 8 March 2004, and Shaw's reply comments of 3 November 2003 and their summary of 8 March 2004.
 

Regulatory framework

4.

In Review of regulatory framework, Telecom Decision CRTC 94-19, 16 September 1994, the Commission stated that the term bundling generally refers to a situation where one rate covered a number of service elements, or where separate rate elements applied to each service element but a number of service elements were aggregated for purposes of applying volume discounts, with the result that the discount available was greater than it would be were the service elements not aggregated.

5.

In GT Group Telecom Services Corp. v. Bell Canada - Non-compliance with Bundling Rules, Telecom Decision CRTC 2002-58, 20 September 2002, the Commission ruled that by making its long distance rebates contingent on a customer obtaining local service from Bell Canada, the Company was providing a bundled service requiring tariff approval.

6.

In Call-Net Enterprises Inc. - Request to lift restrictions on the provision of retail digital subscriber line Internet services, Telecom Decision CRTC 2003-49, 21 July 2003, the Commission found that the incumbent local exchange carriers (ILECs) were not providing a bundle when they offered digital subscriber line (DSL) services that were dependent on the customer using the ILECs' local exchange services. In arriving at this conclusion, the Commission noted that the DSL and local services were not provided under a single rate structure and there was no financial benefit to taking the two services.
 

Issue

7.

Whether TCI violated the Commission's bundling rules when offering several services, including local exchange and forborne services, as a Student Bundle.
 

Position of parties

8.

Shaw stated that the Student Bundle included local exchange service, a choice of long distance services, Internet access, and TCI's Residence Value Bundle (a bundle of call management services). Further, Shaw noted that, in marketing the Student Bundle, TCI stated that subscribers could save 19%. Shaw submitted that the Student Bundle required a different tariff than the Residence Value Bundle.

9.

TCI noted that it already has tariff approval for its Residence Value Bundle. TCI submitted that, when promoting the Student Bundle, the company was simply joint marketing the various services that were listed in the tariff as conditions for obtaining the discount for the Residence Value Bundle. TCI noted that the Residence Value Bundle required that the subscriber obtain local service from TCI, and that the rates for the Residence Value Bundle were lower if the subscriber also obtained long distance services and Internet services or postpaid cellular services from TCI.

10.

TCI argued that no tariff was required for the Student Bundle, since the services included in the Student Bundle were each available on a standalone basis and that the Student Bundle did not involve a financial benefit to the subscriber, other than the benefit subscribers already obtained by subscribing to TCI's Residence Value Bundle. According to TCI, the rates and terms and conditions for obtaining services as part of the Student Bundle were identical to the rates, terms and conditions at which subscribers could obtain TCI's services on a standalone basis.
 

Commission analysis and determination

11.

The Commission notes that the Student Bundle included TCI's Residence Value Bundle. The Residence Value Bundle packaged together a choice of four of TCI's call management services, at discounted rates that depended on whether the subscriber obtained, in addition to local exchange, also long distance, Internet, or postpaid cellular services from TCI. The Commission approved the tariff for the Residence Value Bundle in Residence Value Bundle and Residence No Limits Bundle, Telecom Order CRTC 2003-317, 7 August 2003.

12.

The Commission also notes that the Residence Value Bundle and the other individual service elements within the Student Bundle were all available on a standalone basis to customers at exactly the same rates and terms and conditions as within the Student Bundle.

13.

The Commission considers that to constitute a bundle, there must not only be a single rate or single rate structure, but also a benefit, financial or otherwise, arising from the aggregation of the services.

14.

The Commission concludes that, although the Student Bundle contained both regulated and non-regulated services, it did not offend the Commission's bundling rules, as subscribers to the Student Bundle did not obtain any lower rate or other benefit in addition to that already provided pursuant to the tariff for the Residence Value Bundle.

15.

Accordingly, the Commission finds that the Student Bundle is not a bundle, and denies Shaw's request that TCI be directed to cease providing the bundle.

16.

However, the Commission notes that the Student Bundle promotion implied a savings, when in fact the Student Bundle offered no savings in addition to that available to subscribers to TCI's Residence Value Bundle. The Commission is of the view that this dispute between Shaw and TCI could have been avoided had TCI been more careful in describing the Student Bundle in its marketing campaign.
  Secretary General
  This document is available in alternative format upon request and may also be examined at the following Internet site: http://www.crtc.gc.ca

Date Modified: 2004-04-02

Date modified: