ARCHIVED - Telecom - Commission Letter - 8623-C12-04/04 - Show cause – Publishing of certain information filed in confidence

Letter

Our file: 8623-C12-04/04

Ottawa, 4 November 2004

To: Companies on the attached distribution list

Re: Show cause - Publishing of certain information filed in confidence

In a letter dated 17 September 2004, and in a follow-up e-mail to a number of companies dated 13 October 2004, companies that provided certain data in confidence, in response to CRTC Monitoring activities related to the year 2003, were requested to show cause why that data should not be published in the fourth "Report to the Governor in Council on the Status of Competition in Canadian Telecommunications Markets/Deployment and Accessibility of Advanced Telecommunications Infrastructure and Services" (2004 Monitoring Report).

The companies were requested to address the publication of the following information as was published in the 2003 Monitoring Report:

1.  Based on lines, local market share percentages by major centres, split between incumbents, out-of-territory incumbents and competitors, for the residential, business and total (including wholesale) segments;

2.  Based on lines, the large incumbents' local market share percentages by province;

3.  Based on revenues, the large incumbents' long distance market share percentages by incumbent operating territories; and

4.  Based on fibre-route details, a map displaying major inter-city lit fibre routes

In addition, companies were asked to show cause why the following should not be published in the Commission's 2004 Monitoring Report:

1.  Wireless market share percentages (based on number of subscribers provided in Form 273) by province for each major wireless provider; and

2.  Broadband availability percentages split between rural and urban households by province; and subscription percentages by province.

Responses were received from 360networks Canada (360networks), Bell Canada (on behalf of itself and Aliant Telecom Inc., collectively Bell et al), Bell West Inc., the Canadian Cable Telecommunications Association (CCTA), Cogeco Câble Canada inc .( Cogeco), Bragg Communications Inc. (operating as EastLink), FCI Broadband (FCI), Microcell Solutions Inc. (Microcell), MTS Allstream Inc., NorthernTel, Limited Partnership (Northern Tel), Primus Telecommunications Canada (Primus), Quebecor Media Inc.(on behalf of Videotron Telecom Ltd., Vidéotron ltée, Vidéotron (1998) ltée, CF Câble TV Inc. and Vidéotron Régional ltée (collectively QMI et al), Rogers Cable Communications Inc. (Rogers), Rogers Wireless Inc. (RWI), Saskatchewan Telecommunications (on behalf of itself and Navigata Communications Inc., collectively SaskTel et al), Shaw Cablesystems G.P.( Shaw) and TELUS Corporation Inc. (TELUS).

Staff has carefully considered the responses from the companies.

Disclosure of information for which confidentiality has been claimed is assessed in light of sections 38 and 39 of the Telecommunications Ac t (Act) and section 19 of the CRTC Telecommunications Rules of Procedure (the Rules). In the case of each request, the public interest in disclosure is weighed against the specific direct harm, if any, likely to result from disclosure. In doing so, a number of factors are taken into account, when assessing each of the items.

The expectation that specific direct harm might result from disclosure is not, by itself, sufficient to justify maintaining a claim of confidentiality. In certain circumstances, substantial harm from disclosure may still be outweighed by the public interest in disclosure.

There is a significant public interest in the disclosure of information, including market share data, with respect to the status of competition in Canadian telecommunications markets and data related to the deployment of advanced telecommunication infrastructure and services. The objectives of the Act as set out in section 7 include: "to foster increased reliance on market forces for the provision of telecommunications services and to ensure that regulation, where required, is efficient and effective; to render reliable and affordable telecommunications services of high quality accessible to Canadian in both urban and rural in all regions of Canada"; and "to respond to the economic and social requirements of users of telecommunications services".

The Governor in Council's June 2000 Direction requires the Commission to report, annually for five years, on the status of competition in Canadian telecommunications markets and on the deployment/accessibility of advanced telecommunications infrastructure and services. The Direction also requires that the reports include, among other things, relevant data and analyses. The annual monitoring reports with their underlying data represent a key component of the Commission's ongoing monitoring plan and become an authoritative source of information on the Canadian telecommunications industry for use by various stakeholders. Open and transparent regulatory processes best serve the public interest, and the information published in the reports assists interested parties in participating in regulatory proceedings.

The information gathered as part of its monitoring activities enables the Commission to determine more effectively (a) the state of competition and (b) the effect of competition on services to consumers and business customers. Such information is also useful in assessing the effectiveness of the Commission's policies, decisions and orders.

Item 1:   Based on lines, local market share percentages by major centres, split between incumbents, out-of-territory incumbents and competitors, for the residential, business and total (including wholesale) segments

Companies that responded generally indicated that any data provided in confidence should be sufficiently aggregated when published so that the companies involved could not be identified. Bell et al, Bell West, MTS Allstream, NorthernTel, Primus, TELUS and 360networks expressed no concerns.

EastLink noted that it had filed submissions on 25 August 2003 prior to publication of the 2003 Monitoring Report explaining why local market share information should be treated confidentially and should be further aggregated to ensure that company-specific information is not disclosed publicly. EastLink reiterated that it continues to be of the position that this information should not be published in the same format for the upcoming report and that release of this information would significantly enhance the ability of existing and future competitors to target certain market segments and areas of EastLink's business. EastLink submitted that most of the companies are public companies for which much of the information in the Monitoring Report for these companies is already available; whereas, EastLink is a privately-held company and very limited information is available about it.

Microcell also submitted that the release of market share details enables competitors to extrapolate details about the company. EastLink and the CCTA submitted that the publication in last year's monitoring report of local share percentages by major centre, for the residential and business segments, resulted in the disclosure of information specific to EastLink for specific geographic locations. EastLink stated that it would not be difficult for a competitor to use the "survey information, coupled with other public domain information, to extrapolate the size and value of EastLink's market". EastLink submitted that its market share information is not readily available and release of this information would cause harm to it. Eastlink also stated that any aggregation of data would also be harmful to it, as EastLink is the only alternative provider of local service in most of its operating territory. EastLink stated that this information would provide existing and potential competitors with information to develop more effective business and marketing strategies and expose it to severe business risk. Microcell submitted that the identity of the competitors actively marketing alternative local services in the residential market is widely known as are the specific markets they are targeting. Microcell and EastLink submitted that only national results should be published.

EastLink reiterated the test used by the Commission as expressed in a Practice Note entitled " Practice Note Respecting Claims of Confidentiality and Requests for Disclosure in the Course of a Proceeding " dated 8 October 1998 , to determine whether or not to disclose information filed subject to a claim of confidentiality. EastLink indicated that it is a privately held company and that any decision to infringe upon its right to maintain this information confidential should only be made where the information is critical to the public. In its opinion, the additional market share information that the Commission intends to provide in the 2004 Monitoring Report is not necessary to fulfill the requirements under the Governor in Council's June 2000 Direction.

EastLink also submitted that in Telecom Order 2001-4, the Commission recognized the harm that could be caused to a company by publishing information where such company is the only other competitor offering services in a given area, as is the case for EastLink. EastLink stated that it already faces challenges in offering local telephone service by virtue of generally available public information, that it has experienced increased marketing efforts by the incumbent in an effort to limit EastLink's penetration of new telephone subscribers, that it attributes this to the information that has been made publicly available. EastLink stated that there may be value in this type of information and has no objection to provide it for the Commission's own confidential, internal use.

The CCTA and Microcell submitted that the Federal Communications Commission (FCC) in the United States does not publish any information specific to individual firms. The CCTA also submitted that Statistics Canada also does not publish any information specific to individual firms. The CCTA suggested that only local market shares of incumbents and competitors, disaggregated by business, residential and wholesale segments and by urban and rural, aggregated on a national basis be published. SaskTel et al noted that if the data is published, market details should be published for all companies. Eastlink, Microcell and FCI submitted that the public interest does not outweigh the harm that would accrue to the competitors. Accordingly, Microcell submitted that publication of aggregated information at the national level is acceptable and serves the public good. Microcell submitted that local competition is non-existent and that existing competitors are widely known. Microcell suggested that such information should only be provided where there are 3 or more competitors as is done by the FCC. Microcell stated that prior to the Commission's efforts to collect market data directly from market participants, obtaining consistent, usable market data was difficult and rested in the purview of specialized consulting firms. Microcell also submitted that until the Commission decides how it intends to proceed with forbearance of the local telecommunications market, publication of this data is premature. The remaining companies either had no opinion to express or did not respond.  

Analysis:   Local competition has evolved more slowly in some areas than in others. Based on the 2003 Monitoring Report, at the national level in 2002, competitors had approximately 5% of the local lines. However, on a provincial basis, competitors made greater progress in some provinces and less in others, as displayed in Table 4.12 in the 2003 Monitoring Report, capturing between 0% and 8% of the local lines depending on the province. Similarly, based on Table 4.13 of the 2003 Monitoring Report, in the major centres, competitor local market shares varied even more, ranging from 0% to 10% depending on the major centre. A similar analysis of local residential and business market shares by major centre, indicates that competitors captured between 0% and 13% of the residential market and between 0.1% and 19.5% of the business market. Accordingly, due to the significantly different market shares that competitors have in the residential and business local segments and the different characteristics of these segments, market share information presented for the total local market is not necessarily representative, nor insightful, when analyzing the effectiveness of the Commission's decisions and in monitoring the Canadian telecommunications industry. Although market share information at the national level allows for a determination of the extent to which Canadians as a whole have benefited from competition, it does not allow for an assessment of the extent to which competition has evolved throughout the country.

Other agencies, such as Statistics Canada and the FCC, do not generally publish telecommunications statistics on a major centre basis. For example, in Statistics Canada's Broadcasting and telecommunications publication (Catalogue No 56-001-XIE) dated September 2004, Internet by cable deployment was provided by region, one of which was the Atlantic region, the operating territory of Eastlink . With respect to the FCC, staff notes that although the FCC does not publish information at this level, the United States   market is sufficiently different as to make such comparison inappropriate. Differences in the number of competitors, the degree of competition and the size of the local markets are just some of the factors that contribute to this difference.

As noted in the 2003 Monitoring Report, census metropolitan areas (CMAs) were used to define the major centres. CMAs, however, do not align with municipal boundaries nor are they representative of specific locations (such as the downtown core, suburban areas or telephone exchange boundaries) within the CMA that may be of particular interest to a competitor. The data underlying the line market share percentages would not be disclosed, nor would there be any disclosure of revenue or line information. In addition, there would be no disclosure of demographic details nor the socio-economic characteristics of the customers served. In addition, the monitoring report is generally published towards the end of the year containing data for the previous year, making any market share information contained in the report less useful from a marketing perspective. All of the above would reduce the potential harm that may result from disclosure of residential, business and total (i.e., residential, business and wholesale) local line market share information by major centre. With respect to Eastlink, as competition is limited to two providers, each party can make fairly accurate estimates of their respective market shares.

It is noted that there are several safeguards that further mitigate any potential harm that may result from disclosure of this information. In Telecom Decision CRTC 2002-1 , the Commission modified its win back rules so that an incumbent local exchange carrier (ILEC) cannot attempt to win back a business customer with respect to primary exchange service, and in the case of a residential customer, with respect to primary exchange or any other service, for a period of three months after that customer's primary local exchange service has been completely transferred to another local service provider. In Telecom Decision CRTC 2004-4, the win back rules were extended to twelve months for residential customers.

In Public Notices CRTC 2003-1 and CRTC 2003-1-1, the Commission is reviewing the continued appropriateness of ILEC promotions in the local wireline market, and the Commission has suspended consideration of such promotions. In addition, there are limits placed on ILECs should they choose to compete through the bundling of services. Incumbents must file tariffs for approval demonstrating that the conditions applicable to bundled services, including an imputation test, are met.

Conclusion:   In light of the above, any specific direct harm that may result from disclosure of local line market share information by major centre (as defined by the CMAs) for the residential, business and total (i.e., residential, business and wholesale) by incumbents, out-of-territory incumbents and competitors would be mitigated and would not be sufficient to outweigh the public interest in its disclosure.

Item 2:   Based on lines, the large incumbents' local market share percentages by province

Responses from companies were the same as those expressed for item 1 above. In addition, the CCTA proposed that local market shares of incumbents and competitors, disaggregated by business, residential and wholesale segments and disaggregated by province be published instead.

Analysis:   As noted in item 1 above, local competition has evolved more slowly in some areas of the country than in others. Market information for the large incumbents' by province would allow for a comparison of local market share results among the provinces and identify the extent to which Canadians in various parts of the country have benefited from competition in the local market.

These provincial results do not reflect specific markets (i.e., residential, business and wholesale) or specific locations. Provincial results encompass both urban and rural areas.

As noted in item 1 above, the data underlying the line market share percentages would not be disclosed, nor would there be any disclosure of revenue or line information. In addition, there would be no disclosure of demographic details nor the socio-economic characteristics of the customers served. In addition, the monitoring report is generally published towards the end of the year containing data for the previous year, making any market share information contained in the report less useful from a marketing perspective.

The safeguards that were discussed in item 1 are applicable here as well. It is noted that some incumbents publish this similar information in their annual reports.

Conclusion:   In light of the above, any specific direct harm that may result from disclosure of local market share information on a provincial basis for the large incumbents on a total (i.e., residential and business) market basis would be mitigated and would not be sufficient to outweigh the public interest in its disclosure.

Item 3:  Based on revenues the large incumbents' long distance market share percentages by incumbent operating territories

Bell et al, Bell West, 360networks, Primus, MTS Allstream and TELUS expressed no concerns with the publication of this data. SaskTel et al stated that information filed in confidence should not be made public due to the harm that its release may cause to the company. SaskTel et al indicated that if the data is published, then the data should be published for all the companies. FCI submitted that the information is sensitive and confidential. FCI noted that it is a privately held company and submitted that release of financial, commercial and corporate information, specific to it, would prejudice its position. FCI stated that the public interest does not outweigh the harm that would accrue to it. The remaining companies either had no opinion to express or did not respond.

Analysis:   Long distance market share data at the incumbent operating territory level would allow for a comparison of long distance market share results among those territories and would identify the extent to which various parts of the country have benefited from competition and the extent to which the incumbent has the lion's share of the long distance market within its territory. As displayed in Table 4.8, in the 2003 Monitoring Report, the incumbent's long distance market share varied significantly, ranging between 67% and 82% depending on the operating territory.

As noted in items 1 and 2 above, the data underlying the revenue market share percentages would not be disclosed, nor would there be any disclosure of revenue information. In addition, there would be no disclosure of demographic details, nor the socio-economic characteristics of the customers served. In addition, the monitoring report is generally published towards the end of the year containing data for the previous year, making any market share information contained in the report less useful from a marketing perspective.

Conclusion:   In light of the above, any specific direct harm that may result from disclosure of long distance revenue market share information on an incumbent operating territory level for the large incumbents on a total (i.e., residential and business) market basis would not be sufficient to outweigh the public interest in its disclosure.

Item 4: Based on fibre-route details, a map displaying major inter-city lit fibre routes

360networks, Bell et al, Bell West, FCI, MTS Allstream, NorrthernTel, Primus, SaskTel et al and TELUS expressed no objection to the publication of a map displaying major inter-city lit fibre routes.

Any specific direct harm that may result from a map displaying inter-city lit fibre routes would not be sufficient to outweigh the public interest in its disclosure.

Item 5: Wireless market share percentages by province for each major wireless provider

Aliant, Bell Mobility, Bell West, MTS Allstream, TELUS and 360networks have no objection to the publication of market share percentages by province for each major wireless provider. MTS Allstream submitted that this information is, for the most part, already publicly available.

Microcell and RWI submitted that publication of this type of detail is neither necessary nor relevant for the purposes of the Commission's reporting mandate. RWI also submitted that this level of detail is not relevant to an important issue of public policy before the Commission. Microcell indicated that by publishing this type of information, competitors would be able to target a particular player that is gaining market share in a particular province. Microcell also submitted that the FCC in this regard does not show individual market share.

RWI submitted that releasing wireless market share on a provincial basis will unduly harm RWI's competitive position, particularly in those provinces which are served primarily by a provincial or regional wireless carrier and will result in material financial loss to RWI. In these cases, RWI argued that the dominant carriers possess disproportionate market positions. Release of this information would reveal the strengths and weaknesses of their regional operations. RWI submitted that, in the past, the Commission weighted the importance of the regulatory issue in question and the relevance of the market share information to that issue and the level of disaggregation as was done in the Commission letter of 02 November 1990 when considering long distance competition. It also submitted that r elease of this information would work counter to the CRTC's and the Government of Canada's own policies of encouraging the development of competitive markets in Canada .

SaskTel generally did not take issue with the release of market share percentages provided the incumbent's market share is not published in a manner that makes it obvious which company is being illustrated. SaskTel submitted that the wireless market share percentages, if published, should be provided for each of the major wireless providers.

Analysis :

Although market share information at the national level allows for a determination of the extent to which Canadians as a whole have benefited from competition, it does not allow for an assessment of the extent to which competition has evolved throughout the country. As discussed in item 2 above, the level of detail provided at the provincial level provides a greater amount of detail from which to assess the state of wireless competition and the effectiveness of the Commission's policies, decisions and orders than at the national level. Much information about the wireless industry is already available. Wireless subscriber information as well as maps of their serving territory is already publicly available, either from individual company reports and websites or through the Canadian Wireless Telephone Association (CWTA). Companies routinely make estimates of their market share. As competition within each province is limited to a small number of providers, each party can determine who the competition is and can make fairly accurate estimates of their respective market shares. It is also noted that the monitoring report is generally published towards the end of the year containing data for the previous year, making any market share information contained in the report less useful from a marketing perspective.

With respect to concerns that release of this information would lead to targeted marketing, staff notes that all parties are already aware of the geographic footprint of each of their main competitors, and that targeted marketing is already in existence. Market share at the provincial level would be of limited value in developing effective marketing programs as no information or details would be provided with respect to the demographics or socio-economic characteristics of the market. Staff notes that although the FCC does not publish information at this level, the U.S. market is sufficiently different as to make comparisons between the two inappropriate. The difference in the number of competitors, the size of the market, and the penetration rates are just three of the factors that contribute to the difference. 

Conclusion : In light of the above, any specific direct harm that may result from disclosure of wireless market share percentages by province for each major wireless provider would not be sufficient to outweigh the public interest in its disclosure.

Item 6: Broadband availability percentages split between rural and urban households by province subscription percentages by province

Companies that responded generally indicated that any data provided in confidence should be sufficiently aggregated when published so that the companies involved could not be identified. Bell et al, Bell West, 360networks, NorthernTel, Primus, TELUS and MTS Allstream expressed no concern.

Eastlink's position was similar to its position to item 1 above. It also submitted that the Commission reconsider how much detail the public really needs in order to understand the current competitive landscape. Eastlink, Microcell and FCI submitted that the public interest does not outweigh the harm that would accrue to the competitors. Shaw indicated that it has grave concerns with release of this information as it would allow competitors to more effectively target its customers.

The CCTA submitted that the disclosure of information on subscription levels would significantly enhance the ability of existing and future competitors to target specific areas of an individual cable operator's business in smaller markets. The CCTA and Rogers indicated that competitors could use this information, coupled with other public domain information to extrapolate the size and value of an individual firm's operation and formulate more effective business strategies. The CCTA and Rogers also submitted, as in item 1 above, that other agencies such as Statistics Canada and the FCC withhold from publication data that is specific to an individual firm.

Cogeco, Rogers and Shaw support the CCTA suggestion that the Commission consider publishing (1) broadband subscriptions levels, disaggregated by province, aggregated by all types of service providers and (2) broadband subscription levels disaggregated by types of service providers and by urban and rural, aggregated on a national level instead.

Rogers submitted that if CMA is used to define urban and rural communities, provinces such as New Brunswick and Newfoundland and Labrador have only one municipality ( St. John and St. John's respectively).

Analysis :

The Governor in Council's June 2000 Direction requires the Commission to report, annually for five years, on the deployment and accessibility of advanced telecommunication infrastructure and services in urban and rural areas in all regions of Canada. One of the issues of interest is the narrowing of the "digital divide" between urban and rural communities, as expressed by the federal government.

Although broadband availability percentages split between rural and urban households, and subscription percentages at the national level allows for a determination of the extent to which Canadians as a whole could or have benefited from the deployment of broadband infrastructure, it does not allow for an assessment of the extent to which this deployment has evolved throughout the country. Nor can it provide a basis from which to begin to assess the effectiveness of the various provincial and federal programs that were established to address the digital divide.

As noted in item 1 above, in Statistics Canada's Broadcasting and telecommunications publication (Catalogue No 56-001-XIE) dated September 2004, Internet by cable deployment was provided by region, one of which was the Atlantic region, the operating territory of Eastlink and Rogers . The Statistics Canada publication excluded DSL deployment. The broadband data under consideration includes both DSL and cable modem and does not identify each separately.

It is noted that there are three or more urban communities in each province. The identification of communities as either urban or rural on a provincial basis would include at a minimum 3 urban communities in each province.

The data underlying the deployment of, and subscription to, broadband service, would not be disclosed, nor would there be any disclosure of revenue or subscription information. In addition, there would be no disclosure of demographic details, nor the socio-economic characteristics, of the customers who may benefit from this deployment. In addition, the monitoring report is generally published towards the end of the year containing data for the previous year, making any information contained in the report less useful from a marketing perspective.

Conclusion : In light of the above, any specific direct harm that may result from disclosure of broadband availability percentages split between rural and urban households by province and broadband subscription percentages by province would not be sufficient to outweigh the public interest in its disclosure.

Overall Conclusion

In light of this, the information in question as concluded above, for each of the above items can be published in the third annual monitoring report.

Yours sincerely,

Shirley Soehn
Executive Director, Telecommunications

c.c.: Steve Malowany, CRTC, (819) 953-2167

Distribution List

360networks Canada
Bell Canada
Aliant Telecom Inc.
Bell West Inc.
The Canadian Cable Telecommunications Association (CCTA)
Cogeco Câble Canada inc
Bragg Communications Inc.
FCI Broadband
Microcell Solutions Inc.
MTS Allstream Inc.
NorthernTel, Limited Partnership (Northern Tel)
Primus Telecommunications Canada
Quebecor Media Inc.
Rogers Cable Communications Inc.
Rogers Wireless Inc.
Saskatchewan Telecommunications
Navigata Communications Inc.
Shaw Cablesystems G.P.
TELUS Corporation Inc.

Date modified: 2004-11-04