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Ottawa, 14 October 2011

Mr. Mirko Bibic
Senior Vice-President
Regulatory & Government Affairs
Bell Canada
160 Elgin Street, Floor 19
Ottawa, On  K2P 2C4

Re: Request for clarifications regarding certain determinations made in Broadcasting Regulatory Policy CRTC 2011-601, Regulatory framework relating to Vertical Integration

Dear Mr. Bibic:

The Commission is in receipt of your letter dated 5 October, 2011 in which Bell Canada states it is requesting clarifications and further details to certain policy determinations in respect of Broadcasting Regulatory Policy CRTC 2011-601 (the VI Policy).  In the Commission’s view the letter goes much farther than its stated purpose and effectively requests changes to the VI Policy.

The Commission notes that it identified in Appendix 2 of the VI Policy, a number of follow up proceedings, such as the call for comments on specific audit provisions for Vertically Integrated Entities.  The Commission also notes that the VI Policy indicated that it will issue a number of draft regulatory amendments, such as the ones to implement the standstill rule.  It is the view of the Commission, that Bell Canada should raise its concerns as part of the public consultation process of those proceedings.

However, the Commission is prepared to offer four clarifications to dispel any misunderstanding of its VI Policy:

1) In paragraph 10 of your letter, Bell Canada states that the VI Policy and the Code currently employ the following terminology which may appear inconsistent; “fair, equal and reasonable”.  It is the Commission’s view that the above noted terms convey the same meaning as commercial reasonableness and it is this standard, together with the policy objectives set out in the Broadcasting Act that will be applied to the adjudication of disputes under the VI policy.

2) With respect to the use of the words “should”, “shall” and “shall not” in the Code of Conduct, as discussed in paragraphs 22, 23, and 24 of your letter, the Commission points to the introductory sentence to the English version of the Code:

“This code sets out general objectives and guidelines that the Commission considers should govern the commercial arrangements between broadcasting distribution undertakings (BDUs), programming undertakings and new media exempt undertakings.”  (emphasis added)

The Commission wishes to underline that the Code of Conduct is a set of principles that must be read as an ensemble and that its purpose is to provide guidance on matters that should be considered by parties in their negotiations.  However, the Commission will issue an Erratum changing every “shall” to “should”.

3) With respect to the application of the standstill rule as discussed in paragraph 17 of your letter, the Commission directs you to paragraph 104 of the VI Policy where the Commission says that during any dispute between an operator of a programming undertaking and a distribution undertaking, “each licensee or operator shall continue to provide its services or distribute the programming services on the same terms and conditions as it did before the dispute. The rates determined by the Commission or agreed to by the parties will be applied when the last agreement reached for the distribution of the service expires”.

4) With respect to the application of the Head Start Rule as discussed in paragraph 14 of your letter, the Commission directs you to paragraph 70 of the VI Policy, where the Commission says that “the Commission will require that, once a programming undertaking is ready to launch a new pay or speciality service it must make that service available to all BDUs ...”, (emphasis added).  Further, footnote 7 underscores the fact that BDUs will not be surprised by a sudden launch of a new programming service as these services must be approved by the Commission and that all such approvals are published on the Commission’s website.

Sincerely yours,


John Keogh for

Robert A. Morin
Secretary General

Cc: Parties to the VI Proceeding

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