ARCHIVED - Letter

Ottawa, 22 July 2014

File No. 2014-0231-2

By email

Ann Mainville-Neeson
Vice President, Broadcasting Policy and Regulatory Affairs
TELUS
ann.mainville-neeson@telus.com

Kory Teneycke Vice President
Sun News Network
kory.teneycke@sunmedia.ca

Re: Application by TELUS Communications Company for Final Offer Arbitration with Sun News Network

Pursuant to sections 12 to 15 of the Broadcasting Distribution Regulations and Broadcasting and Telecom Information Bulletin CRTC 2013-637 (Information Bulletin 2013-637), this letter is to advise the parties that the request by TELUS Communications Company (TELUS) for final offer arbitration with Sun News Network (SNN) has been accepted by the Commission.

This letter sets out the dates upon which the final offer process is to be conducted, the matters upon which the Commission will make a determination, as well as the procedure to be followed.

The Application

In its application dated 18 March 2014, TELUS requested Commission-supervised final offer arbitration in order to determine the wholesale rates for the distribution of SNN by TELUS. TELUS submitted that, while the parties have made several attempts to negotiate an agreement for the carriage of SNN by TELUS, the parties were too far apart for commercial negotiations to succeed.  TELUS submitted that the dispute meets all the criteria for resolution by final offer arbitration, namely:

• The dispute is bilateral;
• The parties have been unable to resolve the matter by alternative methods;
• The dispute is relevant to the regulation and supervision of the Canadian broadcasting system, primarily to matters of interpretation or application of an existing Commission decision, policy or regulation;
• The resolution of the dispute does not require a new policy or change to an existing policy; and
• The dispute concerns monetary issues only.

TELUS indicated that the sole issue for determination between the parties is the rate card for the distribution of SNN on TELUS’ systems.

On 20 March 2014, Commission staff requested that the parties participate in staff-assisted mediation, with a view to arriving at a mutually acceptable solution.

In its 31 March 2014 response, Quebecor Media Inc. (QMI), on behalf of SNN, submitted that it would be premature to accept a final offer arbitration process at this stage, and asked the Commission to suspend TELUS’ request until further notice.

On 2 April 2014, Commission staff suspended the final offer arbitration process, in light of continuing negotiations between the parties. The Commission understands that these negotiations have stalled and that parties are now at an impasse.

Determinations

Upon review of the record, the Commission considers that final offer arbitration is the appropriate method of dispute resolution in this case, as the dispute is exclusively monetary, involves only two parties, and otherwise meets the criteria for dispute resolution set out in paragraph 4 of Information Bulletin 2013-637. Accordingly, as noted above, the Commission accepts the application for final offer arbitration.

In accordance with paragraph 21 of Information Bulletin 2013-637, the matter upon which the Commission will make a determination is as follows:

• the appropriate wholesale rates for the distribution of SNN by TELUS, for distribution on the basic service and on a discretionary basis.

The Commission advises parties that other matters relating to the distribution of SNN by TELUS, such as the appropriate packaging of SNN or duration of the agreement, will not be considered as part of this proceeding and are left to negotiation by the parties.   

Accordingly, rather than filing proposed affiliation agreements, which would include terms other than wholesale rates that are beyond the scope of this proceeding, parties’ offers must be limited to setting out their proposed rates for distribution of SNN, on the basic service as well as on a discretionary basis.

The Commission will examine the final offers submitted by the parties and will select one in its entirety. The Commission’s decision will be binding on the parties.

Filing of documents

The Commission requires that, by 30 July 2014, the parties each file their final offers with the Commission. As set out in paragraph 22 of Information Bulletin 2013-637, parties are reminded that these submissions must include concise supporting arguments stating all the facts, Commission requirements, and regulatory decisions or jurisprudence relied on in support of the party’s position.  These submissions must be no longer than ten pages, excluding any attachments.

On 5 August 2014, once Commission staff has confirmed that the offers respond to the identified disputed matter, Commission staff will forward to each of the parties a copy of the other party’s offer.

To complete the record, TELUS is also required to provide the following information, by 5 August 2014:

1. Wholesale rates paid by TELUS to all news services (Canadian and non-Canadian);
2. Retail rates charged by TELUS for all news services when offered on a stand-alone basis (Canadian and non-Canadian);
3. Current number of TELUS subscribers to basic;
4. Current number of subscribers to each news service (Canadian and non-Canadian) distributed by TELUS;
5. Current number of subscribers to each programming package offered by TELUS, including the services offered within each package;
6. Retail rate for each programming package offered by TELUS, including the services offered within each package; and
7. Current tuning or viewership to other news services offered by TELUS (AMA, total hours tuned, etc.), if available.

To complete the record, QMI is also required to provide the following information, by 5 August 2014:

1. A listing of the wholesale rates paid by all BDUs to SNN (rate card with penetration levels and volume discounts, if any), whether set out in an existing affiliation agreement or any other arrangement for distribution; and
2. The current tuning to SNN (AMA, total hours tuned, etc.).

By 8 August 2014, the parties may file observations on the other party’s final offer with the Commission, serving the other party. However, parties will not be authorized to amend their offers. Parties are reminded that these submissions should be no longer than ten pages.

Any documents filed with the Commission should be filed via the secure service “My CRTC Account (GCKey or Partner Log In)” using the “Broadcasting Online Form and Cover Page” on the web page and quoting the application number noted above.

Mediation

Noting that the parties have participated in CRTC staff-assisted mediation in attempting to resolve this dispute, and that the parties have indicated that they wish to continue working in this manner during the final offer arbitration proceeding, the Commission appoints Bernard Montigny, Senior Director, Alternative Dispute Resolution and Processes, to continue in his capacity as mediator over this dispute.

The Commission therefore directs the parties to participate in mediation, after the final offer arbitration record is complete, to be held during the week of 11 August 2014 to 15 August 2014. Parties should familiarize themselves with the Commission’s expectations with respect to their participation in the mediation, as set out in paragraph 129 of Broadcasting Regulatory Policy CRTC 2011-601.

Confidentiality

As noted in paragraph 40 of Information Bulletin 2013-637, existing Commission confidentiality rules and practices apply during the course of final offer arbitration proceedings. The applicable rules and practices are set out in the Canadian Radio-television and Telecommunications Commission Rules of Practice and Procedure (the Rules of Procedure) and described in Broadcasting and Telecom Information Bulletin 2010-961. The parties are reminded to provide sufficient justification for their claims of confidentiality and to file abridged versions of submissions, when possible. 

Responsibilities of the parties

Parties may contact Julia Bresee at 819-997-1194 or at julia.bresee@crtc.gc.ca if they require additional information regarding the organization and conduct of the final offer proceeding.

Where a document is to be filed or served by a specific date, the document must be actually received, not merely sent, by that date. In addition to filing with the Commission, all copies of submissions are to be sent to julia.bresee@crtc.gc.ca.

Sincerely, 

[Original signed by]

John Traversy
Secretary General

cc. Peggy Tabet, Quebecor Media Inc., tabet.peggy@quebecor.com

Date modified:

2014-07-22