ARCHIVED - Telecom Commission Letter addressed to Ann Mainville-Neeson (TELUS) and Kory Teneycke (Sun News Network)

Ottawa, 6 August 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

This letter is to advise the parties that the request by Sun News Network (SNN) to vary the procedure set out in the final offer arbitration process with TELUS Communications Company (TELUS) has been rejected.

In this letter, the Commission also sets out revised dates upon which the final offer arbitration is to be conducted. For all other matters with respect to the conduct of this proceeding, please refer to the 22 July 2014 letter from the Commission (“the conduct letter”).

The Request

In a letter dated 22 July 2014, SNN requested that the Commission’s final offer arbitration be modified to include the filing of comprehensive affiliation agreements and to remove ratings performance data from the list of information to be provided in this proceeding (referred to as “tuning or viewership data” in the conduct letter).

With respect to the first, SNN argued that the acceptance of a rate card alone is insufficient and that other matters, such as distribution, channel placement, start date, and contract length will not resolve themselves at the end of this process. Accordingly, it requested that comprehensive affiliation agreements be filed as part of each party’s final offer in this proceeding.

Secondly, it argued that requesting viewing data seeks to introduce new criteria related to channel ratings, which is inherently prejudicial to SNN. It argued that while a relevant test for a more mature channel, it is an impossible threshold for a new entrant to pass, and should not be admissible in these proceedings.

The Response

TELUS disagreed with both components of SNN’s request and submitted that SNN’s request is merely a delay tactic in avoiding final offer arbitration.

TELUS submitted that distribution is not at issue as between SNN and TELUS. It argued that SNN is provided in TELUS’ News theme pack, along with many other news services, in accordance with the packaging requirement set out in the Commission’s policy for national news services.

With respect to ratings performance data, TELUS argued that this data is an essential component in determining the value of a programming service to customers and the reasonableness of a wholesale rate, as evidence of customer demand.

Determinations

Scope of the proceeding

The Commission considers that final offer arbitration is an effective dispute resolution tool when used for disputes that are exclusively monetary and otherwise meet the criteria for dispute resolution set out in paragraph 4 of Information Bulletin 2013-637. The Commission is of the view that other forms of dispute resolution, such as mediation or expedited processes, are more effective tools to deal with non-monetary matters.

As such, the Commission considers it appropriate to retain the current scope of this proceeding as set out in the conduct letter, i.e., to determine the appropriate wholesale rates for the distribution of SNN by TELUS, on the basic service and on a discretionary basis and denies SNN’s request that the parties file comprehensive affiliation agreements as final offers.

Tuning or viewership data

The Commission notes that the Code of conduct for commercial arrangements and interactions, set out in Appendix 1 to Broadcasting Regulatory Policy CRTC 2011-601 set out that:

Where applicable, negotiating a wholesale rate for a programming service based on fair market value should take into consideration the following factors:

1. historical rates;
2. penetration levels and volume discounts;
3. the packaging of the service;
4. rates paid by unaffiliated BDUs for the programming service;
5. rates paid for programming services of similar value to consumers;
6. the number of subscribers that subscribe to a package in part or in whole due to the inclusion of the programming service in that package;
7. the retail rate charged for the service on a stand-alone basis; and
8. the retail rate for any packages in which the service is included.

These same factors were reiterated by the Commission with respect to the wholesale rates for Category C news specialty services (in Broadcasting Order 2013-735).

The Commission considers that tuning or viewership data can assist in assessing a service’s relative value and quality to consumers, as set out in factors e) and f) above. The Commission further considers that consideration of this data will not be prejudicial to SNN because it will have an opportunity to make submissions regarding how the data should be interpreted and applied in the circumstances. The Commission can then give it the appropriate weight based on the record of the proceeding. Accordingly, the Commission denies SNN’s request that tuning or viewership data be excluded from the scope of this proceeding.

Revised filing dates for documents

The following dates shall replace those specified in the conduct letter:

• The Commission requires that, by 11 August 2014, the parties each file their final offers with the Commission.
• On 15 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 additional information specified in the conduct letter, by 15 August 2014.
• To complete the record, Quebecor Media Inc., on behalf of SNN, is also required to provide the additional information specified in the conduct letter, by 15 August 2014:
• By 20 August 2014, the parties may file observations on the other party’s final offer with the Commission, serving the other party.

Mediation

The Commission changes the dates for mediation set out in the conduct letter, to the week of 25 August 2014 to 29 August 2014.

Sincerely,

[Original signed by]

John Traversy
Secretary General

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

Date modified:

2014-08-06