ARCHIVED - Conduct Letter addressed to Peggy Tabet (Québecor Média) and Kevin Goldstein (Bell Canada)

Ottawa, 21 April 2016

Application No.: 2016-0241-7

By email

Ms. Peggy Tabet
Senior Director, Regulatory Affairs – Broadcasting
Québecor Média
tabet.peggy@quebecor.com

Mr. Kevin Goldstein
Vice-President, Legal and Regulatory Affairs
Bell Canada
Bell.regulatory@bell.ca

Re: Dispute with respect to Le Réseau des Sports – Request for final offer arbitration

Dear Ms. Tabet and Mr. Goldstein:

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 Commission accepts the request by Québecor Média Inc., on behalf of Vidéotron G.P., for final offer arbitration with Bell Media Inc., in its name and on behalf of Le Réseau des sports 1 and Le Réseau des sports 2 (collectively, the RDS services).

This letter sets out the dates upon which the final offer arbitration (FOA) process is to be conducted, the matter upon which the Commission will make a determination, and the procedure to be followed.

The application

On March 4, 2016, the Commission received an FOA request from Québecor Média, on behalf of Vidéotron G.P. (Vidéotron), pursuant to sections 12 to 15 of the Broadcasting Distribution Regulations, for the purpose of establishing (i) the rate for linear content in packages; (ii) the standalone rate; and (iii) the multiplatform rate.

Vidéotron stated that it is referring this dispute to the Commission because the parties in question were unable to reach a mutual agreement despite extensive negotiations. Furthermore, Vidéotron submitted that the dispute lends itself to the Commission’s dispute resolution process, for the following reasons:

• the dispute is bilateral;
• the dispute concerns monetary issues only.
• the dispute is relevant to the regulation and supervision of the Canadian broadcasting system; and
• the resolution of the dispute does not require a new policy or change to an existing policy.

In its response dated March 9, 2016, Bell Media Inc., on behalf of the RDS services (Bell Media), indicated that it supports proceeding to FOA with regard to the linear rate for the distribution of the RDS services. However, Bell Media noted that it would be premature to proceed to FOA for the standalone and multiplatform rates. Finally, Bell Media argued that, in the event that the standalone and multiplatform rates do result in an FOA proceeding, it would be more appropriate to consider them as distinct issues, as opposed to as part of one omnibus FOA proceeding. Bell Media proposed that the parties pursue bilateral negotiations to attempt to resolve these issues.

In its response dated March 11, 2016, Vidéotron stated that it was ready to work with Bell Media until March 25, 2016, to establish the standalone and multiplatform rates, as well as the applicable term, after which any issue still in dispute should be referred to the Commission for FOA.

In light of the parties’ willingness to engage in further bilateral negotiations, the request for FOA was suspended on March 16, 2016, as was the timeframe in which the Commission may determine whether it is prepared to accept the request for FOA.

On April 11, 2016, Vidéotron asked the Commission to lift the suspension of this FOA and resume the FOA process, this time by limiting the scope to the rate for the distribution of the RDS services in linear packages, noting that, apart from the RDS services’ linear packaged rate, all other monetary issues had been resolved by agreement of the parties. Vidéotron noted that Bell Media had agreed with this new scope for the FOA process in its letter dated March 9, 2016.

On April 15, 2016, the parties jointly proposed a format to follow in the filing of final offers.

Decisions

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 per-subscriber wholesale rate for the distribution of the RDS services in a linear package, payable by Vidéotron to Bell Media.

The Commission hereby notifies the parties that the other issues relating to the distribution of the RDS services by Vidéotron will not be considered in the proceeding and will have to be the subject of negotiations between the parties.

Accordingly, in the offers they will present, the parties must only propose a per-subscriber linear packaged rate for the RDS services. The Commission will examine the final offers submitted by the parties and will select one in its entirety.^{Footnote 1} The Commission’s decision will be binding on the parties.

Filing of documents

The Commission requires that the parties each file their final offers with the Commission by May 6, 2016. As set out in paragraph 22 of Information Bulletin 2013-637, the 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.

When preparing your arguments, please refer to the criteria for fair market value set out in the Wholesale Code, Broadcasting Regulatory Policy CRTC 2015-438. As noted in the Interpretation of the Wholesale Code, Broadcasting Information Bulletin CRTC 2015-440, the Commission will determine which fair market value factors are applicable in a given case and assess proposed rates or final offers in relation to those factors. In addition, the Commission will apply, where appropriate, a public interest test that examines whether the proposed wholesale rates are consistent with the relevant public policy objectives.

By May 11, 2016, once Commission staff has confirmed that the offers respond to the identified matter, Commission staff will forward to each party a copy of the other party’s offer.

To complete the record, Vidéotron is also required to provide the following information, by May 6, 2016:

1. the most recent affiliation agreement reached with Bell Media regarding the RDS services;
2. the current number of subscribers to the RDS services when offered (a) in preassembled packages, (b) in build-your-own packages, and (c) on a standalone basis, as well as the wholesale rate for each of those offerings;
3. the total number of Vidéotron television service subscribers for each of its broadcast distribution undertakings (BDUs) in Quebec;
4. the wholesale rates paid by Vidéotron for other sports services (Canadian and non-Canadian) when offered (a) in preassembled packages and (b) in build-your-own packages;
5. the current number of subscribers to each sports service (Canadian and non-Canadian) distributed by Vidéotron;
6. the current number of subscribers to each preassembled and build-your-own package offered by Vidéotron that includes a sports service, as well as the identity of the services offered within each package;
7. the retail rate for each preassembled package offered by Vidéotron that includes a sports service, and the individual wholesale rates for each service offered within such packages; and
8. the current tuning or viewership for RDS1 and RDS2 and all other sports services offered by Vidéotron, including (a) set-top-box data, (b) average minute audience, and (c) total hours tuned, if available.

To complete the record, Bell Media is also required to provide the following information by May 6, 2016:

1. the affiliation agreements between RDS and the other BDUs operating in Quebec for the distribution of the RDS services;
2. the rates (fixed rate, or effective rate under a variable rate card, indicating the penetration levels and volume discounts, where appropriate) paid by all BDUs to Bell Media for the RDS services;
3. a listing of the actual wholesale rates paid by all BDUs operating in Quebec to Bell Media for the RDS services when offered (a) in preassembled packages, (b) in build-your-own packages, and (c) on a standalone basis, whether set out in an existing affiliation agreement or any other arrangement for distribution;
4. for each BDU that distributes the RDS services in Quebec, the penetration rate for (a) preassembled packages, (b) build-your-own packages, and (c) standalone; and
5. the current tuning or viewership for RDS1 and RDS2, including (a) average minute audience, and (b) total hours tuned, if available.

The parties will have until May 16, 2016, to file comments on the other party’s final offer with the Commission, and to serve a copy of these comments on the other party. However, the parties will not be authorized to amend their offers. The parties are reminded that these comments should be no longer than 10 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 that same webpage and quoting the application number noted above.

Confidentiality

In accordance with paragraph 40 of Information Bulletin 2013-637, existing Commission confidentiality rules and practices will apply throughout the 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 their documents, when possible.

Responsibilities of the parties

The 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 via “My CRTC Account”, the parties must send copies of all the documents in question to julia.bresee@crtc.gc.ca.

Yours sincerely,

Danielle May-Cuconato
Secretary General

Date modified:

2016-04-21