Broadcasting Procedural Letter Addressed to Jean-Philippe Béïque and Kevin Goldstein (Ebox Inc. and Bell Media Inc.)

Ottawa, 1 November 2017

Our reference: 2017-0909-9

BY EMAIL

Mr. Jean-Philippe Béïque
Chief Executive Officer
Ebox Inc.
jp@ebox.ca

Mr. Kevin Goldstein
Vice President, Regulatory affairs
Bell Media Inc.
bell.regulatory@bell.ca

Re: Undue preference complaint by Ebox Inc. against Bell Media Inc. (2017-0909-9)

Dear Sirs:

An undue preference complaint has been filed by Ebox Inc. (Ebox), a new entrant in the broadcasting distribution market, against Bell Media Inc. (Bell). A number of procedural questions have been raised following the filing of documents in this matter.

In this letter, the Commission renders determinations on these questions and establishes the procedure to be followed in this case.

The application

On 22 September 2017, Ebox filed an application alleging undue preference against Bell, pursuant to section 11 of the Discretionary Services Regulations (the Regulations)This application was filed under part 1 of the Canadian Radio-television and Telecommunications Commission Rules of Practice and Procedure(the Rules). 

The application is being processed on an expedited basis, in light of Ebox’s arguments for urgency in this matter.

Documents filed

On 10 October 2017, pursuant to the established timelines, Bell filed its answer to the application. Among other things, Bell indicated that it has been, and remains, prepared to offer its services to Ebox on reasonable terms and conditions, and that it will insist that carriage negotiations are undertaken on that basis.

Concurrently, interventions were filed by:

On 11 October 2017, Bell asked the Commission for a right of reply to certain interventions. Bell is seeking the opportunity to respond directly to what Bell perceives to be incorrect statements and policy interpretations outlined in these interventions.

On 12 October 2017, Ebox asked the Commission to strike from the record, before any documents are placed on the public file, certain information that Ebox considers to be confidential contained in Bell and Corus’ submissions. Ebox argues that disclosure of this information would contravene the confidentiality agreements duly executed by Bell and Ebox and would have adverse consequences on Ebox and on the integrity of the Commission’s dispute resolution processes.

Ebox also asked the Commission to refuse Bell’s request for a right of reply and to extend the applicable timelines in this case, in order to allow six days for the applicant to file its reply in this proceeding.

On 12 October 2017, TELUS Communications Inc. (TELUS) filed in an intervention, outside the expedited timelines set out in this case. On this same date, Bell filed a letter indicating that it objects to TELUS’ late filing being added to the file of this proceeding, on the basis that the onus is on interveners, in a part 1 proceeding, to review the Commission's website regularly to keep track of filing deadlines. 

On 13 October 2017, Bell filed a reply to Ebox’s submission regarding confidentiality. Bell argued that it did not disclose any specific information as to the various discussions and negotiations with Ebox, in terms of rates or offers exchanged. Bell argued that Ebox takes this position in order to limit the Commission's evaluation of relevant facts that would refute the undue preference allegation filed by Ebox. In this letter, Bell reiterated that it has been, and remains, prepared to offer its services to Ebox on reasonable terms and conditions.

On 17 October 2017, Corus filed a letter asking the Commission to reject Ebox’s procedural request and asking that Corus’ intervention be allowed on the public record of the proceeding, for the same reasons set out by Bell.

Decisions

Mandatory mediation

Upon review of the record thus far, the Commission notes that Bell indicates that it is prepared to offer its programming services to Ebox, as long as the terms and conditions for the distribution of its services are reasonable. On that basis, the Commission considers that the main question in this case is whether Bell is offering Ebox reasonable rates for the distribution of its programming services.

In this regard, the Commission has consistently encouraged parties to negotiate when it comes to matters related to wholesale rates.  Accordingly, the Commission requires that parties resume mediation, pursuant to section 14(2) of the Regulations and pursuant to condition no.16 of the Revised exemption order for terrestrial broadcasting distribution undertakings serving fewer than 20,000 subscribers, BRP 2015-543

In doing so, the Commission appoints Bernard Montigny, Senior Director, Dispute Resolution, as mediator in this file. Mediation will take place concurrently with the current undue preference proceeding.

The Commission notes that section 6 of the Wholesale Code (BRP 2015-438) sets out that a reasonable rate is one which is based on the fair market value of the service, and takes into consideration the following factors, where applicable:

  1. historical rates;
  2. penetration levels, volume discounts, and the packaging of the service;
  3. rates paid by unaffiliated BDUs for the programming service;
  4. rates paid for programming services of similar value to consumers, taking into consideration viewership;
  5. 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, taking into consideration viewership;
  6. the retail rate charged for the service on a stand-alone basis; and
  7. the retail rate for any packages in which the service is included.

Noting that Ebox’s distribution undertaking is not yet launched, the Commission considers, a priori, that factor c (rates paid by unaffiliated BDUs for the programming service) is highly probative in this case.

Right of reply to Bell

The Commission notes that, in the context of an allegation of undue preference, the onus is on the respondent to demonstrate that a preference or disadvantage is not undue. Since the burden of proof is reversed, the Commission considers that it is reasonable to afford Bell a right of reply to interveners, in order to have the opportunity to respond to arguments raised in their interventions. Ebox, as the applicant in this case, retains the right to file a final reply.

Confidentiality

Confidentiality is critical to the mediation process established by the Commission. It is safeguarded by a confidentiality agreement signed by the parties. Notably, information shared during mediation must remain confidential vis-a-vis the tribunal, which may be called upon to render determinations on the same issues within the context of a formal process. Accordingly, no information related to staff-assisted mediation, or to offers exchanged in the context of such mediation, can be disclosed by any party, whether filed on the public record or in confidence.

Based on the above, the Commission orders that the information identified by Ebox be struck from Bell’s answer and Corus’ intervention, as well as in the translation of Bell’s answer and Bell’s letter dated 13 October 2017, both of which contain some of the same statements.

Bell may, in the context of its reply, elaborate on its statement that it is prepared to offer its services to Ebox on reasonable terms and conditions, as long as such arguments are limited to terms and conditions that it is prepared to offer to Ebox, on a going forward basis, for the distribution of its services.

TELUS’ intervention

The Commission considers that a two-day delay is not unreasonable and that it is therefore appropriate to accept TELUS’ intervention in this case, noting that Ebox and Bell will have the opportunity to respond to it. 

Procedure to be followed

Parties must make themselves available for two consecutive days of mediation.  In this regard, Mr. Bernard Montigny’s staff will contact the parties to confirm dates.

By 3 November 2017, omitting all confidential information identified by Ebox:

By 8 November 2017, Bell may file a reply.

By 14 November 2017, Ebox may file a final reply.

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.

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, all copies of submissions are to be sent to julia.bresee@crtc.gc.ca.

A copy of this letter and all related correspondence will be added to the public record of the proceeding.

Yours Sincerely,

Scott Hutton
Acting Secretary General

c.c.: Sylvie Courtemanche, Corus Entertainment Inc.
Ann Mainville-Neeson, TELUS Communications Inc.

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