Telecom Commission Letter addressed to Christopher J. Edwards (Canadian Cable Systems Alliance Inc.) and Agatha Pezzi (TLN Media Group)

Ottawa, 3 May 2019

Our reference: 2019-0252-8

BY EMAIL

Mr. Christopher J. Edwards
Vice-President, Regulatory Affairs
Canadian Cable Systems Alliance Inc.
cedwards@ccsa.cable.ca

Ms. Agatha Pezzi
Senior Vice-President
TLN Media Group
agathap@tlntv.com

Re: Request for final offer arbitration (2019-0252-8) with respect to Telelatino

Dear Ms. Pezzi and Mr. Edwards:

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 Canadian Communication Systems Alliance (CCSA) for final offer arbitration (FOA) with Telelatino Network Inc. (TLN).

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

The Commission strives to release FOA decisions as expeditiously as possible. However, any procedural issues that arise may result in delays to the applicable timelines (see details in the attached Procedural Appendix).

The application

On 17 December 2018, the Commission received a request for FOA from CCSA, pursuant to section 12(1) of the Broadcasting Distribution Regulations, relating to a commercial dispute with TLN regarding the Telelatino programming service (the 2018 FOA application). This application was subsequently suspended by the Commission, to allow further negotiations.

On 26 March 2019, CCSA submitted a request to withdraw its 2018 FOA application and filed a new request for FOA, pursuant to section 12(1) of the Broadcasting Distribution Regulations, for the purpose of establishing various rates and retroactive payments (the 2019 FOA application).

CCSA noted that this dispute has been ongoing for many years. CCSA further noted that since 2016, it has participated in dispute resolution processes with TLN and saw no prospect of the parties reaching a timely agreement without the Commission’s assistance. CCSA indicated that the dispute is an appropriate matter for the Commission’s FOA process, for the following reasons:

In its response letter dated 2 April 2019, TLN indicated that it was surprised to receive CCSA’s application for FOA and did not support the request. TLN stated that it hoped to resolve the dispute directly with CCSA and welcomed the Commission’s assistance, albeit without resort to FOA.

On 4 April 2019, TLN filed a second response letter adding that it disagreed with CCSA’s depiction of the dispute and proposed an alternative characterization of the rates that should be established while maintaining retroactive payments.

Additional Procedural Issues

On 5 April 2019, CCSA filed a request to strike out TLN’s responses from the record. Among other things, CCSA’s argued that TLN had been given an unfair advantage in being granted extensions that were contrary to the timelines established in Information Bulletin 2013-637.

The Commission notes that the FOA applications by CCSA were made solely pursuant to the Broadcasting Distribution Regulations, which apply only to licensed BDUs. However, a number of CCSA’s member companies are BDUs operating under Broadcasting Order CRTC 2015-544: Terms and conditions of the exemption order for terrestrial broadcasting distribution undertakings serving fewer than 20,000 subscribers (Broadcasting Order 2015-544). The corollary dispute resolution provisions in the Broadcasting Order 2015-44 should therefore be considered within this FOA proceeding.

Commission Decisions

The Commission approves CCSA’s request to withdraw its 2018 FOA application.

The Commission denies CCSA’s request to strike TLN’s responses from the record, as the delay incurred does not constitute sufficient rationale to justify the removal of these documents from the record.

Upon review of the current record, the Commission considers that FOA is an 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, the Commission accepts CCSA’s 2019 FOA application.

In accordance with paragraph 21 of Information Bulletin 2013-637, and pursuant to sections 12 to 15 of the Broadcasting Distribution Regulations and sections 16 and 17 of Broadcasting Order 2015-544, the matter upon which the Commission will make a determination is as follows:

Establishing the rates for packaged distribution of the Telelatino service by CCSA licensed and exempt members for a term beginning as of the day on which Telelatino was first made available to CCSA in the absence of a commercial agreement Footnote1 and ending on the day previously agreed upon by the parties.

The Commission hereby notifies the parties that other matters relating to the distribution of the Telelatino service by CCSA members will not be considered in this proceeding and are left to negotiation between the parties, including with the assistance of Commission staff.

Accordingly, in the final offers they will submit, the parties must propose offers consistent with the Commission’s above noted characterization of the matter at dispute. A confidential template to this effect has been provided to the parties. The Commission will examine the final offers submitted by the parties and will select one in its entirety Footnote2 . The Commission’s decision will be binding on the parties.

Documents to be provided

The Commission requires that the parties each file their final offers with the Commission by 20 May 2019. A confidential template in Excel format has been provided to facilitate the parties’ submissions. Please refer to the attached Procedural Appendix for the procedure to be followed in the filing of documents, in addition to Information Bulletin 2013-637.

When preparing your arguments, please refer, where applicable, 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.

To complete the record, CCSA must also provide additional information as set out below. A confidential template in Excel format has been provided to facilitate the transmission of that information when applicable. Please note that the information provided by CCSA should be provided on an aggregated basis, whenever possible. For each year or month since the expiry of the last commercial agreement to present (in accordance with the confidential template), please provide the following by 20 May 2019:

  1. the latest affiliation agreement between CCSA and TLN for the distribution of Telelatino and any applicable amendment (or whatever term sheet that may apply);
  2. the wholesale rates paid by CCSA for Telelatino when offered in a preassembled and/or build-your-own package (as the case may be);
  3. the wholesale rates paid by CCSA for other comparable services (Canadian and foreign) in a preassembled and/or build-your-own package (as the case may be);
  4. the average monthly number of subscribers to Telelatino, in a preassembled and/or build-your-own package(as the case may be);
  5. the average monthly number of subscribers to each comparable service (Canadian and foreign) distributed by CCSA;
  6. the retail rate for packages offered by CCSA members that include Telelatino;
  7. CCSA viewership to Telelatino (e.g., set top box data, average minute audience, total number of hours watched); and
  8. CCSA viewership to all other comparable services offered by CCSA (e.g., set top box data, average minute audience, total number of hours watched), if available.

To complete the record, TLN must also provide additional information as set out below. A confidential template in Excel format has been provided to facilitate the transmission of that information when applicable. Please note that the information provided about CCSA should be provided on an aggregated basis, whenever possible. For each year or month since the expiry of the last commercial agreement to present (in accordance with the confidential template), please provide the following by 20 May 2019:

  1. Affiliation agreements in effect between TLN and other BDUs in the Canadian market for the distribution of Telelatino;
  2. For each BDU (other than CCSA) that distributes Telelatino:
    1. wholesale rates broken down by distribution in a preassembled and/or build-your-own package (as the case may be),
    2. number of subscribers and actual penetration levels, and
    3. applicable volume discount;
  3. Data on the tuning or viewership to Telelatino, including
    1. average minute audience (AMA), and
    2. total number of hours watched;
  4. Total payments received by TLN from each BDU (including CCSA) that distributes Telelatino.

By 27 May 2019, once Commission staff has confirmed that the offers respond to the identified scope of the proceeding, Commission staff will forward to each party a copy of the other party’s offer.

The parties will have 5 days to file comments on the other party’s final offer with the Commission, and to serve a copy of those comments on the other party.  However, neither party will be authorized to amend its offer.

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.

A copy of this letter will be added to the public record.

Responsibilities of the parties

The parties may contact Marie-Claire Bouthillier at 873-353-1612 or at marie-claire.bouthillier@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 marie-claire.bouthillier@crtc.gc.ca.

Yours sincerely,

Claude Doucet
Secretary General

c.c.:      Lori Rosenberg, Canadian Cable Systems Alliance Inc., lrosenberg@ccsaonline.ca
Jay Thomson, Canadian Cable Systems Alliance Inc., jthomson@ccsaonline.ca
Aldo DiFelice, TLN Media Group, aldo@tlntv.com

Procedural Appendix

Parties should be aware that deviation from the final offer arbitration process set out in Information Bulletin CRTC 2013-637 may result in delays to the applicable timelines.

General process

As set out in the Information Bulletin CRTC 2013-637, FOA usually involves a two-step process: (1) the submission of the final offer, and (2) comments.

Parties are responsible for including concise supporting arguments stating all the facts when they file their final offers.  Since the purpose of the comments is to allow each party to comment on the other party’s final offer, procedural fairness requires that the parties’ entire positions be put forth at the beginning of the process (i.e., as part of the final offer).  It is inappropriate to file new evidence and formulate new arguments as part of the comments, if such evidence or arguments could have been filed or formulated when filing the final offers.

Accordingly, the process does not generally provide for parties to file a reply to comments as part of the usual final offer arbitration process.

In the event that a party considers that new evidence or argument has been filed in the context of the comment phase, parties may request from the Commission, in writing, a right of reply, with supporting rationale for the request.

Filing of documents

Generally, there are three versions of each document filed with the Commission in the context of an FOA proceeding:  a version to be placed on the public record (which generally omits details pertaining to the final offers, for instance), a version to be provided to the other party to the FOA (which generally omits certain details which are commercially sensitive), and a full version (containing all confidential information) for the CRTC.

The onus is on each party to ensure that its own sensitive information has been treated appropriately by the other party to the FOA, in reviewing the public versions submitted to the CRTC.

In submitting their filings, parties must clearly designate each version, by marking, at the top of every page of the submission:

Parties must follow the following naming convention in filing documents via GC key:

All public versions of documents must be provided at the same time as the confidential versions, as well as any translations that are to be provided.

Confidentiality

In accordance with paragraph 40 of Information Bulletin CRTC 2013-637, existing Commission confidentiality rules and practices will apply throughout the FOA proceedings.  The applicable rules and practices are set out in the Canadian Radio-television and Telecommunications Commission Rules of Practice and Procedure (the Rules) and described in Broadcasting and Telecom Information Bulletin 2010-961.

Section 31(1) of the Rules provides that in broadcasting matters, a party may designate information related to the following as confidential:

  1. information that is a trade secret;
  2. financial, commercial, scientific or technical information that is confidential and that is treated consistently in a confidential manner by the person who submitted it; or
  3. information the disclosure of which could reasonably be expected
    1. to result in material financial loss or gain to any person;
    2. to prejudice the competitive position of any person; or
    3. to affect contractual or other negotiations of any person.

Section 31(2) of the Rules provides that the party must make the designation at the time that they file the document that contains the information. Moreover, the party that designates information as confidential must provide reasons, as well as any supporting documents, why the disclosure of the information would not be in the public interest, including why the specific direct harm that would be likely to result from the disclosure would outweigh the public interest.

[These sections are only an excerpt of the applicable Rules.]

Matters with orespect t confidentiality can be set out in a covering letter to the party’s final offer or comment submission, and will not be counted towards the page limits set out in Information Bulletin 2013-637.

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