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Broadcasting Commission Letter addressed to Nathalie Dorval (Cogeco Connexion Inc.) and Kevin Goldstein (Bell Media Inc.)

Ottawa, 21 May 2020

File number: 2020-0216-1

By email

Nathalie Dorval
Vice-President, Regulatory Affairs and Copyright
Cogeco Connexion Inc.
Nathalie.Dorval@cogeco.com

Kevin Goldstein
Vice President, Regulatory Affairs, Content and Distribution
Bell Media Inc.
Kevin.Goldstein@bell.ca

Re: Application for final offer arbitration with respect to a dispute between Cogeco Connexion Inc. and Bell Media Inc.

Dear Ms. Dorval and Mr. Goldstein:

Pursuant to section 10(1)(h) of the Broadcasting Act, the Commission has made regulations related to resolving disputes, including sections 12 to 15 of the Broadcasting Distribution Regulations, as well as sections 14 and 15 of the Discretionary Services Regulations. Consistent with these regulations and Broadcasting and Telecom Information Bulletin CRTC 2019-184 (Information Bulletin 2019-184), this letter is to advise the parties that the Commission accepts the request by Cogeco Connexion Inc. (Cogeco) for final offer arbitration (FOA) with Bell Media Inc. (Bell) for the discretionary service VRAK.

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

In its application submitted on 25 March 2020, Cogeco argued that this case meets all of the criteria outlined in Information Bulletin 2019-184 for FOA. Following its review, staff communicated with Cogeco, informing them that it omitted to propose a term and rate structure for the FOA proceeding, and that the Commission’s usual practice is to limit the scope as much as possible, including limiting the number of services.

On 15 April 2020, Cogeco provided the additional information, much of which was submitted in confidence to the Commission and Bell, and also included a proposal to limit the scope of the proceeding to VRAK.

On 21 April 2020, Bell confirmed that it was in agreement with Cogeco’s proposal, and commented on the information submitted in confidence.

Commission Decisions

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 2019-184. Accordingly, the Commission accepts Cogeco’s FOA application.

In accordance with paragraph 22 of Information Bulletin 2019-184, the matter upon which the Commission will make a determination is as follows:

The Commission hereby notifies the parties that other matters relating to the distribution of VRAK by Cogeco will not be considered in this proceeding and are left to negotiation between the parties, including the assistance of Commission staff, if necessary.

In their final offers, 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. Commission staff will communicate with the parties to schedule a mandatory session of staff-assisted mediation to support reaching a mutually-beneficial solution.

The Commission will examine the final offers submitted by the parties and will select one in its entirety. Footnote1 The Commission’s decision will be binding on the parties.

Documents to be provided

The Commission requires that the parties file their final offers with the Commission by 5 June 2020. Please refer to the attached Procedural Appendix for the procedure to be followed in the filing of documents, in addition to Information Bulletin 2019-184.

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 will 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, Cogeco must also provide additional information as set out below by 5 June 2020. A confidential template in Excel format has been provided to facilitate the transmission of that information when applicable:

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

To complete the record, Bell must also provide additional information as set out below by 5 June 2020. A confidential template in Excel format has been provided to facilitate the transmission of that information when applicable:

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

By 10 June 2020, 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 five days following receipt of the other party’s offerto 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 Matthew Tošaj at 613-878-6887 or at Matthew.Tosaj@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 Differends-disputes@crtc.gc.ca, and copy Matthew Tošaj.

Yours sincerely,

Claude Doucet
Secretary General

Procedural Appendix

Information Bulletin 2019-184 sets out the practices and procedures to be followed in FOA (par. 17-33), as well as matters relating to the filing of documents and confidentiality (par. 58-64). Parties should be aware that any deviation from the final offer arbitration process may result in delays to the applicable timelines.

Filing of documents

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

Three versions can be used: “CRTC”, “Other party”, and “Public”. In the CRTC version, submitted in confidence, parties are to highlight text that is designated confidential towards the other party in green, and confidential towards the public in yellow.

Confidentiality

In accordance with paragraph 59 of Information Bulletin CRTC 2019-184, 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.]

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