Telecom - Commission letter addressed to Dennis Béland (Quebecor Media Inc.) and Philippe Gauvin (Cablevision du Nord de Québec Inc.)

Ottawa, 10 December 2020

Our reference: 8622-V3-202005511

BY EMAIL

Mr. Dennis Béland
Vice-president, Regulatory Affairs
Telecommunications, Quebecor Media Inc.
612 St-Jacques Street, 15th floor
Montréal QC  H3C 4M8
regaffairs@quebecor.com

Mr. Philippe Gauvin
Deputy Chief, Legal Services
Cablevision du Nord de Québec Inc.
160 Elgin Street, 19th floor
Ottawa ON  K2P 2C4
bell.regulatory@bell.ca

RE: Application filed by Videotron regarding TPIA order processing by Cablevision

On 1 September 2020, pursuant to Part 1 of the CRTC Rules of Practice and Procedure, Quebecor Media, on behalf of its subsidiary Videotron (Videotron), filed an application regarding the refusal of Cablevision du Nord du Québec Inc. (Cablevision) to process in a timely manner all service orders for third-party Internet access (TPIA) service and orders for increased TPIA interconnection capacity from Videotron in Abitibi-Témiscamingue. The parties have since reached an agreement on the second issue of increased interconnection capacity.

Videotron argues that Cablevision’s refusal to provide the necessary personnel to process its access service orders constitutes a blatant violation of Cablevision’s General Tariff for TPIA (TPIA tariff) and section 27(2) of the Telecommunications Act (the Act). According to Videotron, barely one month after launching its services, it already had a long waiting list and had to cease its marketing activities in the region.

In light of the situation presented, the Commission has addressed the following issues:

1. Does Cablevision’s response regarding service order processing for Videotron constitute a violation of its TPIA tariff or section 27(2) of the Act?
2. What would be an appropriate capacity for Cablevision to process orders for Videotron’s TPIA service?
3. Should the Commission order Cablevision to comply with the design and cost report for interconnection capacity?
4. Should a refusal by Cablevision to comply with the decision issued as a result of this proceeding lead to an administrative monetary penalty being imposed under section 72.001 of the Act?

In addition to Videotron and Cablevision, the Competitive Network Operators of Canada (CNOC) and Teksavvy Solutions Inc. (Teksavvy) have submitted interventions.

Position of parties

Videotron

Videotron has indicated that, when it launched its services in the Abitibi-Témiscamingue region on 4 August 2020, it advised Cablevision that it would require much greater order processing capacity than it had previously stated. As a result of Cablevision’s refusal to increase its order processing capacity for Videotron accordingly, Videotron is now forced to advise potential customers that installations would not be completed for several months.

Videotron agrees that Cablevision was entitled to a reasonable period of time to increase its order processing capacity. However, between the time of Videotron’s launch and the filing of its application with the Commission, all indications are that Cablevision made no effort to meet the increase in orders.

Videotron asserts that the obligation to meet demand for a regulated service is not at the discretion of Cablevision. There is nothing in the TPIA tariff or in its TPIA service agreement that gives Cablevision the right to refuse to accept orders because it would facilitate its internal staff management or protect its local monopoly.

Videotron states that a simple effort is required by Cablevision to meet an increase in orders and that several strategies are at its disposal. Videotron indicates that it even offered to negotiate an off-tariff agreement with Cablevision to help increase its order processing capacity more quickly, but this offer was refused.

Cablevision

Cablevision indicates that Videotron provided it with TPIA order forecasts dated March 20, May 21 and July 17 2020 with largely identical volumes, except that they were postponed for a few months. Cablevision then hired and trained new employees to meet Videotron’s initial forecasts. It was not until the launch of Videotron’s services that the forecasts skyrocketed, as Videotron advised Cablevision that it was expecting total orders to be much higher than the forecasts made two weeks earlier for the same period, and with demand peaking for one month only to then gradually decline.

Cablevision indicates that expecting it to absorb such an upheaval immediately is inconceivable, and that Videotron seeks to blame it for its own mistakes. It states that Videotron has still not provided it with forecasts for the entire duration of the service, pursuant to section 200.3(f) of the TPIA tariff, which prevents it from properly conducting long-term resource planning, and that it has revised its forecasts with less than a quarter’s notice.

Cablevision indicates that despite these shortcomings by Videotron, it has initiated a short- and medium-term process in good faith to increase its capacity to process Videotron’s orders. It is therefore clearly false that it is doing nothing to meet Videotron’s needs. On the contrary, it has put in place a process that will enable it to respond to the needs of Videotron and other suppliers in the region in a reasonable and realistic manner.

Cablevision indicates that it is unable to increase its pace any faster because the hiring, training and onboarding process takes six weeks. Cablevision operates in a small market, and the requested increases represent a temporary and unjustifiable level based on Videotron’s forecasts.

CNOC and TekSavvy

CNOC submits that the fact that a large TPIA provider such as Videotron is itself meeting difficulties as a competitor provides insight into the situation faced by smaller competitors, including against Videotron. CNOC submits that there has been a lack of recent progress on the service quality issue and believes that the Commission should add this issue to the upcoming review of wholesale wireline and interconnection services. TekSavvy, for its part, supports Videotron’s application but believes that Cablevision should be required to meet its obligations in the future and should be penalized for past violations.

Videotron’s response

Videotron argues that the efforts promised by Cablevision remain largely inadequate, since the customer backlog would not be eliminated for several months, notwithstanding the new service orders that continue to accumulate. Videotron states that its ability to produce long-term forecasts is directly dependent on this dispute, since the Commission’s decision will determine when it will be able to resume its marketing activities in the region. According to Videotron, any communications company must regularly reallocate human resources in response to changing demand.

Commission’s analysis and determinations

I. Violation of the TPIA tariff or section 27(2) of the Act

Section 27(2) ^Footnote1

Shortly after its launch in Abitibi-Témiscamingue, Videotron was forced to interrupt its promotional activities and rethink its growth plans, which has for effect to deprive local residents and small businesses of the benefits of true competition in telecommunications services. Cablevision’s actions and omissions therefore result in a form of discrimination against Videotron and its potential users waiting for connections. Indeed, due to actions from Cablevision during the period covered by Videotron’s application, certain Cablevision customers were able to successfully change service provider, while many others were not able to do so.

The Commission notes that this situation can be frustrating for Videotron and customers awaiting to be connected at a time when Videotron is trying to establish itself in a new market where demand is stronger than expected. It also appears that Cablevision is resisting further increases to its order processing capacity based on forecasts that peak for one month and then decline. While according to Videotron, a simple effort is required of Cablevision and several strategies are at its disposal, the Commission considers that Cablevision operates in a relatively small market and it requires some time to adjust.

The Commission considers that although Cablevision’s conduct constitutes discrimination within the meaning of section 27(2) of the Act, Cablevision has successfully demonstrated that this discrimination is not unjust. Cablevision has taken the necessary steps to meet Videotron’s initial forecasts, has continued to increase its order processing rate considering the substantial increase in the number of orders, has made changes to its web portal, and has submitted a proposal to Videotron which the latter accepted regarding increased interconnection capacity.

TPIA tariff

As for the terms and conditions of the TPIA tariff that are relevant to this proceeding:

• An off-tariff agreement between Videotron and Cablevision is permitted but not mandatory.
• Videotron is responsible for presenting a growth plan covering the service agreement period and for revising it on a quarterly basis, which it has not done.
• The provision of service by Cablevision is subject to certain limitations, including those related to the capacity of its infrastructures and operations. In the circumstances, considering the size of the market and the fact that Videotron’s forecasts do not show a continued growth in the number of its orders, it would be unreasonable to expect Cablevision to have had the capacity to process the increases requested by Videotron in August as quickly and as efficiently as Videotron would have liked.^Footnote2

Accordingly, the circumstances of this proceeding do not establish that Cablevision acted in violation of its TPIA tariff. However, as set out in Telecom Decision 2019-423,^Footnote3 Cablevision is required to provide its TPIA service to any competitor with a genuine interest in the service. In addition, its tariff stipulates that it offers its TPIA service where it offers its Internet access services to its own end users. It must therefore be able to meet its competitors’ actual TPIA needs based on the best forecasts that they are able to make in a timely manner, still in accordance with the provisions of the TPIA tariff and confirmed by the actual number of new subscribers.

Conclusion

The Commission therefore concludes that, by its acts and omissions, Cablevision has discriminated against its competitor Videotron and potential customers, but that this discrimination was not unjust. The Commission also finds that Cablevision did not contravene its TPIA tariff.

II. Appropriate capacity for processing Videotron’s TPIA service orders

Videotron is asking the Commission to order Cablevision to increase its order processing capacity to a certain level starting 1 November 2020. Instead, Cablevision proposes to reach a level it deems more reasonable starting in November and to maintain this pace until June 2021.

Assuming that public enthusiasm for the presence of a new competitor is as Videotron asserts, the approach proposed by Cablevision could result in a limit or cap to Videotron’s ability to meet demand in certain months. Videotron would then be in the unfortunate position, especially for a competitor seeking to establish itself in a new market, of having to constantly readjust its promotional activities and explain the wait times to potential subscribers. It would also be difficult for Videotron to eliminate its backlog of orders and maintain its reputation among potential subscribers.

It seems impractical for the parties for the Commission to order a specific level of order processing that may be too low in some months (and contribute to add to Videotron’s order backlog) and too high in other months (and force Cablevision to train and maintain resources that may not be needed). In reality, the Commission considers that this is an issue that calls for increased collaboration between Videotron and Cablevision to exchange forecasts and other data necessary on a timely basis to determine an appropriate processing pace.

In light of the above and despite the fact that the record does not reflect unjust discrimination or a violation of the TPIA tariff, in accordance with the TPIA tariff and in the absence of a new agreement between the parties, the Commission expects:

• Videotron to submit to Cablevision, within 10 days of the decision date, a growth plan for its end users and wholesale customers using the TPIA service covering the service period, and to revise it on a quarterly basis, in accordance with section 200.3(f) of the TPIA tariff;
• Cablevision to be able to complete, at a minimum, the number of orders per month for Videotron that it committed to in its response as part of this proceeding beginning 1 November 2020, and to maintain this order processing capacity for Videotron thereafter if necessary;
• Cablevision to take the necessary steps, within 40 days of the decision date, to be able to process, in any given month, all of Videotron’s TPIA service orders; and,
• Cablevision to take the necessary steps to eliminate Videotron’s order backlog as soon as possible following the decision, given that it will have had time to increase the capacity of its order-processing infrastructures and operations since Videotron submitted its application on 1 September 2020.

III. Interconnection capacity order

The public record reflects that the parties have agreed on the issue of increased interconnection capacity. The Commission expects the parties to meet their respective commitments in any agreement they reach relating to the issues raised in this proceeding.

IV. Administrative monetary penalty

In light of the above findings that Cablevision did not practice unjust discrimination or violate its TPIA tariff, it would not be appropriate for this proceeding to impose administrative monetary penalties under the Act.

Policy Direction

In reaching its determinations, the Commission took into account the 2006^Footnote4 and 2019^Footnote5 Policy Directions.

The 2006 Policy Direction requires the Commission to rely on market forces to the extent feasible and to regulate, where it is still necessary to do so, in a manner that interferes with market forces only to the minimum extent necessary to achieve the policy objectives of the Act. It also requires the Commission to specify the intended purpose of the regulatory measures it applies. The above determinations advance the materialization of the policy objectives set out in paragraphs 7(a), 7(b), 7(c), 7(f) and 7(h) of the Act. In addition, they rely on market forces to the greatest extent possible by stating certain expectations that the parties respect the terms of the TPIA tariff or any other agreement they enter into, and collaborate more closely with the objective to respond to the needs of the population of Abitibi-Témiscamingue who wish to benefit from competition in the telecommunications market.

As for the 2019 Policy Direction, it states that, in exercising its powers and duties under the Act, the Commission must consider how its decisions can promote competition, affordability, consumer interests and innovation. The Commission considers that the expectations stated in this decision are consistent with these policy directions, particularly with respect to paragraphs (i), (iii), (iv), (v) and (vi). For example, the above determinations aim to ensure that the TPIA tariff and any agreements the parties enter into are respected. This decision also promotes greater collaboration in the provision of wholesale telecommunications services, so that consumers in the Abitibi-Témiscamingue region can enjoy the benefits of healthy competition among providers and have access to competitive, affordable and high-quality services.

Conclusion

The Commission notes that it would have been more appropriate for the parties to handle the issues raised in this request through negotiations, during which the parties could have resolved the dispute bilaterally and used the staff-assisted dispute resolution service if necessary. The issue at the heart of this dispute calls for increased collaboration among the various teams at Videotron and Cablevision, in the service of the population of Abitibi-Témiscamingue, and the Commission expects the parties to work together more closely on this matter in the future.

Original signed by

Claude Doucet
Secretary General

c.c.: Competitive Network Operators of Canada, regulatory@cnoc.ca
TekSavvy Solutions Inc., regulatory@teksavvy.ca

Date modified:

2020-12-10