Telecom - Secretary General Letter addressed to Peggy Tabet (Québecor Media Inc.) and Stephen Schmidt (TELUS)

Ottawa, 29 January 2024

Reference(s): 8622-V3-202306381

BY EMAIL

Peggy Tabet
Vice President, Regulatory and Environmental Affairs
Québecor Media Inc.
612 Saint-Jacques Street
Montreal QC H3C 4M8
tabet.peggy@quebecor.com

Stephen Schmidt
Vice-President - Telecom Policy & Chief Regulatory Legal Counsel
Telecom Policy & Regulatory Affairs
TELUS
Floor 5, 215 Slater St.
Ottawa, Ontario
Canada K1P 0A6
regulatory.affairs@telus.com

Subject: Request for final offer arbitration regarding mobile virtual network operator access rates

Peggy Tabet and Stephen Schmidt,

This letter is to advise you that the Commission accepts the request by Québecor Media Inc. (QMI), on behalf of Vidéotron Ltd. and Freedom Mobile Inc., for final offer arbitration (FOA) with TELUS Communications Inc. (TELUS).

This letter sets out the matter upon which the Commission will make a determination and procedures associated with the conduct of this process.

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 9 November 2023, the Commission received a letter from QMI, requesting FOA for the purpose of establishing rates for the provision of mobile virtual network operator (MVNO) access service by TELUS to QMI.

In a letter dated 16 November 2023, Commission staff sent a request for information to QMI and TELUS seeking clarification on the proposed format and rate structure of the offers to be considered in the FOA process along with justification. In their replies, the parties proposed similar final offer rate structures.   

On 27 November 2023, the Commission suspended the FOA request while the parties participated in staff-assisted mediation (SAM). However, in a letter dated 21 December 2023, QMI informed the Commission that the parties had not been able to reach an agreement through SAM and asked the Commission to initiate an FOA process.

On 12 January 2024, TELUS opposed QMI’s request to initiate an FOA process and stated that negotiations are ongoing between the parties. TELUS stated that these negotiations have resulted in rate proposals that are very close to each other, and that such a difference in rates is normally resolved in the marketplace. In TELUS’ view, QMI is gaming the framework by using FOA to obtain rates it would not normally have access to by way of commercial negations. TELUS argued that accepting QMI’s FOA request would equate to normalizing the use of FOA rather than using it on an exceptional basis. TELUS alleged that this would constitute a change to the existing policy and that therefore the dispute does not meet all of the criteria set forth in Information Bulletin CRTC 2019-184.

On 16 January 2024, QMI submitted a reply to address the arguments that opposed FOA set out in TELUS’ reply of 12 January 2024.  TELUS subsequently requested that QMI’s reply either be struck from the record as it was out of process, or that it be granted the right to reply to cure the procedural issue it raised.

Commission Decisions

1. QMI’s request for FOA;

On whether to accept or reject the request for FOA, Telecom Decision CRTC 2021-130  established FOA as a regulatory backstop to commercial negotiations, in the event those negotiations fail. Given that parties have negotiated for some time already, that an agreement was not reached in the course of staff-assisted mediation, and that the Commission has made it clear to parties that it expected MVNO access agreements to be in place 90 days following the publication of Telecom Order CRTC 2023-133, the Commission does not believe that accepting this FOA constitutes a change in policy as alleged by TELUS. TELUS’ argument that QMI may be motivated to present an offer that does not reflect fair market value is not grounds to refuse QMI’s request to initiate FOA. If that is the case, the Commission can select TELUS’ offer, or reject both offers if neither are just and reasonable.

The Commission is therefore of the view that FOA is appropriate in this case and that QMI’s request meets all the criteria set forth in Information Bulletin CRTC 2019-184:

• the dispute only involves one issue: rates for the provision of TELUS’ MVNO access service to QMI; 
• the dispute is bilateral;
• the parties have been unable to resolve the dispute by other methods;
• the dispute is relevant to the regulation and supervision of the Canadian telecommunications system; and,
• the resolution of the dispute does not require the establishment of a new policy or change to an existing policy.

Accepting this application is also consistent with the principles set out in Practice and procedure for final offer arbitration to determine mobile virtual network operator access rates, Information Bulletin CRTC 2022-337.

2. Rate structure

Based on the rate structures proposed by both parties, the Commission accepts QMI’s application for FOA to determine MVNO access rates with seamless handoff based on the following terms:

• this FOA will determine the rates for # #; and
• the rates to be determined are for # #.

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

• which party’s offer better represents just and reasonable rates for MVNO access with seamless hand-off capability based on the following rate structure format?

#

#

Each party must separately provide one final offer, which must be consistent with the Commission’s characterization of the matter in dispute, as noted above. Commission staff may ask the parties to respond to clarifying questions following the submission of final offers, as needed, to ensure a complete record for the Commission to make a determination.

The Commission will examine the final offers submitted by the parties and will select one offer in its entirety. The Commission’s decision will be binding on the parties. On an exceptional basis, where neither party’s final offer is, in the opinion of the Commission, in the public interest, both final offers will be rejected by the Commission and the parties involved will be so advised. In such case, the Commission may suggest or initiate a different dispute resolution mechanism.

3. TELUS’ request to strike QMI’s reply of 16 January 2024

Regarding QMI's reply and TELUS's procedural request relating to it, which added to the matters to be disposed of in this letter, the Commission has decided to strike QMI's 16 January 2024 letter from the record, and the Commission will not consider it in making its decision.

The Commission also reminds the parties that they are encouraged to continue negotiations in parallel with the FOA process. If parties come to an agreement, they can withdraw from the FOA process. Both parties will have to confirm that an agreement has been reached.

Documents to be provided

The Commission requires that the parties each file their final offers for MVNO access with the Commission by 13 February 2024.

Please refer to the attached Procedural Appendix for the procedure to be followed in the filing of documents.

Alongside their final offers, parties have the opportunity, in their submissions, to indicate which policy objectives would be furthered by their respective proposal, as well as which factors set out in paragraph 14 of Telecom Information Bulletin CRTC 2022-337 should apply, how such factors should be interpreted, and how much weight should be accorded to a given factor in assessing proposals. In their submissions, parties can also propose and provide justification for other factors they believe the Commission should consider, as long as the other party can comment, in its reply, as to the pertinence of the proposed factors in determining the appropriate MVNO access rates. These submissions are not to exceed 30 pages in length. As indicated in Information Bulletin CRTC 2019-184, the Commission may, upon request, permit a party to include an appendix to its final offer submission.

To complete the record on the FOA request, QMI is to provide by 13 February 2024:

• copies of all MVNO access agreements entered into;
• copies of all current off tariff roaming access agreements, along with any related agreements that contain information pertinent to a current agreement, allowing QMI to roam on another Canadian network, along with a ranking, with pertinent rationale, of relevance for this FOA;
• in an Excel spreadsheet, actual number of subscribers and usage on QMI’s own network for the past 12 months, broken down by brand, as well as monthly volume projections for the use of TELUS’ MVNO network, including new subscribers due to access to the MVNO network, and total number of subscribers using the MVNO network. This should include usage (actual and projected) for calls, SMS and data, along with any pertinent assumptions used to establish the projections;
• in an Excel spreadsheet, detailed costs, and cost breakdown of providing the network access to QMI’s customers through its own network. Where possible, please provide the costs on a per subscriber basis. The Excel spreadsheet must include all formulas used to derive the cost elements and shall not include hard coded numbers that are not supported by either an internal / external reference, explanation, or other supporting rationale. The Excel spreadsheet must further include descriptions of all relevant variables, the vintage of the data used, as well as explanations of any assumptions used with supporting rationale;
• in an Excel spreadsheet, details and breakdowns of all costs incurred, other than the rates being decided through this FOA, to provide wireless access service to customers through the TELUS MVNO network, on a per subscriber basis. The Excel spreadsheet must include all formulas used to derive the cost elements, inclusions and exclusions, and shall not include hard coded numbers that are not supported by either an internal / external reference, explanation, or other supporting rationale. The Excel spreadsheet must further include descriptions of all relevant variables, the vintage of the data used, as well as explanations of any assumptions used with supporting rationale;
• any documentation relevant to establishing the cost of providing seamless hand-off capability and an explanation of how, or if, it was incorporated into the proposed rates; and
• any other data relevant to justify QMI’s final offer.

To complete the record on the FOA request, TELUS is to provide by 13 February 2024:

• copies of all MVNO access agreements entered into;
• copies of all off tariff roaming access agreements entered into, along with any related agreements that contain information pertinent to a current agreement, providing access to TELUS’ network. In order to reduce the burden of filing additional agreements, all agreements that were filed by TELUS in response to the Commission letter dated 19 August 2022, will form part of the record of this FOA process. The Commission will maintain the claims of confidentiality requested at that time for this proceeding.
• in an Excel spreadsheet, details and breakdowns of all costs incurred, to provide wireless access service to TELUS’ own subscribers, on a per subscriber basis. The Excel spreadsheet must include all formulas used to derive the cost elements, inclusions and exclusions, and shall not include hard coded numbers that are not supported by either an internal / external reference, explanation, or other supporting rationale. The Excel spreadsheet must further include descriptions of all relevant variables, the vintage of the data used, as well as explanations of any assumptions used with supporting rationale;
• in an Excel spreadsheet, detailed costs, and cost breakdown of providing the MVNO access service to QMI, including the costs of providing seamless hand-off capability. Where possible, please provide the costs on a per subscriber basis. The Excel spreadsheet must include all formulas used to derive the cost elements and shall not include hard coded numbers that are not supported by either an internal / external reference, explanation, or other supporting rationale. The Excel spreadsheet must further include descriptions of all relevant variables, the vintage of the data used, as well as explanations of any assumptions used with supporting rationale;
• any other data relevant to justify TELUS’ final offer.

After receiving the offers, the Commission will review them to confirm that they are within the identified scope and that all information requested by the Commission has been appropriately submitted. Should clarification questions be required, Commission staff will notify the parties and specify the timeline for a response. Upon confirming that the offers are within the identified scope and are complete, Commission staff will forward to each party a copy of the other party’s offers. The Commission aims to submit each party with a copy of the other party’s offer within five days of receiving the final offers.

The parties will then have five days following receipt of the other party’s offers, to file comments with the Commission on the other party’s final offer, 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 Telecom Cover Page and using the application number 8622-V3-202306381.

The parties may contact Philippe Nadeau at 819-664-7849 or Philippe.Nadeau@crtc.gc.ca if they require additional information regarding the organization and conduct of the FOA proceeding.

Where a document is to be filed or served by a specific date, the document must be received, not merely sent, by that date. In addition to filing with the Commission via “My CRTC Account”, the parties must also send copies of all the documents in question to Philippe Nadeau at Philippe.Nadeau@crtc.gc.ca, Michel Murray at michel.murray@crtc.gc.ca, and Joël Beaupré at joel.beaupre@crtc.gc.ca.

Parties may file certain information in confidence as detailed in the appendix to this letter. The Commission is of the view that it is of particular importance for the attainment of the objectives set out in the Telecom Regulatory Policy CRTC 2021-130, as well as in the public interest, that all carriers that provide or access wholesale MVNO services be provided with sufficient information to understand the Commission’s rationale and decisions. As such, the Commission will aim to release as much information and rationale as possible to the public in its decisions on FOA proceedings on MVNO access rates. Releasing as much information as possible would also assist other carriers involved in the conclusion of a MVNO access agreement.

In keeping with this objective, the parties should prepare their various submissions as part of this process with a view to disclosing information on the public record to the maximum extent possible, which will also assist the Commission to release FOA decisions as expeditiously as possible.

As an exception to the Canadian Radio-television and Telecommunications Commission Rules of Practice and Procedure, these final offers and related submissions are not to be served on the other party at the time of filing. Upon confirmation that both offers are within the identified scope of the proceeding as established by the Commission, the Commission will forward to each of the parties a copy of the other party’s offer.

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

Yours sincerely,

Original signed by

Marc Morin
Secretary General

Procedural Appendix

Procedures

The Canadian Radio-television and Telecommunications Commission Rules of Practice and Procedure (the Rules), which are referred to in Information Bulletin CRTC 2019-184,  and Information Bulletin CRTC 2022-337, set out the practices and procedures to be followed in FOA regarding MVNO access rates, as well as matters relating to the filing of documents and confidentiality.^Footnote1 Parties should be aware that any deviation from the FOA process may result in delays to the applicable timelines.

Filing of documents

Parties must follow the naming convention noted below when filing documents via GC key.

Application number – FOA – Filing party – Document name – Document version – Filing date (yyyy-mm-dd)

Confidentiality

In accordance with paragraph 59 of Information Bulletin CRTC 2019-184 and paragraph 19 of Information Bulletin CRTC 2022-337, existing Commission confidentiality rules and practices will apply throughout the FOA proceedings.

The applicable statutory regime and associated practices are set out at sections 38 and 39 of the Telecommunications Act and in sections 30 to 34 of the Rules. The procedures for filing confidential information or requesting its disclosure are further described in Broadcasting and Telecom Information Bulletin CRTC 2010-961.

A party designating information as confidential must make such designation at the time that they file the document that contains the relevant information. 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 in its disclosure.

In FOA proceedings there are generally three versions of each document filed with the Commission: (i) a full, complete version that contains all confidential information and is for use solely by the Commission; (ii) a version that is provided to the other party to the FOA and that includes the complete details of the party’s offer but generally omits certain details that are of a commercially sensitive nature; and (iii) a version that is placed on the public record and generally omits commercially sensitive information as well as details pertaining to the final offer, among other things. When filing their submissions, parties must clearly designate each version of the submitted document by marking the top of every page of each version of the document with one of the following three designations: “Public version”, “Confidential version for party X”, or “Confidential CRTC version”.

In the confidential CRTC version, parties are to highlight any text that is designated confidential: in green to denote confidential to the other party and the public, and in yellow to denote confidential to the public but disclosed to the other party.

Date modified:

2024-01-29