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TRANSCRIPT OF PROCEEDINGS
FOR THE CANADIAN RADIO‑TELEVISION AND
TRANSCRIPTION DES AUDIENCES DU
CONSEIL DE LA RADIODIFFUSION
ET DES TÉLÉCOMMUNICATIONS CANADIENNES
SUBJECT / SUJET
Expedited procedure for resolving competitive issues /
Procédure accélérée de règlement des questions de concurrence
HELD AT: TENUE À:
Salon Réal Therrien Salon Réal Therrien
7th floor, Central Building 7e étage, l'édifice central
Les Terrasses de la Chaudière Les Terrasses de la Chaudière
1 Promenade du Portage 1, promenade du Portage
Gatineau, Quebec Gatineua (Québec)
March 21, 2005 Le 21 mars 2005
In order to meet the requirements of the Official Languages
Act, transcripts of proceedings before the Commission will be
bilingual as to their covers, the listing of the CRTC members
and staff attending the public hearings, and the Table of
However, the aforementioned publication is the recorded
verbatim transcript and, as such, is taped and transcribed in
either of the official languages, depending on the language
spoken by the participant at the public hearing.
Afin de rencontrer les exigences de la Loi sur les langues
officielles, les procès‑verbaux pour le Conseil seront
bilingues en ce qui a trait à la page couverture, la liste des
membres et du personnel du CRTC participant à l'audience
publique ainsi que la table des matières.
Toutefois, la publication susmentionnée est un compte rendu
textuel des délibérations et, en tant que tel, est enregistrée
et transcrite dans l'une ou l'autre des deux langues
officielles, compte tenu de la langue utilisée par le
participant à l'audience publique.
Canadian Radio‑television and
Conseil de la radiodiffusion et des
Transcript / Transcription
BEFORE / DEVANT:
Andrée Wylie Vice-Chairman,
Barbara Cram Commissioner / Conseillère
Andrée Noël Commissioner / Conseillère
ALSO PRESENT / AUSSI PRÉSENTS:
Stephen Millington Legal Counsel
Len Katz Executive Director, Telecom
Marc O'Sulivan Executive Director,
HELD AT: TENUE À:
Salon Réal Therrien Salon Réal Therrien
7th floor, Central Building 7e étage, l'édifice central
Les Terrasses de la Chaudière Les Terrasses de la Chaudière
1 Promenade du Portage 1, promenade du Portage
Gatineau, Quebec Gatineua (Québec)
March 21, 2005 Le 21 mars 2005
TABLE OF CONTENTS / TABLE DES MATIÈRES
PAGE / PARA
Opening Remarks by the Chairperson / 1 / 1
Remarques d'ouverture par la présidente
Applicant: Aliant Telecom Inc.
Respondent: Bragg Communications Inc.,
operating as Eastlink Telephone
Regarding: Bragg Communications' refusal to accept
Aliant Telecom advertising in Nova Scotia
and Prince Edward Island
File No.: 8624‑A53‑200415530
OPENING REMARKS BY / REMARQUES D'OUVERTURE PAR
Aliant Telecom 4 / 21
EastLink Telephone 15 / 78
QUESTIONS BY / INTERROGATOIRE PAR
The Commission 24 / 120
Aliant Telecom 80 / 427
EastLink Telephone 98 / 501
CLOSING REMARKS BY / REMARQUES DE FERMETURE PAR
Aliant Telecom 108 / 558
EastLink Telephone 109 / 568
Gatineau, Quebec / Gatineau (Québec)
‑‑‑ Upon commencing on Monday, March 21, 2005 at 1000/
L'audience débute le lundi 21 mars 2005 à 1000
OPENING REMARKS / REMARQUES D'OUVERTURE
SEQ 1_0 \* Arabic \r 11 LA PRÉSIDENTE: À l'ordre, s'il vous plaît.
SEQ 1_0 \* Arabic \n2 Bonjour et bienvenue à tous. Je suis Andrée Wylie. Je suis la vice‑présidente de radiodiffusion du CRTC et je présiderai cette audience.
SEQ 1_0 \* Arabic \n3 Mes collègues sont Barbara Cram, à ma droite, conseillère régionale du Manitoba et de la Saskatchewan, et à ma gauche, Andrée Noël, conseillère de la région du Québec, et elles se joignent à moi aujourd'hui pour siéger à cet comité d'audition.
SEQ 1_0 \* Arabic \n4 Avant de débuter, je voudrais souhaiter le bienvenue à Rick French, our new Vice Chair, Telecom. Those who haven't had the opportunity to meet him can at the break, or whenever, as long as it is not while I am speaking.
‑‑‑ Laughter / Rires
SEQ 1_0 \* Arabic \n5 THE CHAIRPERSON: We certainly are happy to have him with us.
SEQ 1_0 \* Arabic \n6 Over the course of this hearing we will be assisted by a number of Commission staff, including, among others, Stephen Millington, our legal counsel, who is to the right of Madam Cram; Len Katz, Executive Director Telecom, who is here and on time ‑‑ good; and Mark O'Sullivan, Executive Director of Broadcasting.
SEQ 1_0 \* Arabic \n7 Please don't hesitate to contact Mr. Millington if you have any procedural questions with respect to the conduct of this hearing.
SEQ 1_0 \* Arabic \n8 The purpose of this oral public hearing is to adjudicate a complaint by Alliant Telecom against Bragg Communications regarding Bragg's refusal to accept Alliant's advertising in Nova Scotia and Prince Edward Island.
SEQ 1_0 \* Arabic \n9 Before we begin, I would like to say a few words about the administration of the hearing.
SEQ 1_0 \* Arabic \n10 This hearing, as you know, is less formal than traditional telecom hearings, and much narrower in scope. Due to its expedited nature, intervenors and the general public will not participate in the oral phase.
SEQ 1_0 \* Arabic \n11 The parties will be asked first to introduce the members of their respective teams. The applicant, followed by the respondent, will have 10 minutes each for opening remarks.
SEQ 1_0 \* Arabic \n12 Following these remarks, the applicant, and then the respondent, will be questioned on matters related to the application, first by the Commission, followed by the applicant, then the respondent, and ending with the Commission's final questions.
SEQ 1_0 \* Arabic \n13 The Commission will not entertain written final argument. Rather, parties will have an opportunity at the end of the hearing to make final oral submissions.
SEQ 1_0 \* Arabic \n14 The Notice of Public Hearing letter indicated that the parties must file all documents with the Commission and serve them on the other parties prior to the hearing. We are, therefore, not inclined to accept any additional documents at this stage.
SEQ 1_0 \* Arabic \n15 There is a verbatim transcript of this hearing being taken by the court reporter. In order to ensure that the court reporter is able to produce an accurate transcript, please make sure that your microphone is turned on when speaking, simply by pushing the button on the microphone.
SEQ 1_0 \* Arabic \n16 If you have any questions on how to obtain all or parts of the transcript that will be produced, please approach the court reporter at the end of the hearing and some indications will be given to you on how to proceed.
SEQ 1_0 \* Arabic \n17 We would like all of you to ensure that cellphones and pagers are turned off at all times when you are in the hearing room.
SEQ 1_0 \* Arabic \n18 As indicated in the Commission's organization and conduct letter of March 17, 2005, we plan to consider this application from 10:00 a.m. to noon, and we intend to issue a brief written decision by April 1, 2005.
SEQ 1_0 \* Arabic \n19 We will now proceed with the opening remarks of Alliant.
SEQ 1_0 \* Arabic \n20 Mr. Fitzpatrick.
OPENING REMARKS BY / REMARQUES D'OUVERTURE PAR
SEQ 1_0 \* Arabic \n21 MR. FITZPATRICK: Thank you, Madam Commissioner.
SEQ 1_0 \* Arabic \n22 First, I will introduce the people here from Alliant today. My name is Paul Fitzpatrick. I am senior legal counsel with Alliant.
SEQ 1_0 \* Arabic \n23 To my left is Sue Harley. She is the Director of Market Integration with Alliant Telecom.
SEQ 1_0 \* Arabic \n24 To her left is Rick Stephen, the Director of Regulatory Matters for Alliant.
SEQ 1_0 \* Arabic \n25 Madam Commissioners, ladies and gentlemen, in this proceeding EastLink wears two hats. First, EastLink is a broadcast distribution undertaking, or BDU, under the Broadcasting Act. It operates a cable TV service in parts of the maritimes. It is virtually a monopoly cable TV provider in its operating territory, including the Halifax Regional Municipality.
SEQ 1_0 \* Arabic \n26 As part of its cable programming, EastLink operates a TV listing channel. This is a channel that you go to to find out what is coming on the various network channels that EastLink carriers. Although it is referred to as the TV listing channel, EastLink also sells advertising there.
SEQ 1_0 \* Arabic \n27 Until recently, Alliant Telecom purchased advertising space on this channel and ran ads for cellular telephone services.
SEQ 1_0 \* Arabic \n28 In October 2004, EastLink advised Alliant that it would no longer carry its advertising, except advertising for the New Brunswick and Newfoundland markets.
SEQ 1_0 \* Arabic \n29 EastLink's second hat is that of a telecommunications service provider. It operates mainly in Nova Scotia and Prince Edward Island, where it is a well known and successful competitive local exchange carrier.
SEQ 1_0 \* Arabic \n30 Historically, Alliant has not sold cellular telephone services. However, this is changing. In December 2004, less than two months after EastLink cancelled Alliant's cellular advertising, EastLink announced a partnership with Rogers Wireless. Under this partnership, Rogers' cellular services will be added to EastLink's bundles.
SEQ 1_0 \* Arabic \n31 Alliant sees EastLink's refusal to accept its advertising as unjust discrimination. It appears that this change in EastLink's policy is intended to give EastLink and its partners an undue or unreasonable preference and to disadvantage Alliant.
SEQ 1_0 \* Arabic \n32 Is EastLink's behaviour within the accepted standards required of BDUs under Canadian regulatory law? Does EastLink's conduct meet the standard of fairness and propriety that public policy dictates?
SEQ 1_0 \* Arabic \n33 The first step in our analysis is to determine which regulatory regime applies, the Broadcasting Act or the Telecommunications Act.
SEQ 1_0 \* Arabic \n34 Alliant submits that EastLink's behaviour is prohibited under both, and it is up to the Commission to decide under which Act this issue should be adjudicated.
SEQ 1_0 \* Arabic \n35 Both section 9 of the Broadcast Distribution Regulations and subsection 27(2) of the Telecommunications Act prohibit unjust discrimination. However, the wording is slightly different under both statutes, and the wording in the Telecommunications Act is slightly broader and arguably offers greater protection to the victims of discrimination.
SEQ 1_0 \* Arabic \n36 Another important difference is that subsection 27(4) of the Telecommunications Act places a reverse onus on the perpetrator of discrimination to prove that any preference or disadvantage is not undue or unreasonable. In other words, if the Telecommunications Act applies, the onus falls to EastLink to show that its discriminatory behaviour is not unjust and that any preference or disadvantage arising from its behaviour is not undue or unreasonable.
SEQ 1_0 \* Arabic \n37 Under what circumstances will the issue fall under the Broadcasting Act?
SEQ 1_0 \* Arabic \n38 Basically, as Alliant understands the authorities, the regulation of "programming services" falls under the Broadcasting Act. If EastLink's TV listing channel is a non‑programming service, then it falls under the Telecommunications Act. This follows from CRTC Telecom Decisions 96‑1, the regulation of broadcasting distribution undertakings that provide non‑programming services, and 97‑2, the regulation of full‑channel TV services.
SEQ 1_0 \* Arabic \n39 How do we determine whether the EastLink TV listing channel is a non‑programming service?
SEQ 1_0 \* Arabic \n40 The Commission has provided guidance on this, and in CRTC Telecom Decision 97‑2, essentially indicated that non‑programming services would include visual images, whether or not combined with sounds, that consist predominantly of alphanumeric text.
SEQ 1_0 \* Arabic \n41 Is the EastLink TV listing channel a non‑programming service?
SEQ 1_0 \* Arabic \n42 Alliant submits that under any common sense interpretation it must be a non‑programming service, consisting predominantly of alphanumeric text.
SEQ 1_0 \* Arabic \n43 The Commission has also indicated that, in this analysis, the word "predominant" is to be given the extraordinary meaning of signifying that which is more influential or more powerful. What are the most influential or powerful constituents of EastLink's TV listing channel? Let's look at some considerations.
SEQ 1_0 \* Arabic \n44 First, what is the channel called? How does EastLink refer to it?
SEQ 1_0 \* Arabic \n45 They call it their TV listing channel because that is what it is. Clearly, its predominant purpose is to list the programming coming on the network channels carried on EastLink's cable service. That listing is done in an alphanumeric format.
SEQ 1_0 \* Arabic \n46 Second, what do people use the channel for?
SEQ 1_0 \* Arabic \n47 Obviously, to obtain information about what is coming on TV. This is useful information. Take it from someone who has stayed in hotels in Halifax and who has availed himself of this channel.
SEQ 1_0 \* Arabic \n48 Alliant Telecom submits that people do not select the TV listing channel to view advertisements or public service announcements or other content that may be featured on the channel. These other features are incidental to the main purpose of the channel.
SEQ 1_0 \* Arabic \n49 To suggest that the TV listing channel's predominant characteristic is something other than providing TV listings, which are presented in an alphanumeric format on the left‑hand side of the screen, is, quite simply, ignoring the plain reality of the situation.
SEQ 1_0 \* Arabic \n50 Alliant submits that the TV listing channel is clearly a non‑programming service and is, therefore, reviewable under the unjust discrimination provisions in section 27(2) of the Telecommunications Act. That provision states:
"No Canadian carrier shall, in relation to the provision of a telecommunications service, or charging of a rate for it, unjustly discriminate or give an undue or unreasonable preference toward any person, including itself, or subject any person to an undue or unreasonable disadvantage."
SEQ 1_0 \* Arabic \n51 Alliant also submits that the burden is now on EastLink to show that its discriminatory behaviour is not unjust, and that any preference or disadvantage that has accrued, or may accrue to it or Rogers Wireless is not undue or unreasonable.
SEQ 1_0 \* Arabic \n52 Of course, EastLink will try to persuade the Commission that the harm accruing to Alliant is minimal. Alliant would respond as follows.
SEQ 1_0 \* Arabic \n53 First, this case is different from most others. It is not a case that lends itself to the easy quantification of negative impact or competitive harm. Alliant submits that this case is more about principle. It is about equity, fairness and propriety, and the expected standards of conduct of the BDU.
SEQ 1_0 \* Arabic \n54 EastLink has singled out Alliant and has subjected it to not unintentional or incidental discrimination, but rather targeted and intentional discrimination.
SEQ 1_0 \* Arabic \n55 As a matter of public policy, is that appropriate? Is that the standard that should apply?
SEQ 1_0 \* Arabic \n56 When you consider the issue at this broad level, Alliant submits that the answer is clear. EastLink ought not to be permitted to abuse its position of authority and power granted under its broadcast distribution licence to give itself and its business partners in a separate industry, telecommunications, an advantage over its competitors.
SEQ 1_0 \* Arabic \n57 Second, EastLink is in a unique and powerful situation vis‑à‑vis the cable television market where it operates. Because it is a virtual monopoly there, it essentially owns access to the cable television viewer. Contrary to EastLink's submission, Alliant has not targeted EastLink's customers in either the telecommunications or broadcasting markets with its ads on EastLink's TV listing channel. In fact, Alliant targeted cable TV viewers. It has specifically tailored its TV listing channel advertising in the past to reach that market.
SEQ 1_0 \* Arabic \n58 By denying Alliant access to this advertising medium, EastLink is completely closing the door to that market, as it were, and denying access to a very cost effective mode of advertising.
SEQ 1_0 \* Arabic \n59 Third, we must not lose sight of the fact that EastLink, in its capacity as a BDU, is using the privileges and authorities granted under that regime to benefit itself and its business partners in another industry, telecommunications.
SEQ 1_0 \* Arabic \n60 Would this be permitted if the shoe were on the other foot and if Alliant were a combined BDU and Canadian common carrier and discriminated against EastLink by denying it Yellow Pages advertising because EastLink was a competitor in the broadcast area?
SEQ 1_0 \* Arabic \n61 The answer to that would be a resounding no, and rightly so.
SEQ 1_0 \* Arabic \n62 Fourth, if this is a de minimus issue, as EastLink suggests, then why has it changed the status quo and proactively taken a decision to deny Alliant access?
SEQ 1_0 \* Arabic \n63 The proof of the significance of this issue is demonstrated by the fact that EastLink has consciously considered the matter and has decided to deny Alliant something that it had previously accepted.
SEQ 1_0 \* Arabic \n64 EastLink's actions show that it is something which it considers significant. If that wasn't the case, it would let the status quo remain.
SEQ 1_0 \* Arabic \n65 One expects that EastLink will also argue that Alliant has other advertising avenues open to it and that Alliant has engaged in discriminatory behaviour by refusing EastLink access to certain advertising vehicles. These arguments are unpersuasive for several reasons.
SEQ 1_0 \* Arabic \n66 First, Alliant only has one vehicle where it sells advertising space to third parties, the Yellow Pages. EastLink is free to advertise wherever it chooses. EastLink's sale of third party advertising on the TV listing channel is a fair analogy to the Yellow Pages. Why shouldn't the same rules of access as apply to Yellow Pages advertising apply to EastLink's advertising services? Why shouldn't there be regulatory symmetry here?
SEQ 1_0 \* Arabic \n67 Second, while Alliant advertises its services on its website, through billing inserts and in other marketing avenues exclusive to Alliant, it does not carry third party advertising there. The same avenue is open to EastLink. It, too, has the ability to advertise on its own website and through its own billing inserts.
SEQ 1_0 \* Arabic \n68 However, should Alliant carry third party advertising on its website, it could do so without being subjected to the Commission's scrutiny, as such website content is not under the Commission's purview.
SEQ 1_0 \* Arabic \n69 Similarly, EastLink may not carry third party advertising on its website, but can do so if it chooses.
SEQ 1_0 \* Arabic \n70 Third, EastLink suggests that it is common for companies to deny their direct competitors access to advertising through their venues, and cites the CBC advertising policy.
SEQ 1_0 \* Arabic \n71 However, to compare the CBC refusing advertising for competitive services is quite different from EastLink, which is operating as a BDU and which is a virtual monopoly cable TV service provider in its operating territories, accepting advertisements in relation to Alliant's telecommunications services.
SEQ 1_0 \* Arabic \n72 The CBC example relates to same industry advertising, whereas EastLink's situation deals with advertising in telecommunications, not broadcasting. Alliant does not compete with EastLink in the broadcast industry.
SEQ 1_0 \* Arabic \n73 In conclusion, Alliant submits that EastLink's conduct is unjustly discriminatory and that it provides EastLink and its business partner, Rogers Wireless, an undue or unreasonable preference. Alliant submits that EastLink has failed to establish that its conduct is not contrary to the standards required under either section 9 of the Broadcast Distribution Regulations or subsection 27(2) of the Telecommunications Act.
SEQ 1_0 \* Arabic \n74 Therefore, Alliant respectfully requests that the Commission order that EastLink immediately withdraw its refusal to accept Alliant advertising on its TV listing channel and that EastLink be ordered to provide a line with access to its TV listing channel for advertising purposes on the same terms and conditions that EastLink provides itself and other businesses, including telecommunications service providers.
SEQ 1_0 \* Arabic \n75 Thank you.
SEQ 1_0 \* Arabic \n76 THE CHAIRPERSON: Thank you, Mr. Fitzpatrick.
SEQ 1_0 \* Arabic \n77 Ms MacDonald.
OPENING REMARKS BY / REMARQUES D'OUVERTURE PAR
SEQ 1_0 \* Arabic \n78 MS MacDONALD: My name is Nathalie MacDonald, and I am the Director of Regulatory Matters on behalf of EastLink.
SEQ 1_0 \* Arabic \n79 Here with me is Mr. Barry Scott, who is the Director of Advertising Services with EastLink.
SEQ 1_0 \* Arabic \n80 With regard to this application, the Commission really has two issues to determine. The first is which legislation applies in determining Alliant's complaint against EastLink, the Broadcasting Act or the Telecommunications Act.
SEQ 1_0 \* Arabic \n81 Second, a determination as to whether EastLink's refusal to advertise Alliant services on the listing service is in breach of that legislation.
SEQ 1_0 \* Arabic \n82 The Commission has determined under the Broadcasting Act that an undue preference or disadvantage will exist where it is shown that the preference or disadvantage has or is likely to have a material adverse impact on the complainant or any other person.
SEQ 1_0 \* Arabic \n83 It also examines the impact that the preference has had or is likely to have on the achievement of the objectives of the Broadcasting Act.
SEQ 1_0 \* Arabic \n84 Under the Broadcasting Act, the onus is on Alliant to prove this claim.
SEQ 1_0 \* Arabic \n85 Under the Telecommunications Act, in order for an undue preference or disadvantage to exist, there must be a finding that the establishment or continuance of a competitive market is being unduly impaired by EastLink's actions.
SEQ 1_0 \* Arabic \n86 The Telecommunications Act includes a reverse onus provision, which means that if the application is determined under this Act, EastLink must establish that any preference or disadvantage is not undue.
SEQ 1_0 \* Arabic \n87 While it is EastLink's position that EastLink is not in breach of either piece of legislation, in our opinion the Broadcasting Act governs the TV listing service.
SEQ 1_0 \* Arabic \n88 As stated throughout the submissions and interrogatory responses, the first issue in determining which legislation applies is whether the relevant services are programming services or non‑programming services.
SEQ 1_0 \* Arabic \n89 The Commission precedent indicates that such a determination should also be made on a case‑by‑case basis.
SEQ 1_0 \* Arabic \n90 The Broadcasting Act applies to programming. A program is defined as sounds or visual images, or a combination of sounds and visual images that are intended to inform, enlighten or entertain, but does not include visual images, whether or not combined with sounds, that consist predominantly of alphanumeric text.
SEQ 1_0 \* Arabic \n91 "Predominantly" has been defined as that which is more influential or powerful.
SEQ 1_0 \* Arabic \n92 The Commission has recognized that even where a moving image only occupies a quarter of the screen, in some cases that service may be characterized as a program if the moving image is the focus of attention.
SEQ 1_0 \* Arabic \n93 In the case of EastLink's listing service, while it may be true that a subscriber initially goes to that service to check the listings, once you are on that service, the more influential or powerful component of that service is on the right side of the screen, which has the visual images and the audio sounds, and that includes the full motion Barker programming, as well as the pictorial images of the advertisements that are located on the listing service.
SEQ 1_0 \* Arabic \n94 In determining whether the service is predominantly a programming service, the Commission must look to that part of the service which is more influential or powerful once a viewer is looking at the screen. It is notable that the focus of this application deals with the services on the right side of the screen, which are not predominantly alphanumeric.
SEQ 1_0 \* Arabic \n95 Furthermore, in EastLink's opinion, the evidence before the Commission does not support a finding that EastLink is in breach of section 9 of the Broadcasting Act. Alliant has not established that the lack of advertising of its services on EastLink's listing service is likely to have a material adverse impact on Alliant, another person, or an impact on the broadcasting objectives.
SEQ 1_0 \* Arabic \n96 There is no evidence before the Commission that the Broadcasting Act objectives are impacted by this issue. Nor has Alliant provided any evidence of a material adverse impact to Alliant or any other person if it cannot advertise on the listing service.
SEQ 1_0 \* Arabic \n97 The Commission has before it an argument by Alliant that may suggest that the refusal to provide access to advertising is not fair, and statements that it will likely have an adverse impact on Alliant. The principles of equity and fairness, or the appearance of equity and fairness, is not the key to the test to establish whether an undue preference exists. The key is the undue preference provisions and the test of those provisions.
SEQ 1_0 \* Arabic \n98 In assessing whether the impact, if any, is material, EastLink submits that the Commission must first look at whether there is any evidence before the Commission to suggest that this is the case. If there is evidence, is it substantial enough to indicate that Alliant is materially impacted by the lack of advertising?
SEQ 1_0 \* Arabic \n99 Various facts should be considered. We are talking about a listing service which, in the scheme of advertising, is not a key advertising medium for large companies like Alliant. This listing service is typically directed to very small local companies who have that as a resource for their advertising.
SEQ 1_0 \* Arabic \n100 EastLink would submit that this listing service, if anything, is only a small supplement to Alliant's overall advertising market and budget.
SEQ 1_0 \* Arabic \n101 If the Commission looks at the facts presented in light of the full picture, we submit it will become clear that a case of material impact cannot be made out. In fact, as stated in EastLink's previous submissions, the impact to EastLink by having Alliant place advertising for its services on the listings channel would be a more material negative impact to EastLink.
SEQ 1_0 \* Arabic \n102 This is a situation where EastLink's direct competitor, Alliant, is seeking access to EastLink's subscribers. While Alliant may state that they aren't seeking access to EastLink's cable subscribers, that they are seeking access to the viewers, EastLink submits that this is really the same thing. Any incremental additional viewers is not the sole basis upon which Alliant is looking to advertise its services.
SEQ 1_0 \* Arabic \n103 EastLink's concern is that Alliant's intention is to leverage individual products in order to successfully win back EastLink customers for Alliant‑bundled products. We think it is important for the Commission to note that this type of discretion is applied by various companies who have access to advertising vehicles.
SEQ 1_0 \* Arabic \n104 The decisions made by such companies are the same. They are based on business decisions.
SEQ 1_0 \* Arabic \n105 This issue is not about EastLink causing harm to Alliant, it is about EastLink governing its business and making decisions to prevent the erosion of its customer base to its competitor, who has numerous services and packages available to target EastLink's customers.
SEQ 1_0 \* Arabic \n106 While Alliant raises the issue of the Yellow Pages being analogous, EastLink says this is not at all the same situation.
SEQ 1_0 \* Arabic \n107 The purpose of the Yellow Pages is to provide information to consumers about various businesses that operate in a given area. It is to provide information to consumers.
SEQ 1_0 \* Arabic \n108 The focus of the Yellow Pages is to ensure the most complete document available for consumers to access phone numbers. That is not the focus of the listing service. It is to a directory publisher's advantage to get as much access, even if it includes advertising its competitors' services.
SEQ 1_0 \* Arabic \n109 The listing service is not about that. The listing service is provided to EastLink's cable subscribers, and it is not a predominant means of advertising competitors' products.
SEQ 1_0 \* Arabic \n110 These same factors must be considered, as well, if the Commission finds that this application is governed by the Telecommunications Act. While the reverse onus applies to the Telecommunications Act, the test requires substantial evidence that the continuance of a competitive market is being unduly impaired.
SEQ 1_0 \* Arabic \n111 The issue of the establishment of a competitive market is not relevant, since Alliant is the incumbent for its telecommunications services, so such a market is already established.
SEQ 1_0 \* Arabic \n112 Given that the test requires such a high threshold in order to find that a preference is undue, EastLink submits that the evidence clearly does not satisfy this test. The facts currently before the Commission already establish that if a preference exists, it is not an undue one.
SEQ 1_0 \* Arabic \n113 Alliant has provided no indication of harm ‑‑ financial harm or otherwise ‑‑ to Alliant by the failure to list its services. In fact, Alliant is seeking to advertise all services; however, it has never advertised all services in the past, it has only advertised its Mobility product.
SEQ 1_0 \* Arabic \n114 EastLink, therefore, asks that in arriving at a determination in this proceeding the Commission continue to focus on the requirements that any preference or disadvantage must be clearly substantial or material. The mere fact that a company does not have one avenue on which to advertise its services does not equate to such a finding, unless the effect of that denial will have a significant impact on the company.
SEQ 1_0 \* Arabic \n115 We ask that the Commission not just look at the issue of Alliant's denial on this service, but also to look at the other avenues which Alliant has at its disposal, many of which EastLink does not have.
SEQ 1_0 \* Arabic \n116 The facts, when reviewed as a whole, will establish that there is no undue preference in favour of EastLink or undue disadvantage to Alliant by EastLink's refusal to provide advertising services on the listing channel.
SEQ 1_0 \* Arabic \n117 Thank you.
SEQ 1_0 \* Arabic \n118 THE CHAIRPERSON: Thank you, Ms MacDonald.
SEQ 1_0 \* Arabic \n119 Mr. Millington, please.
QUESTIONS BY / QUESTIONS PAR
SEQ 1_0 \* Arabic \n120 MR. MILLINGTON: Thank you, Madam Wylie.
SEQ 1_0 \* Arabic \n121 I am going to start my questions with Alliant and Mr. Fitzpatrick.
SEQ 1_0 \* Arabic \n122 Are you familiar with a CRTC decision that was referenced in EastLink's response to Interrogatory No. 1 on February 10th? It is the complaint by Wagg Communications against Shaw Communications, CRTC Decision 2003‑518.
SEQ 1_0 \* Arabic \n123 MR. FITZPATRICK: Yes, somewhat.
SEQ 1_0 \* Arabic \n124 MR. MILLINGTON: In that decision there was a determination as to whether the Shaw TV listings channel was a program or predominantly an alphanumeric broadcast, and in that case there was a split screen, 50/50, as there is here. Half of the image was pictorial and half was alphanumeric, as is the case here.
SEQ 1_0 \* Arabic \n125 In that case there was a still image on the non‑alphanumeric side of the channel. In this case we have a full‑motion video from time to time.
SEQ 1_0 \* Arabic \n126 So we have a very similar situation ‑‑ split screen, 50/50, a TV listing channel, a combination of image and alphanumeric content, and in the Wagg Communications case the image was a still image, and in this case it is a video image.
SEQ 1_0 \* Arabic \n127 In the Wagg Communications case, the Commission determined that the TV listing channel was not predominantly alphanumeric and determined that it was a program and subject to the BDU regs.
SEQ 1_0 \* Arabic \n128 Can you help me in distinguishing why the determination wouldn't be the same in this particular instance?
SEQ 1_0 \* Arabic \n129 MR. FITZPATRICK: Thank you, Mr. Millington.
SEQ 1_0 \* Arabic \n130 I believe that the Commission does have the authority, and obviously it is recognized that they have to adjudicate every case on its own merits. I believe that the Commission will receive submissions that will enlighten the discussion with respect to what is predominant in the TV listing channel and consider each case on its merits.
SEQ 1_0 \* Arabic \n131 In this particular case, I have some difficulty with the philosophy that if the TV listing channel does, for a period of time, include a particular ad which distracts and draws attention, and then a minute later it is gone and there is some other doll ad that is a black‑and‑white text ad ‑‑ that because there is a video image at some time during the run of the day that may catch and draw one's attention, that that defines the predominant characteristics of the channel.
SEQ 1_0 \* Arabic \n132 I feel that the predominant characteristics of the channel should be determined by what the viewers go to the channel for ‑‑ what is its utility.
SEQ 1_0 \* Arabic \n133 The main purpose of going to the TV listing channel is to determine what is coming on TV. That is the main reason people avail themselves of the service to begin with. That is the reason for being, largely, of the channel.
SEQ 1_0 \* Arabic \n134 In my view, I feel that that is significant. In fact, it can be heavily weighted in determining what the predominant characteristic of the channel is.
SEQ 1_0 \* Arabic \n135 I am speaking largely from personal experience. I have viewed the channel ‑‑ and I am saying that four points share it in Halifax, for example ‑‑ when I want to know what is coming on TV. I am not terribly interested in ads about a real estate agent who is operating in Antigonish or other things of local interest, for example.
SEQ 1_0 \* Arabic \n136 The TV listing channel is used, I suspect, a lot by people who are using cable television from out of town ‑‑ hotel guests ‑‑ and, really, I don't think it is reasonable to assume that they would have a high degree of interest in things like local advertisements. They go to the channel because they want to see what is coming on TV.
SEQ 1_0 \* Arabic \n137 I have a very strong feeling that that is the predominant nature of that particular service.
SEQ 1_0 \* Arabic \n138 The advertising flickers from minute to minute, it changes from minute to minute, it has different characteristics in terms of its sound, its sight. Some are video, some are still, some are quite distracting, some are not so distracting.
SEQ 1_0 \* Arabic \n139 To define the pith and substance of the channel's predominant characteristic by a flickering, highly distracting ad at one particular point in time, I think, is not to look at the channel in its totality.
SEQ 1_0 \* Arabic \n140 MR. MILLINGTON: Let's accept the fact that people go to the TV listing channel to look up TV channels, and once they are there ‑‑ the test really doesn't talk about why you go to the channel, it talks about what happens once you are watching the channel, and it goes to what your eye is drawn to. That is what you are essentially being attracted to.
SEQ 1_0 \* Arabic \n141 Could you comment on what would be the purpose of advertising on that side of the channel? Why would people pay for advertising on the video side of the channel? Why would Alliant be interested in advertising on that side of the channel if there wasn't some expectation by the advertiser that the viewer's eye, the viewer's attention, would be drawn to that part of the screen?
SEQ 1_0 \* Arabic \n142 MR. FITZPATRICK: First of all, I think the primary strength of this powerful advertising medium is the fact that there are a lot of hits, if you will, to use an analogy from the Internet industry. A lot of people go there, so there is broad exposure in terms of the audience that will be viewing that channel. That is a reason why you would want to advertise there.
SEQ 1_0 \* Arabic \n143 In terms of whether you present an ad that captures the attention, it varies from minute to minute. Some ads, you are quite right, are very fetching, and people put on ads that will capture your attention. That should not define the channel in its totality.
SEQ 1_0 \* Arabic \n144 There are long periods of time when there are ads which are still imagines, which, to the average viewer, are not particularly captivating, with a voiceover.
SEQ 1_0 \* Arabic \n145 To suggest that, because there might be a catchy ad every 15 minutes, that should define the nature of the channel, I don't agree with that.
SEQ 1_0 \* Arabic \n146 In terms of the advertising strength and the effectiveness of the medium and why one would want to advertise there, it is obvious. A very large number of viewers watch it. Not just subscribers, viewers. Hotel guests view this thing.
SEQ 1_0 \* Arabic \n147 In terms of exposure, it is very attractive from an advertising medium perspective. It is very cost effective as well.
SEQ 1_0 \* Arabic \n148 If you were to run comparable ads on a network television channel, that would be far, far more expensive than running the service on the EastLink TV listing channel.
SEQ 1_0 \* Arabic \n149 Also, it depends on who your market is. If you want to specifically target cable TV viewers with a specific product, this is the place to go. This is, by far, I would submit, a very attractive and cost effective way of targeting into a very defined market.
SEQ 1_0 \* Arabic \n150 MR. MILLINGTON: What would be the cost difference between running an ad on the TV listing channel as compared with regular broadcasting programming, like on the CBC?
SEQ 1_0 \* Arabic \n151 MR. FITZPATRICK: I would defer to my friend, Ms Harley.
SEQ 1_0 \* Arabic \n152 MS HARLEY: I don't have specific numbers to quote, but certainly it would be more cost effective, obviously, than buying network programming.
SEQ 1_0 \* Arabic \n153 We are in the habit of buying a number of different media to get our message across, and this would be a much more cost effective way.
SEQ 1_0 \* Arabic \n154 I think one of the points that strikes me as I reflect on this is that people do go ‑‑ consistent with what Paul has told us ‑‑ people do go to a listings channel to find TV listings. The reason that we advertise there is, because of the nature of the EastLink TV listing channel, it is a rolling or a scrolling listing, it is not an interactive guide that we advertise on. So when you are waiting for information, you have the opportunity to view information that is on that part of the screen.
SEQ 1_0 \* Arabic \n155 Our hope is to provide information that is attractive and compelling enough to draw their attention.
SEQ 1_0 \* Arabic \n156 In some cases you do continue to watch the scrolling guide. It really depends on the advertiser to come up with something that is eye‑catching and attractive and relevant enough.
SEQ 1_0 \* Arabic \n157 And I think the relevancy issue is very important here. Looking at it from an advertising perspective, an ad is only going to be effective if you reach the right person, at the right time, with the right message.
SEQ 1_0 \* Arabic \n158 If I happen to tune in to this channel when I am in Halifax and several ads scroll by that have absolutely no relevance to me in my personal situation, I am going to ignore them and I am going to continue to watch the listing guide.
SEQ 1_0 \* Arabic \n159 So we do look at it as a very cost effective means to provide information that we hope will be compelling enough to catch the attention, as people are waiting for the listing, which we would assume is the prime reason.
SEQ 1_0 \* Arabic \n160 Think of your experience as you watch these scroll by. I may go there to find out ‑‑ you know, I am waiting for a program to come on Discovery tonight. While I am waiting for that channel to come up, something else may catch my eye. But once I find that, I'm gone.
SEQ 1_0 \* Arabic \n161 I am still there to get information on that listing, and once I have it, then I exit that service. I don't tune in to say, "Gee, I wonder what ads are on today."
SEQ 1_0 \* Arabic \n162 MR. MILLINGTON: What percentage of your advertising budget would you devote to a TV listing channel annually?
SEQ 1_0 \* Arabic \n163 MS HARLEY: It would be a small portion. We have used it for a number of services in the past, but it would be a very small portion, again because of the cost effectiveness.
SEQ 1_0 \* Arabic \n164 Our advertising budget is spread around Atlantic Canada. The EastLink service is only available to a portion of that, but it reaches over 200,000 ‑‑ I believe the number is around 230,000 customers. So, from that point of view, the cost is commensurate with reaching those people.
SEQ 1_0 \* Arabic \n165 MR. MILLINGTON: Could you provide us within the next, say, couple of days with what the price differential is that you would pay for the mobile advertising ‑‑
SEQ 1_0 \* Arabic \n166 MS HARLEY: Compared to some of our other forms of advertising?
SEQ 1_0 \* Arabic \n167 MR. MILLINGTON: Say for broadcast on the CBC, or something that is also a television broadcast, just so we can see the price comparison in terms of the difference.
SEQ 1_0 \* Arabic \n168 As well, I would like to know what percentage of your overall advertising budget would be directed to the TV listing channel.
SEQ 1_0 \* Arabic \n169 That should be fairly simple to get hold of, I would think.
SEQ 1_0 \* Arabic \n170 MR. FITZPATRICK: Yes, we can do that, Mr. Millington.
SEQ 1_0 \* Arabic \n171 I would like to add, as well, to what my friend Ms Harley has said, and I think the Commission should not lose sight of this.
SEQ 1_0 \* Arabic \n172 I don't think it is particularly instructive ‑‑ it is helpful but not determinative to look at a dollar figure in terms of what is paid for the TV listing channel advertising versus the global budget.
SEQ 1_0 \* Arabic \n173 What you should consider is, how powerful is this advertising medium. How cost effective is this advertising medium.
SEQ 1_0 \* Arabic \n174 You are hitting, potentially, every TV viewer who subscribes to the monopoly cable TV service in these areas, who is looking at the channel daily.
SEQ 1_0 \* Arabic \n175 Using the Yellow Pages as an analogy, how often do you pick up the Yellow Pages? Once a week? Once a month? It varies from person to person, but the television advertising channel is a very powerful medium and we should not determine its overall significance on the basis of what percentage of the overall budget it occupies.
SEQ 1_0 \* Arabic \n176 Mr. Millington, we will undertake the budget information, as you have requested.
SEQ 1_0 \* Arabic \n177 MR. MILLINGTON: Thank you.
SEQ 1_0 \* Arabic \n178 I would like to turn now to a point that was also raised by Ms MacDonald, which has to do with the test under the BDU regs, specifically the requirement to show a material adverse impact by both the complainant or another party, and also the material adverse impact on the objectives of the broadcasting policy for Canada.
SEQ 1_0 \* Arabic \n179 In your response to Interrogatory No. 4 on February 10th, on page 3 of 3, under subsection (b), Alliant states:
"Concerning the material adverse impact (eg. financial impact, et cetera), Alliant is unable to quantify in terms of market share loss or financial impact EastLink's refusal to accept its advertising." (As read)
SEQ 1_0 \* Arabic \n180 There seems to be an admission ‑‑ and I think you said as much this morning ‑‑ that it is very difficult for you to quantify what the impact is on EastLink.
SEQ 1_0 \* Arabic \n181 I am interested in how the inability to advertise wireless services can have a material adverse impact on the objectives of the Broadcasting Act, which is the second part of the two‑step test.
SEQ 1_0 \* Arabic \n182 MR. FITZPATRICK: Thank you, Mr. Millington.
SEQ 1_0 \* Arabic \n183 I will respond initially with a broad, general, principle overview. The Commission has the discretion, obviously, to apply the undue discrimination test on a case‑by‑case basis, and to tailor it to the facts as presented in each unique case.
SEQ 1_0 \* Arabic \n184 We admit that in this particular case the quantification of a finite or a definite financial impact is difficult to do. It is just the nature of the case. It is a principle‑based type of case.
SEQ 1_0 \* Arabic \n185 Does that mean that you cannot commit undue discrimination or incur undue harm simply because it cannot be easily quantified on a financial basis? I suggest not.
SEQ 1_0 \* Arabic \n186 I think that the Commission has the authority under the legislation and ought to review each case on a case‑by‑case basis to determine whether, as a matter of principle, in this particular case, for example, the type of behaviour is acceptable according to the proper norm of conduct to expect here.
SEQ 1_0 \* Arabic \n187 In terms of the policy considerations, for example, Mr. Millington, that you have made reference to, the broadcast policy talks about ‑‑ one element of it is that distribution undertakings should provide the efficient delivery of programming at affordable rates. I believe, in the answers to interrogatories, that we alluded to that policy, operating a broadcast distribution undertaking. We submitted that a broadcast distribution undertaking's denial of programming to a company, in this case Alliant, based on the fact that the company is competing against the distribution undertaking in another industry, surely cannot be deemed to be an efficient delivery of programming.
SEQ 1_0 \* Arabic \n188 I feel that when you consider the efficient delivery of programming, it doesn't go to a pure cost‑base analysis. It needs to go to whether the policy is being implemented and being respected on a broader principle base level as well.
SEQ 1_0 \* Arabic \n189 On that level, I think that the strength of the case from Alliant's perspective is, when you look at it from a principle basis, we can see that the type of behaviour that EastLink has engaged in here is not, in my view ‑‑ in Alliant's view ‑‑ the type of activity that should be condoned by the regulator.
SEQ 1_0 \* Arabic \n190 MR. MILLINGTON: But if we are under the Broadcasting Act, help me with the relevance of advertising telecom services to the objectives of the Broadcasting Act?
SEQ 1_0 \* Arabic \n191 MR. FITZPATRICK: It would be relevant as regards the general manner in which the undertaking is being run: on the basis of public interest considerations, on the basis of whether the public and other commercial actors in Canada and in the Canadian environment are receiving fair and equitable treatment from the broadcast distribution undertaking.
SEQ 1_0 \* Arabic \n192 So, from that perspective, I believe that the policy consideration and the policy issue is a relevant one.
SEQ 1_0 \* Arabic \n193 Does that answer your question, Mr. Millington?
SEQ 1_0 \* Arabic \n194 MR. MILLINGTON: That's your answer.
SEQ 1_0 \* Arabic \n195 MR. FITZPATRICK: I don't know, Mr. Stephen, if you want to supplement that. I don't know if you have anything further to add.
SEQ 1_0 \* Arabic \n196 MR. STEPHEN: I think part of the issue here is that we see that EastLink is using its BDU to leverage itself against us in telecommunications, and while it is hard to define that in terms of what has been considered to date by the Commission, in terms of previous decisions, it is still a relevant factor.
SEQ 1_0 \* Arabic \n197 While the case law is very limited, in my view, in terms of these types of complaints, I think it is appropriate for the Commission to give due consideration to it.
SEQ 1_0 \* Arabic \n198 In the past, the few cases that I have read on the broadcasting side that deal with this issue really don't go to the substance of cross‑competition across different sectors, and using one sector, i.e., the BDU, to leverage against telecom, but the principle was established in the regulations that there wasn't to be undue preference.
SEQ 1_0 \* Arabic \n199 Now, the cases to date have dealt with undue preference specific to broadcasting issues, so this is a broader discussion, in which case, I would say, the case history at this point has not dealt with these types of issues.
SEQ 1_0 \* Arabic \n200 So I think it is sort of a new item for consideration, but still within the general philosophy of what is undue preference, which is in the regulations.
SEQ 1_0 \* Arabic \n201 Part of our argument is that it should be considered in a broader context, consistent with the regulations, as opposed to perhaps some of the specific few decisions that have dealt with section 9 in the past.
SEQ 1_0 \* Arabic \n202 MR. MILLINGTON: I have a question for EastLink, and I would like to pose it a bit hypothetically, if you will indulge me.
SEQ 1_0 \* Arabic \n203 We will start with the assumption that the TV listing channel is determined to be predominantly alphanumeric, and therefore subject to the Telecom Act.
SEQ 1_0 \* Arabic \n204 In paragraphs 23 through 25 of your reply dated January 7, 2005, you set out a number of advantages and alternatives that Alliant enjoys in terms of its position in the market and how it all comes to the market in terms of advertising, and its incumbency and all of the elements that go along with that incumbency.
SEQ 1_0 \* Arabic \n205 I am wondering what your position would be if we weren't talking about Alliant but we were talking about a new entrant, a company that is not connected to a large established telecom company, one that didn't have the financial resources and the avenues to market its services that Alliant currently enjoys. What would your company's position be with respect to accepting advertising from a company for telecom services on the TV listing channel?
SEQ 1_0 \* Arabic \n206 MS MacDONALD: I guess the first thing we would say is, keeping in mind that these sorts of issues have to be dealt with on a case‑by‑case basis, the facts that would go to make an argument of undue preference in one case may not exist in another case. So, on the face of it, receiving a request ‑‑ and Barry may have something to say about the receipt of those requests, but, on the face of it, I would have to say that we would basically do the usual process of receiving requests, and have a look at it, where EastLink would receive any requests and look at various impacts, including the content of the ads and the obligations we might have with regard to some of the standards for advertising.
SEQ 1_0 \* Arabic \n207 Part of that assessment will factor in business impacts.
SEQ 1_0 \* Arabic \n208 In a case where it is a smaller company that may not have the resources, that may also compete ‑‑ I am not saying that EastLink would choose to refuse that advertising; what I am saying is that, in the present case that we have before the Commission, there is a real issue with the targeted and focused marketing that Alliant is undertaking in EastLink's marketplace for all services.
SEQ 1_0 \* Arabic \n209 And part of that issue, really, goes to the fact that Alliant is an incumbent in the local wireline market, and it also has a longstanding history of incumbency in the Internet market, with its dial‑up and its moving into high‑speed as well.
SEQ 1_0 \* Arabic \n210 The fact is that the landscape in our serving areas, where we have our broadcast services, has to factor in the fact that there are bundles being offered by competitors, and the power that Alliant exerts in directing and targeting EastLink's customers through other avenues continues today, notwithstanding the fact that the listing service today isn't being offered to Alliant.
SEQ 1_0 \* Arabic \n211 I guess we would say that that makes this particular case one where we really think we have the right to take the position we have taken.
SEQ 1_0 \* Arabic \n212 So I guess, to summarize, I would say that we would have to look at it on a case‑by‑case basis, and it is very, very clear in this case that there is no undue harm being caused to Alliant. In fact, any individual service that is targeting the same customer that has an Alliant service has a very high likelihood, when the customer moves to that service, of taking all of the same services with it, and that is where the concern lies.
SEQ 1_0 \* Arabic \n213 We have seen that. There was a discussion here about Mobility, but the end effect of Alliant seeking to advertise Mobility on the listing service is to poll EastLink's customers for local wireline, for Internet service, and basically to move that customer into an Alliant bundle.
SEQ 1_0 \* Arabic \n214 So with each advertisement that might have the likelihood of taking an EastLink customer, it is really taking a customer who will have a full suite of services.
SEQ 1_0 \* Arabic \n215 So the impact is quite significant, and that is the business analysis that goes into making this kind of decision. We really think that, as a company, we have the right ‑‑ or we should have the right to make that decision, where there is no harm to a company like Alliant.
SEQ 1_0 \* Arabic \n216 MR. SCOTT: In actual fact, we have been presented with a very similar case where reconnect companies have come forward to us wanting to promote on our listing channel. We would look at that, as Nathalie said, really in the scope of the total impact on our business generally. Do we want to promote these kinds of companies, or companies that may have an image in the marketplace. Do they impact others in the company, or just one small piece of the business that we are very competitive in.
SEQ 1_0 \* Arabic \n217 It is sort of a cross‑company scope. In actual fact, the company that did come forward did not, for whatever reason, purchase services from us, but did purchase local radio advertising and, at the end of the day, it caused some confusion in our organization because the general consumer was having some difficulty differentiating reconnect services with ourselves, and I would suspect even Alliant.
SEQ 1_0 \* Arabic \n218 So that would be a case where we didn't have to get into the conversation of whether we would accept their advertising or not, but just the sheer fact of having another entrant or another telecom service in the marketplace did create some confusion.
SEQ 1_0 \* Arabic \n219 So I guess I would say that we do assess them based on other things, not just whether we are competitors or whether they have the type of business that we are trying to be associated with.
SEQ 1_0 \* Arabic \n220 I think the key element is that, as Nathalie said, it is really the cable subscribers that receive this TV listing service, and, being a family organization, we take very seriously what we put into people's homes.
SEQ 1_0 \* Arabic \n221 So there is content and general attractiveness about the advertising and the business that we do consider, as well, that may or may not be competitive with us.
SEQ 1_0 \* Arabic \n222 MR. MILLINGTON: Was this reconnect company the only other telecom operator that approached you for advertising on the TV listing channel?
SEQ 1_0 \* Arabic \n223 MR. SCOTT: I would have to say yes. From time to time we have had dialogue with other Mobility dealers ‑‑ Telus, for example ‑‑ but it never ended up in a sale for us. It never ended up in an actual purchase.
SEQ 1_0 \* Arabic \n224 But we actively engage every day in conversation with businesses in our province, and I would say, except for maybe Telus, that would be the other potential.
SEQ 1_0 \* Arabic \n225 MR. MILLINGTON: So you have never had to actually face the question as to whether you would take the advertising of a small operator that doesn't have the characteristics of a lion, if that is what I am understanding you to say.
SEQ 1_0 \* Arabic \n226 And you don't know, or you can't tell me what you think the disposition of the company would be?
SEQ 1_0 \* Arabic \n227 MR. SCOTT: As it relates to a reconnect, or just generally?
SEQ 1_0 \* Arabic \n228 MR. MILLINGTON: Generally.
SEQ 1_0 \* Arabic \n229 MR. SCOTT: I guess that I can't totally answer your question because of the fact that it would be how competitive we are and the impacts on the other company.
SEQ 1_0 \* Arabic \n230 I guess I would have to have a little more detail on what a new incumbent would look like and the resources they have.
SEQ 1_0 \* Arabic \n231 MR. MILLINGTON: I don't want to put words in your mouth, but in terms of a competitive company, would it be fair to suggest, then, that the more it became like Alliant, in the sense of being bigger, more established, offering a greater competitive threat, the more likely you would be to not accept the advertising?
SEQ 1_0 \* Arabic \n232 MR. SCOTT: Again, I am not trying to skirt the issue, but I think, really, it is about the risk. It would be about the risk and the impact on the business.
SEQ 1_0 \* Arabic \n233 Obviously, I guess what we are saying is, if a company is larger, has more resources, has been entrenched, or has been entrenched for a certain amount of time, they would be potentially a bigger threat to us. So, if that is the scenario that we are thinking about, then it would probably be a clearer decision than for somebody who was not going to compete.
SEQ 1_0 \* Arabic \n234 MR. MILLINGTON: So as the company became a greater risk to EastLink's business, the greater the likelihood of the advertising being refused. So one could speculate ‑‑ and, again, this is hypothetical, but if initially the decision was taken to allow the advertising from this new entrant, as that new entrant became more successful and more competitive, and perhaps took a larger market share, the decision might be revisited, and then the advertising venue might be closed off to them.
SEQ 1_0 \* Arabic \n235 MS MacDONALD: If I may, Mr. Millington ‑‑
SEQ 1_0 \* Arabic \n236 MR. MILLINGTON: Go ahead.
SEQ 1_0 \* Arabic \n237 MS MacDONALD: That kind of question actually does get to the crux of the issue. I would say that the real issue is, is there an undue preference. Is there a real likelihood of substantial impact to the company.
SEQ 1_0 \* Arabic \n238 All of those different kinds of ways of saying the test.
SEQ 1_0 \* Arabic \n239 In a situation where you have an incumbent or a company that is entrenched, that has already got its business, is established ‑‑ the market is competitive, and in those kinds of situations, then the undue preference question is already answered. There isn't one.
SEQ 1_0 \* Arabic \n240 So for us to say, "That makes sense," more likely, if another company does come along and they are entrenched, as opposed to being a new entrant or a small family operation, or what have you, we would say that, then, when you look at the legislation, those tests don't result in finding an undue preference.
SEQ 1_0 \* Arabic \n241 That is why we are taking this position here, because we really don't see that there is any harm in taking the position we have taken with Alliant. We don't see that there is harm to Alliant, to other parties, to the broadcasting objectives, and even under the Telecom Act. We don't see that the continuance of the competitive market is going to be impaired or likely to be impaired by this action.
SEQ 1_0 \* Arabic \n242 That is where we say that we have the right.
SEQ 1_0 \* Arabic \n243 So while it might sound not very nice to describe it ‑‑ EastLink isn't allowing advertising, et cetera ‑‑ when you really look at what the issues are under the legislation, and you really look at the circumstances that Alliant has presented, and the circumstances on the Telecom Act that we presented that say, "Look, there is no harm," then I think we have the right to make that decision, and that would be the scenario where we could make that decision.
SEQ 1_0 \* Arabic \n244 MR. MILLINGTON: But we are talking about a much smaller entity, a new entrant, a company that does not have the financial wherewithal of an Alliant. You would agree, then, I think, that the competitive landscape would be much different, and therefore your disposition would likely be different.
SEQ 1_0 \* Arabic \n245 MS MacDONALD: I would have to say that that probably is correct.
SEQ 1_0 \* Arabic \n246 If we were making a decision to refuse any kind of access, we would have to say: What are the circumstances? Are we allowed to do this?
SEQ 1_0 \* Arabic \n247 And then we would look at the tests. We would say: Under this test we are looking at the undue preference issue.
SEQ 1_0 \* Arabic \n248 It is that type of situation. We don't want to be at the Commission for making a decision that is in breach of the regulations.
SEQ 1_0 \* Arabic \n249 So with small entrants the circumstances may very well be different, in which case we would have to grant the advertising. It is just that it would be based on a case‑by‑case situation, which Barry discussed.
SEQ 1_0 \* Arabic \n250 MR. MILLINGTON: One final question and then I will let you go.
SEQ 1_0 \* Arabic \n251 What kind of market share do you think would be relevant to you making a change in the disposition of the availability of the advertising if you are starting off with somebody who is not viewed as a competitive threat? At what level do you think you would revisit that decision and say that maybe it is not appropriate any longer?
SEQ 1_0 \* Arabic \n252 You have to remember that this group would be targeting customers of Alliant probably as much or more than EastLink. So, in terms of the competitive threat, it would be not fully directed at EastLink.
SEQ 1_0 \* Arabic \n253 I am just wondering, again, if you have an idea of what level of market share would trigger your revisiting of the decision.
SEQ 1_0 \* Arabic \n254 MS MacDONALD: I wouldn't say that we have an established policy of denying access. It is not a situation where we could refer to a list and look to that. So I certainly can't speak to what criteria and at what point EastLink would say, "No, we are not going to accept this advertisement."
SEQ 1_0 \* Arabic \n255 What I can say is that the experience in the marketplace with Alliant, and the fact that EastLink is a new entrant on the local wireline side, is a key factor. Alliant may claim that they may have some kind of harm that they have experienced by not advertising on the listing service, but the reality is, there is no evidence of that harm, notwithstanding that they claim it is difficult to calculate.
SEQ 1_0 \* Arabic \n256 The reality is, Alliant not getting a few extra customers because they haven't advertised on the listing service ‑‑ it's a totally different impact on EastLink losing multiple services, per customer, when we have invested the capital to upgrade our system to provide a phone service.
SEQ 1_0 \* Arabic \n257 So we would have a customer and, based on the investment, we would lose the opportunity to cover that investment every time a customer was taken.
SEQ 1_0 \* Arabic \n258 Now we recognize that Alliant is out there in other mediums, and more significant mediums, and more predominant than EastLink, and I would say that their advertising is probably tenfold that of EastLink's. They have those routes, and that is why we are saying it is not a preference for Alliant.
SEQ 1_0 \* Arabic \n259 I know that I am not answering your question about the new entrant and the market share they would have, but, really, our experience today is being faced with Alliant, so we really haven't put our minds to what our guidelines are on accepting advertising, in terms of what the market share of a potential competitor is.
SEQ 1_0 \* Arabic \n260 In many respects our advertising listing service is very much a small business service. If you look at the listings, in most cases you are going to find John Doe's Tractor Service, or whatever it may be.
SEQ 1_0 \* Arabic \n261 In fact, in most cases the listing service is not a service where people are seeking it out and making contact, it is a call‑driven service where our sales people are going out and looking for the business.
SEQ 1_0 \* Arabic \n262 I would just say that those factors are relevant to saying that while EastLink may not necessarily know what it is going to do the next time around, where this is on a case‑by‑case basis, our experience with Alliant is at the forefront, and that is why we are here today.
SEQ 1_0 \* Arabic \n263 MR. MILLINGTON: But the new entrant would be viewed as a competitive threat sometime before it ever approached the size of EastLink.
SEQ 1_0 \* Arabic \n264 Long before it ever got to your size, or your market share, it would be viewed as a competitive threat to you.
SEQ 1_0 \* Arabic \n265 MS MacDONALD: One example that might be somewhat useful is to illustrate that EastLink did accept the advertising of Alliant Mobility dealers.
SEQ 1_0 \* Arabic \n266 Now, I know that Alliant's position is that this is coincidental with EastLink adding a Rogers cellular add‑on to our bundle; however, that is not actually the key basis for EastLink making its decision.
SEQ 1_0 \* Arabic \n267 Coincidentally, on October 1st Alliant purchased DownEast Mobility. EastLink was accepting ads from Alliant Mobility, and while at that time, no, it wasn't a direct competitor, we were certainly dealing with an Alliant‑based entity. But the distinction is that, with the purchase of DownEast Mobility, and with the view of what is happening in the marketplace, Alliant is getting more and more focused on its value packages ‑‑ on its bundles.
SEQ 1_0 \* Arabic \n268 When Alliant purchased DownEast Mobility, it became pretty obvious that the Alliant Mobility product, which I think at one point ‑‑ and it may still be ‑‑ was offered at $10 extra in a bundle, was a pretty sweet deal and a pretty good incentive to pull other customers over.
SEQ 1_0 \* Arabic \n269 We did not cancel Alliant Mobility's contract. What happened was that the nature of the contracts were of a short‑term duration and they expired.
SEQ 1_0 \* Arabic \n270 It was our understanding, from what we were told, that, as a result of the work stoppage they did not renew, and then, as time went on, our marketing department became aware that this Mobility product was actually being leveraged. The call centres are receiving the calls and upselling the customers to other services, and it is actually hurting.
SEQ 1_0 \* Arabic \n271 And when I say that, that is the intention of the products, and Alliant's annual reports would suggest that bundles are the way to go.
SEQ 1_0 \* Arabic \n272 I would just say that EastLink is not necessarily inclined to deny a competitor, but when you have the strength behind Alliant pulling multiple services over through integrated call centres, that's when we start saying, "Wait, what are we doing?"
SEQ 1_0 \* Arabic \n273 Another point I would mention is that with the listing service we would say that this service is available to small‑time businesses and that sort of thing, as well as larger companies, but our customers ‑‑ we wouldn't say that there is a customer disadvantage. Our customers, I would say, don't typically expect that we are going to be advertising our competitors' products.
SEQ 1_0 \* Arabic \n274 That is just another point to make, as well.
SEQ 1_0 \* Arabic \n275 MR. MILLINGTON: Thank you, Ms MacDonald.
SEQ 1_0 \* Arabic \n276 Those are my questions, Madam Wylie.
SEQ 1_0 \* Arabic \n277 THE CHAIRPERSON: Thank you, Mr. Millington.
SEQ 1_0 \* Arabic \n278 Commissioner Cram.
QUESTIONS BY / QUESTIONS PAR
SEQ 1_0 \* Arabic \n279 COMMISSIONER CRAM: First, I want to talk to you, Mr. Fitzpatrick, about your concept of, if I can call it, intent and purpose, in terms of this particular channel.
SEQ 1_0 \* Arabic \n280 It seems to me that under the Act it is whether it is to be defined as a programming service. Your distinction is that it is the intention of the service to inform as to TV listings, and the purpose of the subscriber is to see the TV listings.
SEQ 1_0 \* Arabic \n281 I don't see where intent and purpose fit into the definition of program under the Act. It says, "sounds or visual images, or a combination of sounds and visual images." It doesn't talk about what you were talking about, intent and purpose.
SEQ 1_0 \* Arabic \n282 MR. FITZPATRICK: Thank you, Madam Commissioner.
SEQ 1_0 \* Arabic \n283 COMMISSIONER CRAM: I'm sorry, I didn't read the whole definition. It says that it is intended to inform, enlighten and entertain, but it doesn't seem to have intent and purpose in the definition.
SEQ 1_0 \* Arabic \n284 MR. FITZPATRICK: Yes, I agree with that.
SEQ 1_0 \* Arabic \n285 I guess we were trying to determine what the pith and substance of the service is about, what the general nature of the service is, or what the predominant nature of the service is. While we feel that the intent and purpose is important in terms of why the person goes there, the reason a person goes there, I would submit, dictates what they do when they get there.
SEQ 1_0 \* Arabic \n286 So, to that extent, I would submit that it may have some significance.
SEQ 1_0 \* Arabic \n287 But I would also point out that we keep talking about the content in terms of what is on the screen. We have to recognize, as well, that the only content on the screen is the TV listing information itself. The advertising content changes constantly, and while there may be some aspects of the advertising content which may be distracting and which may focus the attention, it may not be that way two minutes later, when there is some other kind of ad on which is a still picture ad, advertising perhaps some mundane product. I don't mean that in a pejorative sense, but in terms of a visually stimulating sense.
SEQ 1_0 \* Arabic \n288 I think we reiterate our submission that the intent and purpose is significant to determine why the person is going to go to the channel, and what they are going to do when they get there. But I will leave that to the side. I think that is a significant point.
SEQ 1_0 \* Arabic \n289 In terms of whether there are more eye‑catching advertisements versus the ad channel, in some cases there will be, but in other cases there will not be. There is a balancing of the whole that has to be done when you try to capture under one categorization what the nature of the service is.
SEQ 1_0 \* Arabic \n290 COMMISSIONER CRAM: I am sure you have read the Wagg Communications decision that was referred to by counsel. It appears to me that the only difference between the two services, at least if I look at the Wagg decision, is that the service here in question has audio, and it doesn't appear in this decision that there is audio.
SEQ 1_0 \* Arabic \n291 So it would seem to me that this is Wagg times two, because the audio here is about the ads.
SEQ 1_0 \* Arabic \n292 Would you agree with me or not?
SEQ 1_0 \* Arabic \n293 MR. FITZPATRICK: I agree that, in terms of the content, both ads are very similar.
SEQ 1_0 \* Arabic \n294 I think that the Commission ‑‑ I always feel that the law is an evolving creature and will remain open to listen to new arguments and to look at new perspectives, and to appreciate new arguments and new perspectives, and to reflect.
SEQ 1_0 \* Arabic \n295 I do agree, on the basis of the Wagg decision, that the way the Commission characterized the channel in that particular case is very similar to ours. I don't know what arguments were made before the Commission at that particular hearing. I don't know what factors were considered.
SEQ 1_0 \* Arabic \n296 Based on our assessment of the situation, in terms of what the predominant nature of EastLink's TV listing channel is, we feel that we have interesting arguments to make in that regard. I am not sure they are novel arguments, but they are the way we see it.
SEQ 1_0 \* Arabic \n297 We see this as a very powerful advertising medium. From our perspective, certainly, we feel that the alphanumeric content of it is the predominant content of it, albeit it that it may be interspersed with distractions from time to time from more eye‑catching content that may flicker across the screen.
SEQ 1_0 \* Arabic \n298 COMMISSIONER CRAM: The second area that I wanted to talk about is that you did not limit your application ‑‑ and I don't suppose, depending on the decision we make, that it would be limited ‑‑ to merely advertising Mobility services on this service. You would agree that if there was a decision in your favour, it would probably mean that you could advertise bundles on this service?
SEQ 1_0 \* Arabic \n299 MR. FITZPATRICK: The way the policy position was stated to Alliant was that the decision had been made not to carry any advertisements of any products, so I guess we are pushing back based on that statement of policy on EastLink's part, and that is essentially what we are seeking in this particular case.
SEQ 1_0 \* Arabic \n300 The Commission does have, I suspect, and I submit, within the purview of its jurisdiction to order a reinstatement of rights, if you will, on a limited or on some prescribed or conditional basis.
SEQ 1_0 \* Arabic \n301 We are essentially wanting to be on a level playing field with other commercial entities that may wish to advertise on this broadcast medium.
SEQ 1_0 \* Arabic \n302 It is interesting the way the discussion has gone. There seems to be an understanding that the broadcast mechanism may be used by a telecom operator as a private manner in which to run its advertising, and to use it as a tool to discriminate against its telecommunications competitors. I have some difficulty with that. I think the ability to broadcast television images is a very powerful one in our society, and one which should not be taken lightly and considered to be a private domain. It is one that should, at least, consider other public policy types of factors and considerations.
SEQ 1_0 \* Arabic \n303 COMMISSIONER CRAM: Thank you.
SEQ 1_0 \* Arabic \n304 MR. STEPHEN: I would also like to add that the concern over bundles ‑‑ there are some significant barriers that Alliant faces with respect to the promotion of bundles, through regulatory requirements. So if there are concerns over, for instance, promoting local services ‑‑
SEQ 1_0 \* Arabic \n305 Right now, as you probably will recall, there is a ban on us having any special promotions on local services.
SEQ 1_0 \* Arabic \n306 Similarly, if the bundles contain local services, they require CRTC approval.
SEQ 1_0 \* Arabic \n307 So if we were to use that, clearly, the Commission would have already preapproved those bundles to begin with.
SEQ 1_0 \* Arabic \n308 COMMISSIONER CRAM: Ms MacDonald, I was listening to you talking about the reason why you would be entitled, in your reply to questions by Mr. Millington, to refuse this advertising, and you talked about Alliant's incumbency and the fact that they are already entrenched and their size.
SEQ 1_0 \* Arabic \n309 Of course, my immediate question is, I didn't think that Alliant became entrenched any more so between June and October of 2004. In fact, I would have said, given the strike, that they became less entrenched and less incumbent maybe.
SEQ 1_0 \* Arabic \n310 I need to know what happened. Is it only that you found out that they had changed their marketing strategy?
SEQ 1_0 \* Arabic \n311 Is that it really? It isn't incumbency, it isn't entrenchment, it is just the fact that you found out ‑‑
SEQ 1_0 \* Arabic \n312 MS MacDONALD: I think the decision would more appropriately have been based on various factors.
SEQ 1_0 \* Arabic \n313 I would say, definitely, that the primary concern that prompted EastLink to make this decision had to do with the activity of leveraging cellular services in order to target other products and services in bundles.
SEQ 1_0 \* Arabic \n314 The other part of it is the business analysis of that decision. On a smaller scale, yes, EastLink can't deny that we have a cooperative arrangement with Rogers, so there is an add‑on to that product. And certainly I can't deny that that is not, as well, a criteria or didn't factor into the analysis, but the key issue really boils down to what that cellular product was doing, and it was being leveraged in the value packages.
SEQ 1_0 \* Arabic \n315 I might note Mr. Stephen's comments with regard to the regulatory hurdles that Alliant faces as the incumbent with bundles, but the reality is, whether a bundle includes local or not, the bundles that Alliant offers with cellular also include the Internet. As of today, Alliant cannot unbundle their Internet product from their local wireline product.
SEQ 1_0 \* Arabic \n316 So, when a customer buys cellular and they say, "I can get that product for an extra $10 if I put my services into a bundle," if they want to take the Internet service, they will also take local phone.
SEQ 1_0 \* Arabic \n317 So any loss of an Internet customer from EastLink is the loss of an Internet and a local phone customer, notwithstanding the current bundling rules.
SEQ 1_0 \* Arabic \n318 I guess in the practical sense it is hard to say that on this day we decided that this was what happened. But the fact is, there was an end to the existing contract. Of course, time passes. Companies are looking at what Alliant is doing in the marketplace. They are targeting value packages. Value packages are everywhere. They are on every medium.
SEQ 1_0 \* Arabic \n319 Alliant's own interrogatories make it clear that they advertise in every medium available to them.
SEQ 1_0 \* Arabic \n320 So the listing service really is the only medium that they, according to their interrogatory answers, don't have available to them.
SEQ 1_0 \* Arabic \n321 I guess our decision really came about based on Alliant using its cellular product to leverage those other products, and that was the result of our own internal analysis of what was happening. What's happening when those customers call Alliant to get the Mobility product?
SEQ 1_0 \* Arabic \n322 That became more and more clear on October 1 when the press release announced that Alliant was now acquiring DownEast Mobility, which was a major ‑‑ we saw it as a major move to integrate its Mobility product into its services.
SEQ 1_0 \* Arabic \n323 COMMISSIONER CRAM: Thank you. I have one more small issue.
SEQ 1_0 \* Arabic \n324 Ms Harley, when you provide those numbers to the Commission for price comparisons, could I also have a comparison ‑‑
SEQ 1_0 \* Arabic \n325 You were talking about national sales. I would like a comparison to local news ‑‑ and the lowest share local news and the highest share local news, because it would be by audience share, wouldn't it?
SEQ 1_0 \* Arabic \n326 MS HARLEY: Yes. We will provide some information, certainly, to help you make an informed decision.
SEQ 1_0 \* Arabic \n327 I think another key factor will be not only to compare the price of advertising, but I would submit that the most important factor in assessing your advertising success is what is the cost per sale.
SEQ 1_0 \* Arabic \n328 It is hard to track that directly. We have not, for example, put a specific phone number or a specific tag in the ads to date to know specifically which medium drives which sales, but the way that I evaluate our advertising is that national media is very expensive.
SEQ 1_0 \* Arabic \n329 Regional media is very expensive.
SEQ 1_0 \* Arabic \n330 But if that drives more sales, then it becomes effective.
SEQ 1_0 \* Arabic \n331 When you take the relatively low cost of this, of course, if it drives in 100 sales, my gosh, that becomes a very effective medium.
SEQ 1_0 \* Arabic \n332 So, in that case, you could argue that there is significant harm.
SEQ 1_0 \* Arabic \n333 COMMISSIONER CRAM: Thank you.
SEQ 1_0 \* Arabic \n334 Thank you, Madam Chair.
SEQ 1_0 \* Arabic \n335 THE CHAIRPERSON: Thank you, Commissioner Cram.
SEQ 1_0 \* Arabic \n336 Commissioner Noël.
QUESTIONS BY / QUESTIONS PAR
SEQ 1_0 \* Arabic \n337 COMMISSIONER NOËL: I will not touch on the definition of alphanumeric programming because I think it has been discussed at length.
SEQ 1_0 \* Arabic \n338 You mentioned that you cannot quantify the harm, in terms of market share lost, the financial impact, the harm caused by the decision of EastLink not to allow you to advertise on their listing service.
SEQ 1_0 \* Arabic \n339 If we take the view that this is a programming service and, therefore, it is to be analyzed under the broadcasting regulations ‑‑ the BDU regs ‑‑ don't you feel that the complaint could be premature at this point?
SEQ 1_0 \* Arabic \n340 MR. FITZPATRICK: I'm sorry, could you elaborate on that?
SEQ 1_0 \* Arabic \n341 COMMISSIONER NOËL: If we take the view ‑‑ and I will not re‑discuss it because it has been done by Commissioner Cram and Mr. Millington, but if we take the view that the listing service is a programming service, it is not predominantly an alphanumeric service, and therefore it falls under the BDU regs, section 9 ‑‑
SEQ 1_0 \* Arabic \n342 You say in your letter of 10 February, in answer to Interrogatory No. 4, page 3 of 3:
"Concerning the material adverse impact (eg. financial impact, et cetera), Alliant is unable to quantify in terms of market share loss or financial impact EastLink's refusal to accept its advertising." (As read)
SEQ 1_0 \* Arabic \n343 Don't you think, given that hypothesis, that your complaint is premature?
SEQ 1_0 \* Arabic \n344 MR. FITZPATRICK: I guess what I said initially was that, in terms of determining the type of harm that may be caused due to inappropriate discrimination, there may be types of circumstances which do not lend themselves to easy quantification, but that the Commission should reserve the overriding discretion to consider perhaps unique situations that may arise, where there is, I guess on a logical basis, a degree of harm being caused, a degree of advantage being bestowed, or disadvantage being inflicted, which would permit the Commission to look at that without getting into the specific quantification issue, and to exercise a discretion in response to that.
SEQ 1_0 \* Arabic \n345 COMMISSIONER NOËL: In paragraph 9 of your February 23rd submission you mention market research that identified cable television's viewers as a target market for the cellular services. Why did you choose not to file that market research?
SEQ 1_0 \* Arabic \n346 MR. FITZPATRICK: I guess we didn't consciously consider whether we should or we shouldn't be filing it. There has been research done in terms of our cellular services and the types of markets that would be most receptive to certain types of cellular services, and that was the basis on which our earlier cellular advertising carried on the TV listing channel was predicated on.
SEQ 1_0 \* Arabic \n347 Sue or Rick, I don't know if you wish to elaborate on that.
SEQ 1_0 \* Arabic \n348 MS HARLEY: I think Paul is right, we didn't consciously decide to exclude it. That would have been done as part of a more comprehensive study, of which this would have been one of the findings.
SEQ 1_0 \* Arabic \n349 If you wanted us to share a specific response to that question, we certainly could go back and have a look at doing that, but we wouldn't want to be putting ‑‑
SEQ 1_0 \* Arabic \n350 COMMISSIONER NOËL: On that I would refer you to Mr. Millington.
SEQ 1_0 \* Arabic \n351 You mentioned during your presentation that the TV listing channel is for TV listing and not necessarily for advertising. I heard Mr. Fitzpatrick say that.
SEQ 1_0 \* Arabic \n352 Why would you want to advertise on a TV listing station if, in your view, it is not for advertising that people go for it, but for TV listings?
SEQ 1_0 \* Arabic \n353 MR. FITZPATRICK: I made reference to the number of hits that would be made on that particular channel. So, from that perspective, it is a powerful advertising methodology.
SEQ 1_0 \* Arabic \n354 I recognize the subtlety of which is the more significant. I would submit that Alliant, in looking at the cost benefit analysis of the various options that it has to sell its services ‑‑ the TV listing channel, even if you accept that the reason people are predominantly going there is to see what is coming on TV, based on the cost of it and based on various other circumstances, we see some benefit in doing that.
SEQ 1_0 \* Arabic \n355 I still don't agree that that should define the pith and substance or the predominant characteristic of the channel, but it is a feather ‑‑ or it is an arrow in the quill, if you will, of the marketing department, and there is some benefit, particularly when you consider the vast number of people who go there every day and the relative cost of advertising in that medium.
SEQ 1_0 \* Arabic \n356 COMMISSIONER NOËL: There is something that bothers me, too. You mentioned ‑‑
SEQ 1_0 \* Arabic \n357 MR. FITZPATRICK: Madam Commissioner, I don't know if my friend Ms Harley has something to add to that.
SEQ 1_0 \* Arabic \n358 COMMISSIONER NOËL: I'm sorry.
SEQ 1_0 \* Arabic \n359 MS HARLEY: If I may, I think it is a very important point when you are looking at what do customers go there for.
SEQ 1_0 \* Arabic \n360 I think, for me, a simple test would be, if you take the advertising out of the TV listings, would you still go to the TV listings? I would think the answer would be yes.
SEQ 1_0 \* Arabic \n361 But if you took the TV listings out of the TV listings channel and just left the advertising, would you go there? Probably not.
SEQ 1_0 \* Arabic \n362 The reason we advertise there is that people do go to the listings to find out what is coming on. The cellular telephone market is still very much a growth business, and we hope to catch people who are willing to receive that message as they are waiting for their listings to scroll by.
SEQ 1_0 \* Arabic \n363 For example, if you and I were sitting here watching it and an ad scrolled by, to use Ms MacDonald's example, for a tractor, I am not in the market for a tractor, so I am probably going to glance and go right back to the listings.
SEQ 1_0 \* Arabic \n364 But if I am in the market for a cellphone or a Mobility service, I may very well watch that for a moment, because I am in the right place, I am at the right time. I am a target customer for that service, which is what advertising is really all about, trying to get your message to the right target audience at the right time.
SEQ 1_0 \* Arabic \n365 COMMISSIONER NOËL: Thank you.
SEQ 1_0 \* Arabic \n366 There is another thing that puzzled me, and that is the fact that you mentioned that TV listings are looked at by out‑of‑town people, hotel guests. Why would you be interested in advertising your wireless product, or any other products, to transient people?
SEQ 1_0 \* Arabic \n367 MR. FITZPATRICK: It goes more to the issue of what is the predominant characteristic of the channel.
SEQ 1_0 \* Arabic \n368 There are people who have absolutely no interest in local advertising, who use the channel for the purpose of obtaining TV listings.
SEQ 1_0 \* Arabic \n369 So the point is not geared toward the effectiveness of the channel as an advertising medium in those cases, but more what is it being used for and what is the person doing when they go to the channel.
SEQ 1_0 \* Arabic \n370 COMMISSIONER NOËL: On another point, Mr. Stephen, do you offer a standalone Internet service at the present time, or do you have the intention of offering a standalone Internet service that is independent of the purchase of the local service by the customer?
SEQ 1_0 \* Arabic \n371 MR. STEPHEN: There are a number of variations. For instance, on dial‑up, clearly that is independent of ‑‑
SEQ 1_0 \* Arabic \n372 COMMISSIONER NOËL: No, DSL. High‑speed.
SEQ 1_0 \* Arabic \n373 MR. STEPHEN: In the case of DSL, it can be purchased through people who resell our loops for the use of ‑‑ let's say CLECs using our loops. You can get it that way.
SEQ 1_0 \* Arabic \n374 But in terms of the functionality, it still does require an appropriate loop.
SEQ 1_0 \* Arabic \n375 COMMISSIONER NOËL: So if I live in Halifax and I want to purchase Sympatico ‑‑ I guess it would be marketed under Sympatico high‑speed. If I want to purchase Sympatico high‑speed, I would have to take the local loop from you.
SEQ 1_0 \* Arabic \n376 MR. STEPHEN: Or from somebody who has the equivalent loop.
SEQ 1_0 \* Arabic \n377 COMMISSIONER NOËL: But would I still need the Sympatico service if I am not your customer for the local loop?
SEQ 1_0 \* Arabic \n378 MR. STEPHEN: I think this goes to the issue referred to as dry loops.
SEQ 1_0 \* Arabic \n379 COMMISSIONER NOËL: Yes.
SEQ 1_0 \* Arabic \n380 MR. STEPHEN: And we will be offering that, yes. We are working toward that now, to separate it out so that the loop would be available.
SEQ 1_0 \* Arabic \n381 And that is particularly of interest, particularly with the Mobility segment, where a growing number of customers have Mobility only. So they certainly are interested in being able to ‑‑
SEQ 1_0 \* Arabic \n382 COMMISSIONER NOËL: But you haven't filed with the telecom side of our organization for a tariff for a dry loop.
SEQ 1_0 \* Arabic \n383 MR. STEPHEN: We have made a commitment in proceedings before the Commission and have indicated that by year end, this year, we will have a service in place for a dry loop.
SEQ 1_0 \* Arabic \n384 COMMISSIONER NOËL: You were mentioning that the listing service is interesting because of the number of hits, because people go there often.
SEQ 1_0 \* Arabic \n385 I can understand, I think, that advertising is much less expensive ‑‑ although we haven't seen figures, it is probably much less expensive on that type of service than it is on ATV, or ATV through Bell Globemedia, which is one of your favourites, or any of those conventional TV stations. But there are stations that are known for the number of hits, and I am thinking of the Weather Channel. People go there every morning just to know what they are going to wear. It can produce a high number of hits, too.
SEQ 1_0 \* Arabic \n386 That is just a suggestion.
SEQ 1_0 \* Arabic \n387 I have no more questions.
SEQ 1_0 \* Arabic \n388 THE CHAIRPERSON: Thank you, Commissioner Noël.
SEQ 1_0 \* Arabic \n389 Ms MacDonald, in response to Question 7 of the Commission's interrogatories you refer to the two‑pronged test that has to be met for a finding of undue preference under the Broadcasting Act, which, I take it, is the jurisdiction that you think our decision should be based on.
SEQ 1_0 \* Arabic \n390 MS MacDONALD: I'm sorry, are you referencing ‑‑
SEQ 1_0 \* Arabic \n391 Part one would be the determination of what is the jurisdiction, and part two would be the undue preference ‑‑
SEQ 1_0 \* Arabic \n392 THE CHAIRPERSON: We are assuming that your position is that it is under the Broadcasting Act that we should be making our decision.
SEQ 1_0 \* Arabic \n393 MS MacDONALD: Yes.
SEQ 1_0 \* Arabic \n394 THE CHAIRPERSON: At Question 7 you refer to the two‑pronged test in a finding of undue preference under the Broadcasting Act, the first being a material adverse impact and the second being that it is harmful to the achievements of the objectives of the broadcasting policies set out in the Broadcasting Act.
SEQ 1_0 \* Arabic \n395 MS MacDONALD: Yes.
SEQ 1_0 \* Arabic \n396 THE CHAIRPERSON: With regard to the first one, I take it from your comments that you feel, as a regulated industry, that it is your right to decide what the material impact will be and what the harm will be, depending on the incumbency and the strength of the person who wants to advertise.
SEQ 1_0 \* Arabic \n397 MS MacDONALD: I guess I would say at the outset that when a regulated company is faced with a question that causes that company to go and look to the regulations and say, "Okay, what are we going to do here," that initial question is determined by that company. Just in terms of the initial analysis, obviously we are here today, so there is a view that that determination is in need of Commission analysis.
SEQ 1_0 \* Arabic \n398 One of the things I would note with regard to that test is that, while the Broadcasting Act applies to programming, and we are taking the position that it really is a programming service, we would also point out that in our previous submissions, I think they were the January 7th submissions, we referenced the fact that in a past proceeding the Commission recognized that advertising vehicles ‑‑ that BDUs do not have market power in advertising.
SEQ 1_0 \* Arabic \n399 So while I would say that we are here doing an analysis of whether or not Alliant has faced an undue preference, when you really look at what Alliant is looking for ‑‑ they can speak about the fact that the listings channel is a scarce resource. We would say that radio is really not that much different from what the listings channel offers. It is hour‑long rotations, every listener is listening.
SEQ 1_0 \* Arabic \n400 If you take the position that what you see visually on the listings channel is not really that fancy, then what you are getting is the audio.
SEQ 1_0 \* Arabic \n401 So we would say that radio is a great market, and it is another alternative that is ‑‑
SEQ 1_0 \* Arabic \n402 THE CHAIRPERSON: My question was much narrower than that. My question was, is it your position that when advertising is offered and it conflicts with your company's goals, it is your privilege, or right, to decide whether there will be an adverse impact?
SEQ 1_0 \* Arabic \n403 You mentioned various things, such as the strength of the company, whether it is entrenched, whether it is an incumbent, what the material impact will be on them if you refuse the advertising. And presumably you know if you will accept it.
SEQ 1_0 \* Arabic \n404 For example, let me pose something interesting. What if they gave you ads that you felt were completely ineffective? Would you put them on?
SEQ 1_0 \* Arabic \n405 MS MacDONALD: Basically what I would say is that we, as a business receiving the first request to place an ad, do, at the outset, have the discretion to make the decision. And when I say that, I am not saying that it is our privilege to refuse in all cases. Any refusal has to be subject to our obligations, and when we go to the Broadcasting Act we have to make that initial analysis, because we couldn't be coming to the Commission to ask for clarification every time we have to make a decision like that.
SEQ 1_0 \* Arabic \n406 I would say that the undue preference provisions in the Broadcasting Act are set out, and obviously there is room for interpretation as to at what point a company is granting itself a preference that is undue, or causing a disadvantage that is undue to another company.
SEQ 1_0 \* Arabic \n407 Because that requires a real analysis at a subjective level, I think it is appropriate that we have to make that decision. Otherwise we wouldn't be able to make any decisions and we would have to ask the Commission every time if what we were doing was correct.
SEQ 1_0 \* Arabic \n408 THE CHAIRPERSON: The second prong of the test is whether there is likely to be an impact in the achievement of the objectives of the broadcasting policies set out in the Act. In your response to Question 7, you say that the objectives of the broadcasting policy for Canada do not appear to be relevant to the issue of providing advertising space on the listing service.
SEQ 1_0 \* Arabic \n409 We know that advertising is programming, and that one of the objectives of the Broadcasting Act is that distribution undertakings which are regulated should provide the efficient delivery of programming at affordable rates, using the most effective technologies available at reasonable costs.
SEQ 1_0 \* Arabic \n410 If you go to the definition of programming, it talks of sounds and visual images that are intended to inform and enlighten.
SEQ 1_0 \* Arabic \n411 What would be your position to a suggestion that, indeed, the objectives of the Broadcasting Act are engaged, in that it is beneficial for your subscribers, which is a large proportion of the population in the area you serve, to be enlightened and informed about the alternatives they have in telecom services?
SEQ 1_0 \* Arabic \n412 MS MacDONALD: I guess the first thing I would say is that it would have been nice to have been involved in the drafting of the objectives when that particular provision was drafted.
SEQ 1_0 \* Arabic \n413 Maybe it wouldn't have been, but ‑‑
‑‑‑ Laughter / Rires
SEQ 1_0 \* Arabic \n414 MS MacDONALD: However, when I read that provision, and when it is read in context with all of the other provisions, for the purpose of this application and this issue, while we have to look at what the definition of programming is, how I would interpret that particular provision is that it really seems more appropriately directed to the efficient delivery of programming services to consumers through the most effective technologies available at reasonable costs.
SEQ 1_0 \* Arabic \n415 Some very clear examples of that that I would see would be the provision of programming services ‑‑ broadcast distribution services ‑‑ to our own end customers, our subscribers.
SEQ 1_0 \* Arabic \n416 And efficient technologies and costs, that gets into the cost of upgrading to digital cable and these sorts of issues.
SEQ 1_0 \* Arabic \n417 I think that a more appropriate interpretation really lends itself to that interpretation of that particular provision.
SEQ 1_0 \* Arabic \n418 Again, I would say that while, in a very strict sense, the definition of program ‑‑ we accept that the listing service is ‑‑ I would not say that that provision as easily lends itself to an interpretation ‑‑
SEQ 1_0 \* Arabic \n419 THE CHAIRPERSON: I was suggesting that the advertising is programming, as well, that enlightens and informs, and I was asking you what is your view as to whether the objectives of the Broadcasting Act are engaged, seeing that advertising is programming that informs and enlightens, which is one of the definitions.
SEQ 1_0 \* Arabic \n420 MS MacDONALD: I would say that if you look at the perspective, if you assume that this provision applies to advertising, if we accept that, then EastLink is providing advertising consistent with that provision.
SEQ 1_0 \* Arabic \n421 The fact that EastLink has denied such advertising to Alliant doesn't mean we are in breach of those objectives. The question of denying advertising to Alliant calls upon the undue preference provisions.
SEQ 1_0 \* Arabic \n422 So we can be consistent with this provision if we assume that this provision applies to the advertisements.
SEQ 1_0 \* Arabic \n423 THE CHAIRPERSON: I was strictly looking at the second prong and the statement that the objectives of the Broadcasting Act are not engaged in this discussion, and suggesting that perhaps they are, since advertising is enlightening information, because it is programming, and the more the subscriber receives, the better informed and enlightened they are.
SEQ 1_0 \* Arabic \n424 I think that humane treatment requires a break. We will take a 10‑minute break and then proceed with the questioning from the parties. Thank you.
‑‑‑ Upon recessing at 1140 / Suspension à 1140
‑‑‑ Upon resuming at 1157 / Reprise à 1157
SEQ 1_0 \* Arabic \n425 THE CHAIRPERSON: Order, please. We will now proceed with the next phase of our hearing, which is the opportunity for parties to question each other.
SEQ 1_0 \* Arabic \n426 Mr. Fitzpatrick.
EXAMINATION / INTERROGATOIRE
SEQ 1_0 \* Arabic \n427 MR. FITZPATRICK: Thank you, Madam Commissioner.
SEQ 1_0 \* Arabic \n428 Ms MacDonald, I guess a simple two‑part question. One, why did EastLink stop carrying Aliant cellular telephone advertisements; and two, isn't it clear that it was to cause harm to Aliant as a telecommunications competitor?
SEQ 1_0 \* Arabic \n429 MS MacDONALD: The answer to the first question is, as I had stated earlier today during the proceeding, first of all, the contracts that the Aliant Mobility dealers had had expired and a few months had gone by before they had approached EastLink to request advertising, and during that intervening period, EastLink made a business decision which incorporated various elements but the key reason was based on the activity that Aliant was taking in the marketplace in promoting its bundles, using the cellular service to leverage those bundles, and it became a business decision not to continue the advertisements of the mobility product.
SEQ 1_0 \* Arabic \n430 Part of that analysis came as well when, on October 1, Aliant announced the acquisition of DownEast Mobility, which really lent credence to the fact that the mobility products were being integrated and marketed more in the Aliant bundles and, as I had stated previously, that led to the concerns and the reality that Aliant's provision of advertising was directed directly to EastLink's cable subscribers and it would present an excellent opportunity to win back customers from EastLink to Aliant for multiple services.
SEQ 1_0 \* Arabic \n431 The second part of the question ‑‑ if you could repeat the question.
SEQ 1_0 \* Arabic \n432 MR. FITZPATRICK: I guess the gist of it is that it would appear that the reason for the decision was to cause harm to Aliant as a telecommunications competitor.
SEQ 1_0 \* Arabic \n433 MS MacDONALD: In answer to that, no, EastLink's decision was not intended in any way to cause harm to Aliant as a telecommunications carrier. When EastLink makes a decision with regard to its services, the decision in this particular case was based on protection of EastLink's own customer base due to the very, very likely risk of erosion of multiple services.
SEQ 1_0 \* Arabic \n434 As we said, while EastLink disputes that there is any significant harm to Aliant, the action on our part was not intended to cause harm, and if anything, the erosion of our customer base after significant investments to upgrade our plant for the provision of telecommunications services, including high‑speed internet and telephone, would cause a more significant impact to EastLink than the loss of the potential additional customers that Aliant might gain by advertising in a listing service.
SEQ 1_0 \* Arabic \n435 MR. FITZPATRICK: Is it EastLink's position that it is acceptable for it to use its powers and abilities as a broadcast distribution undertaking specifically to assist itself in a separate industry, i.e. telecommunications, and in using that power as a way of gaining an advantage over their competitors in that industry?
SEQ 1_0 \* Arabic \n436 MS MacDONALD: Well, I would suggest that EastLink is fully entitled to promote its multiple services and that was established in a previous Commission decision that was referenced in EastLink's submissions on January 7th, wherein the Commission determined that BDUs do not have market power in advertising vehicles and therefore combining multiple services in promotion was acceptable, notwithstanding the fact that the incumbent phone companies at that time did have restrictions on joint marketing.
SEQ 1_0 \* Arabic \n437 So it is actually a good example, even though the scenario of that decision was different, in that cable companies were permitted to joint market their services because they did not have market power in advertising, while at the same time, at that time, the joint marketing restrictions were in place for incumbent phone companies.
SEQ 1_0 \* Arabic \n438 So there you have cable companies able to joint market products with no undue preference or discrimination against the incumbent telcos and I would say that that is not really that much different than what we have here. EastLink is promoting its services on the listing and in this particular instance has refused Aliant access to EastLink subscribers to target its services.
SEQ 1_0 \* Arabic \n439 MR. FITZPATRICK: In its submissions, EastLink makes repeated statements, I guess trying to portray this as a bit of a David and Goliath battle, with Aliant being the larger of the two and having more wherewithal in terms of the marketing abilities and whatnot.
SEQ 1_0 \* Arabic \n440 In the press release that was announced on December the 6th with respect to the Rogers Wireless partnership, it makes reference, for example, to Rogers being Canada's largest integrated wireless voice and data network, providing advanced voice and wireless data solutions to customers from coast to coast, et cetera, et cetera, the world standard for wireless communications ‑‑ the accommodation of Rogers Wireless and Microcell has 5.5 million wireless customers and offices in Canadian cities across the country.
SEQ 1_0 \* Arabic \n441 Based on that sort of partnership, isn't it true that in partnering with Rogers Wireless, it is inappropriate to try to characterize this as a bit of a David and Goliath battle and that really we are dealing with more of a contest of equals, certainly vis‑à‑vis the wireless industry?
SEQ 1_0 \* Arabic \n442 MS MacDONALD: I guess I would say that if we are dealing with a contest of equals, I would say that further supports in any case that there is no undue harm to Aliant. I mean the wireless market is competitive and references to the subscriber numbers nationally of Rogers ‑‑ I mean Ontario covers a very large base and I would say that most of the subscribers are ‑‑ you know, there is probably a very large density of the subscribers in those areas. I don't have their numbers locally.
SEQ 1_0 \* Arabic \n443 But in any case, I would say that that does not go to prove an undue preference in favour of one company or an undue disadvantage because we still need to address the issues of substantial impact or harm and we don't see that here.
SEQ 1_0 \* Arabic \n444 MR. FITZPATRICK: I guess EastLink's relative power as a BDU is influenced by its dominance in that particular industry.
SEQ 1_0 \* Arabic \n445 Could you share what percentage of the cable TV subscriber market that EastLink would hold where it operates in Nova Scotia and P.E.I.?
SEQ 1_0 \* Arabic \n446 MS MacDONALD: I am sorry, could you clarify what the intention is for the information?
SEQ 1_0 \* Arabic \n447 MR. FITZPATRICK: Yes. Well, we are trying to determine the impact of being denied the ability to advertise on this particular channel and I am submitting that EastLink's relative power as a BDU, as a monopoly service provider in certain areas of its operating territory, influence how other people are impacted, i.e. Aliant.
SEQ 1_0 \* Arabic \n448 I am just wondering if you could share what percentage of the cable TV subscriber market that EastLink holds where it operates in Nova Scotia and P.E.I.
SEQ 1_0 \* Arabic \n449 MS MacDONALD: I guess in response to that question, our publicly stated subscriber numbers are on our Web site, in the range of around 230,000 cable subscribers across both operating ‑‑ both provinces, but in any event, I don't see how the issue is relevant to Aliant's claim that EastLink is giving itself an undue preference or Aliant has experienced an undue disadvantage. I am just not sure what you are looking for but I don't have the other statistics that you were requesting.
SEQ 1_0 \* Arabic \n450 MR. FITZPATRICK: But would you have rough approximations of the market that EastLink would have in terms of the cable TV subscriber market?
SEQ 1_0 \* Arabic \n451 MR. SCOTT: Are you looking for specifically the size of the adult population that may have access to the service or us compared to maybe our other entertainment competitors like Bell ExpressVu or Star Choice? Like what ‑‑
SEQ 1_0 \* Arabic \n452 MR. FITZPATRICK: I am looking for in terms of the cable TV market, in terms of people who purchase cable TV, where EastLink operates. Do you have 100 per cent of the market, do you have 90 per cent of the market, do you have 50 per cent of the market? I am just trying to get a ‑‑
SEQ 1_0 \* Arabic \n453 MS MacDONALD: I think that is really getting into, you know, information that we ‑‑ the reality in EastLink's serving territories where we offer our cable service is that there are national competitors that are competing in our serving territories, Bell ExpressVu, Star Choice. Bell ExpressVu is a very large competitor. We don't have breakout numbers of the percentage of our market to present here today but likewise, throughout both provinces, there are other BDU competitors.
SEQ 1_0 \* Arabic \n454 So I know the focus of this proceeding speaks to EastLink being the only cable provider but that is in a landmine market. I mean there are national competitors in the wireless satellite markets as well.
SEQ 1_0 \* Arabic \n455 MR. FITZPATRICK: Do you know for example whether Bell ExpressVu carries third‑party advertising on its TV programming ‑‑ TV listing channel?
SEQ 1_0 \* Arabic \n456 MS MacDONALD: We would probably not have sought that out because we would never expect to receive any advertising from Bell ExpressVu on their services.
SEQ 1_0 \* Arabic \n457 MR. FITZPATRICK: In interrogatory number 5 that had been directed to EastLink, it asked EastLink to explain the rules and limitations that may exist pertaining to the type of advertising permitted on EastLink's services, and in its response, EastLink made reference to the programming content guidelines with respect to, for example, illegal programming content or obscenities and profanities, things of this nature, and also mentioned that it would be subject to certain CRTC rulings with respect to format or type of advertising permitted on listing channels.
SEQ 1_0 \* Arabic \n458 Is EastLink's position then that there are no rules that apply regarding standards of conduct that EastLink must follow vis‑à‑vis using its power and discretion as a BDU for anticompetitive purposes?
SEQ 1_0 \* Arabic \n459 MS MacDONALD: I would say that the rules applicable to any BDU with regard to anticompetitive purposes are governed by the Broadcasting Distribution Regulations on the undue preference provisions, and under those provisions, as discussed, BDUs must govern themselves such that they don't grant an undue preference.
SEQ 1_0 \* Arabic \n460 So on a case‑by‑case basis, any claim that a BDU is engaging in such conduct would have to be addressed on that case‑by‑case basis, which is why we are here today. So yes, there is definitely a requirement to govern yourselves according to the legislation that regulates us as a BDU.
SEQ 1_0 \* Arabic \n461 MR. FITZPATRICK: So the undue preference provisions are essentially the only safeguard there in that respect?
SEQ 1_0 \* Arabic \n462 MS MacDONALD: Well ‑‑
SEQ 1_0 \* Arabic \n463 MR. SCOTT: As it relates to content or as it relates to the type of customer coming forward?
SEQ 1_0 \* Arabic \n464 MR. FITZPATRICK: As respects, for example, engaging in anticompetitive behaviour in terms of the type of advertising that it may accept.
SEQ 1_0 \* Arabic \n465 MS MacDONALD: We would say that the regulator, the CRTC, which is governed by the legislation, whether it be the Broadcasting Act or the Telecom Act, those provisions are applicable to us.
SEQ 1_0 \* Arabic \n466 And as it pertains to anticompetitive conduct, unless one was trying to argue that the legislation applicable to a regulator is not relevant, then you are outside the scope of that but we are here today dealing with the legislation that is applicable and therefore we are dealing with the undue preference provisions which would serve as the protections from that type of behaviour that would be defined as potentially anticompetitive.
SEQ 1_0 \* Arabic \n467 MR. FITZPATRICK: Next question: If an advertiser wishes to target advertising specifically toward cable TV viewers, not cable TV subscribers, what avenues exist in Nova Scotia and P.E.I., and maybe just as an add‑on, don't you agree that Aliant can legitimately wish to target cable TV viewers without being specifically interested in whether they are EastLink subscribers or not?
SEQ 1_0 \* Arabic \n468 MS MacDONALD: First of all ‑‑ I will answer one part of that and perhaps I will leave it to Barry to speak to other alternatives to target multiple subscribers, but first of all, we would take the position that while Aliant is claiming that it is seeking access to viewers which would suggest an expanded scope of the general population, our position is that that is not the case.
SEQ 1_0 \* Arabic \n469 Aliant is seeking to target EastLink's subscribers and I make reference to your earlier comment that hotel guests ‑‑ which would be in your interrogatory responses or submissions ‑‑ was described as one set of viewers that aren't subscribers.
SEQ 1_0 \* Arabic \n470 Earlier today, you had indicated that hotel guests would never be interested in the listings because they are local services and they would typically not have an interest in products and services advertised on that channel.
SEQ 1_0 \* Arabic \n471 So what I am getting at is that while Aliant is claiming that the viewers are what they are interested in and trying to expand the scope beyond EastLink subscribers, we would say that many of those viewers are irrelevant and not interested in the products offered on the listing service.
SEQ 1_0 \* Arabic \n472 And therefore, we think that the real key here is that these are EastLink subscribers and any additional viewers in the household would be a very small incremental basis.
SEQ 1_0 \* Arabic \n473 MR. SCOTT: It has been our experience also when you talk about the travellers to hotels is that the majority of people that come to our serving area that are staying in motels really don't ever end up in business for us. They are ‑‑ as somebody mentioned earlier, they are transient and really don't ever end up ‑‑ a percentage do but the majority really don't end up ever buying services locally. They are basically a travelling community.
SEQ 1_0 \* Arabic \n474 I mean it is well known that specifically Halifax, our biggest serving area, is an area that is managed regionally from other areas of Canada for most services. So I mean that is just the economics of the city. So it has never really been a target for us.
SEQ 1_0 \* Arabic \n475 MR. FITZPATRICK: Understood.
SEQ 1_0 \* Arabic \n476 MS MacDONALD: And for that customer base, there are numerous other avenues, and I don't know if Barry can speak more to that, in terms of the other avenues to target a large audience at a low cost, which is what Aliant is claiming the listing service is to achieve. For example, radio is one example and I don't know if Barry wants to expand on some of that.
SEQ 1_0 \* Arabic \n477 MR. SCOTT: Well I guess, as marketers, I mean everybody is really challenged in getting and targeting and, as Susan had said, making sure the message is in front of the right target, but the key here is that you are coming forth wanting to promote on a service that we know. Part of the high value of that would be because it will be going right into cable households that are already buying services from us.
SEQ 1_0 \* Arabic \n478 I think other mediums, as in radio and other mediums that are very targeted, that can be purchase targeted in various targeted fashions, can achieve those kinds of results.
SEQ 1_0 \* Arabic \n479 I would say that our services, except for being targeted towards specifically for cable customers or cable households, it is very hard to use our medium to target because we don't have time of day viewing, we don't have any of the other types of things that are very inherent to traditional mediums like radio and newspaper and traditional broadcasting.
SEQ 1_0 \* Arabic \n480 I mean we don't offer those types of things that allow marketers to pick a particular segment and find out what their attributes are and match the medium to get to them. So our product, specifically the listing service, doesn't really function that way. We are a mass approach, high rotation, but we can't target.
SEQ 1_0 \* Arabic \n481 MR. FITZPATRICK: I appreciate that. I don't think it really addresses the question. The question was that if you were attempting to target cable TV viewers as a market, I suggested that Aliant could legitimately wish to target those viewers without being specifically interested in whether they are EastLink subscribers or customers or whatever. I mean many other people other than subscribers of EastLink watch cable television in Nova Scotia, for example.
SEQ 1_0 \* Arabic \n482 MR. SCOTT: I guess the challenge we have is that we are not aware of the information that might drive that thinking. We know that there is some information through Stats Can that talks about in a home, what people may be residents or non‑residents that could be viewing cable services, but we don't have the data.
SEQ 1_0 \* Arabic \n483 MS MacDONALD: The other thing is cable TV viewers watch cable, and so there are various avenues through cable as well, and I guess we would continue to ask the question, on what basis is a lack of access to cable TV viewers ‑‑ which I would suggest is EastLink subscribers ‑‑ on what basis is Aliant experiencing harm because it is not accessing them?
SEQ 1_0 \* Arabic \n484 The other argument is if you are talking about viewers and not subscribers and if we accept that you really are looking at viewers, well then you are talking about a general population of people, which can be achieved through billboards, newsprint, radio.
SEQ 1_0 \* Arabic \n485 Radio is a perfect example of a similar type of ‑‑ in fact, if you assume that the listing service, the visual is not that fancy, the audio is what is there, and radio is on a one‑hour rotation, has similar price points, the listener is sitting there listening to the ads throughout the course of their listening period.
SEQ 1_0 \* Arabic \n486 So I guess I would say there are numerous opportunities available to reach the general public.
SEQ 1_0 \* Arabic \n487 MR. FITZPATRICK: You are basically saying that there is nothing unique about ‑‑ is that what you are saying, in terms of the vehicle of going through the cable, targeting specifically the cable TV viewer, there are other mediums in which to target the same people? Is that essentially what you are ‑‑
SEQ 1_0 \* Arabic \n488 MS MacDONALD: I would say there are other mediums to target the general population of consumers, which is if you are saying that viewers expand, but I would say the unique thing about what Aliant is looking for is that they want EastLink's subscribers, not viewers, and we maintain that view.
SEQ 1_0 \* Arabic \n489 THE CHAIRPERSON: Mr. Fitzpatrick, you have time to ask one more question that you can't live without asking.
SEQ 1_0 \* Arabic \n490 MR. FITZPATRICK: I don't know that there is one.
‑‑‑ Laughter / Rires
SEQ 1_0 \* Arabic \n491 THE CHAIRPERSON: Does that mean you are finished?
SEQ 1_0 \* Arabic \n492 MR. FITZPATRICK: Can I just take one second here to look, Madam Commissioner?
SEQ 1_0 \* Arabic \n493 MR. FITZPATRICK: I guess one final question, Ms MacDonald.
SEQ 1_0 \* Arabic \n494 You state in response to interrogatory number 10 that EastLink's right to sell advertising on this channel includes the right to make decisions about the impact of that advertising space on its business.
SEQ 1_0 \* Arabic \n495 What impact do Aliant telecom advertisements or telecommunications services have on EastLink's BDU business?
SEQ 1_0 \* Arabic \n496 MS MacDONALD: Well, I guess when answering that interrogatory, we were speaking to the impact on EastLink's business, not narrowly defining it on the BDU business, and we would say that that continues to be relevant, is all of EastLink's business, which goes to the questions that were answered earlier today about EastLink losing customers.
SEQ 1_0 \* Arabic \n497 And in fact, I guess there is also a very good potential for an impact on our BDU business in terms of the Aliant value packages, and assuming that a customer moves to Aliant for triple services of cellular and local service and high‑speed internet, then that same customer may very likely have little incentive to even have a cable service from EastLink, they may go with Bell ExpressVu, and from time to time, I know that there is a combined marketing effort for the Bell ExpressVu product. So there is definitely that real risk as well.
SEQ 1_0 \* Arabic \n498 But I would say that one of the relevant issues is that it is all of our business, it is our investment to upgrade our plant. Just like Aliant is concerned about its telecom business and claiming that that is at risk, we would say that it is our telecommunications services as well.
SEQ 1_0 \* Arabic \n499 THE CHAIRPERSON: Thank you, Mr. Fitzpatrick.
SEQ 1_0 \* Arabic \n500 Ms MacDonald.
EXAMINATION / INTERROGATOIRE
SEQ 1_0 \* Arabic \n501 MS MacDONALD: I just have a couple of questions.
SEQ 1_0 \* Arabic \n502 I just wanted to have some clarification because I want to be clear on what services Aliant is actually looking to advertise. I note that initially the application seemed to indicate a request for all services, but then in answer to interrogatory 5, Aliant specifically stated that it is not seeking advertising services for its potential broadcasting service or for telecommunications services at this time other than wireless. So I just wanted some clarification on that.
SEQ 1_0 \* Arabic \n503 MR. FITZPATRICK: Well, I guess the refusal that we had received at Aliant back in October was a broad‑based refusal to accept any kind of telecommunications services. So I guess ultimately that is the decision that we are attempting to push back on.
SEQ 1_0 \* Arabic \n504 In terms of the types of services that Aliant would be interested in advertising going into the future, of course, Aliant would have an expectation and a desire to be treated the same with the same rules and terms and conditions applying to Aliant as would be applied to any other commercial party that sought to advertise on that particular channel.
SEQ 1_0 \* Arabic \n505 In terms of specific short‑term advertising plans, I can't speak to that. Maybe Ms Harley can.
SEQ 1_0 \* Arabic \n506 I know though that in relation to the advertising that had been denied in the fall of 2004, I believe that would have been cellular.
SEQ 1_0 \* Arabic \n507 Aliant acknowledges that the Commission has broad discretion in terms of any remedy or relief that they may wish to grant in this particular case and we defer to the Commission's judgment as to whether that should be on a conditional or limited basis or on a broad basis.
SEQ 1_0 \* Arabic \n508 MS MacDONALD: Okay. So when Aliant stated that it would expect an incumbent BDU to not advertise its competitors ads and therefore Aliant wouldn't be seeking that, what was the intention in making that statement?
SEQ 1_0 \* Arabic \n509 MR. FITZPATRICK: Sorry?
SEQ 1_0 \* Arabic \n510 MS MacDONALD: Sorry, in the answer to Aliant's interrogatory that ‑‑ I think it was interrogatory number 5. Aliant states that:
"Aliant reference to any other services in paragraph 20 of its complaint is relative to EastLink Communications' representative statement that EastLink will no longer accept any Aliant advertising on any of its cable television channels in Nova Scotia and P.E.I. Aliant may in the future wish to advertise any of its telecommunications services and should not be restricted from advertising or limited to advertising any particular category of telecommunications service. Aliant has no intention of advertising any broadcasting services or any expectation that an incumbent BDU would accept Aliant's advertising cable services on the listings channel. Further, Aliant does not have any plans to advertise any telecommunications services other than wireless." (As read)
SEQ 1_0 \* Arabic \n511 So I just wanted to confirm that that was correct.
SEQ 1_0 \* Arabic \n512 MR. FITZPATRICK: Well, that was ‑‑ certainly as of the time of the interrogatory response, Aliant did not have and does not have any cable services to offer, but as a philosophical point, drawing the analogy, for example, of the CBC advertising policy where like industries are not expected to carry like industry advertising, we would expect that there would be a stronger case to make with respect to carrying cable TV types of advertisements on the EastLink channel.
SEQ 1_0 \* Arabic \n513 Going forward though, in terms of the types of advertising that maybe Aliant may seek to carry or put on the TV listing channel, we would not wish to place any fences around that at this point. We would ‑‑ ideally, we are seeking to have full and open access, equal with anybody else.
SEQ 1_0 \* Arabic \n514 MS MacDONALD: But according to that statement, Aliant had made the decision, at least at the time of drafting that response, that it had no intention of offering other telecommunications services ‑‑
SEQ 1_0 \* Arabic \n515 MR. FITZPATRICK: Mm‑hmm.
SEQ 1_0 \* Arabic \n516 MS MacDONALD: ‑‑ correct?
SEQ 1_0 \* Arabic \n517 MR. FITZPATRICK: That is my understanding ‑‑
SEQ 1_0 \* Arabic \n518 MS MacDONALD: At the time that that response was prepared.
SEQ 1_0 \* Arabic \n519 MR. FITZPATRICK: ‑‑ and I don't know if you can ‑‑
SEQ 1_0 \* Arabic \n520 MS MacDONALD: So I guess that would raise the question: How is failure to advertise then on those channels a material impact to Aliant and how is it negatively impacting Aliant when Aliant didn't see at the time of drafting that response that it was a relevant avenue to list those other telecommunications services?
SEQ 1_0 \* Arabic \n521 MR. FITZPATRICK: If I might, at the time the response was done, we were looking at what are our plans. We had no plans to go beyond mobility products. That is not to say that we feel that we should be limited to mobility only. That just says that at a point in time there were no specific plans for future services, whether it be broadcast or other telecommunications services, and I think that is what we were trying to get at.
SEQ 1_0 \* Arabic \n522 MS MacDONALD: I just have another couple of questions with regard to your mobility service.
SEQ 1_0 \* Arabic \n523 Aliant did purchase DownEast Mobility on October 1 of 2004. Is it safe to say that the business case is moving more toward promoting of individual services in the value packages rather than a stand‑alone basis?
SEQ 1_0 \* Arabic \n524 MS HARLEY: Could you just repeat that again? I am sorry, I want to make sure I understand your question.
SEQ 1_0 \* Arabic \n525 MS MacDONALD: Aliant has acquired DownEast Mobility services. The advertisements for the value packages include mobility products.
SEQ 1_0 \* Arabic \n526 MS HARLEY: Yes.
SEQ 1_0 \* Arabic \n527 MS MacDONALD: Is it safe to say then that the business case is moving toward more promotion of individual services in the value packages as a part of the value package as opposed to on a stand‑alone basis?
SEQ 1_0 \* Arabic \n528 MS HARLEY: Are you asking if we are going to promote value packages or the individual services?
SEQ 1_0 \* Arabic \n529 MS MacDONALD: I guess the question is, is Aliant moving more toward ‑‑ does Aliant promote stand‑alone services?
SEQ 1_0 \* Arabic \n530 MS HARLEY: Absolutely. We would continue to promote them as appropriate to the particular product or service that we are promoting at the time. However, we are very strongly committed to providing value packages to our customers as well.
SEQ 1_0 \* Arabic \n531 MS MacDONALD: Okay. And so with regard to Aliant's call centre, customers who purchase or are interested in purchasing DownEast, is Aliant's call centre trained to deal with the promotion of all the value package services?
SEQ 1_0 \* Arabic \n532 MS HARLEY: Our call centres don't handle anything for DownEast. DownEast is a storefront only. If you are interested in obtaining services from DownEast, you go into one of their stores and you deal with them. We do not handle their telephone calls.
SEQ 1_0 \* Arabic \n533 MS MacDONALD: Okay. I have no further questions.
SEQ 1_0 \* Arabic \n534 THE CHAIRPERSON: Thank you, Ms MacDonald.
SEQ 1_0 \* Arabic \n535 Mr. Millington, do you have further questions?
SEQ 1_0 \* Arabic \n536 MR. MILLINGTON: No, I don't, Madam Chairman.
SEQ 1_0 \* Arabic \n537 THE CHAIRPERSON: Commissioner Cram?
SEQ 1_0 \* Arabic \n538 COMMISSIONER CRAM: No, thank you.
SEQ 1_0 \* Arabic \n539 THE CHAIRPERSON: Commissioner Noël?
SEQ 1_0 \* Arabic \n540 COMMISSIONER NOËL: I have one question, Ms MacDonald. You mentioned earlier that the Commission considers that at the present time you don't have market power in advertising for your listing channels.
SEQ 1_0 \* Arabic \n541 If in the future, as a result of a potential change of view of the Commission or otherwise your company or you as a cable company were to gain market power in advertising, do you feel that you could use that market power to block your telecom competitors and use your inventory for promoting your own telecom services?
SEQ 1_0 \* Arabic \n542 MS MacDONALD: Just to clarify on the comments with regard to no market power in advertising, the point to be made there is that there are numerous other advertising sources out there that are available.
SEQ 1_0 \* Arabic \n543 I don't see EastLink ever having to ask that question because EastLink is not in the business of creating more avenues for, you know ‑‑ EastLink has what it has, and the other avenues that are out there, that have been touched upon in submissions, continue to exist. So in that respect, I don't see EastLink ever having to pose that question.
SEQ 1_0 \* Arabic \n544 COMMISSIONER NOËL: There are proceedings before the CRTC on the broadcasting side which could result ‑‑ it is a potential result of those proceedings to allow the cable operators to use the local avails. In that case, if hypothetically the CRTC was to consider to allow the cable operators to use the local avails, they would gain market power in advertising.
SEQ 1_0 \* Arabic \n545 At that point, in those circumstances, do you feel that you could use that market power to block your telecom competitors and use your inventory for promoting your own telecom services?
SEQ 1_0 \* Arabic \n546 MS MacDONALD: I think the answer to that question really goes back to the question of when EastLink Advertising receives a request for advertising from a company, EastLink has to do an analysis within the criteria, be it content as well as business decisions, and so EastLink would then be in a position to have to make a decision based on all the information before it at the time and each of those decisions would be based on a case‑by‑case basis.
SEQ 1_0 \* Arabic \n547 COMMISSIONER NOËL: Which doesn't answer my question. Would you use the market power available to you in those circumstances to block your competitors and use it for the promotion of your own telecom services?
SEQ 1_0 \* Arabic \n548 MS MacDONALD: Going back to what I had stated previously, I don't think that EastLink would make proactive decisions to use their resources to block competitors and I use the example of ‑‑ there was some discussion about new entrants or small competitors, et cetera, entering markets and potentially seeking advertising from EastLink.
SEQ 1_0 \* Arabic \n549 I think the real issue is the nature of the competitor and then the issue becomes one of ‑‑ a question of is EastLink going to be engaging in activity that would equate to an undue preference under the legislation if we do this or if we do that, and so that analysis would factor into it.
SEQ 1_0 \* Arabic \n550 COMMISSIONER NOËL: Thank you.
SEQ 1_0 \* Arabic \n551 THE CHAIRPERSON: That completes this phase now. So we will now hear from both of you in final submissions.
SEQ 1_0 \* Arabic \n552 Would you like five minutes to gather your thoughts or are you ready?
SEQ 1_0 \* Arabic \n553 MR. FITZPATRICK: I am ready to proceed, Ms Commissioner.
SEQ 1_0 \* Arabic \n554 THE CHAIRPERSON: Madam MacDonald? Miss MacDonald?
SEQ 1_0 \* Arabic \n555 MS MacDONALD: Yes, I am ready.
SEQ 1_0 \* Arabic \n556 THE CHAIRPERSON: You are ready.
SEQ 1_0 \* Arabic \n557 Go ahead, please.
CLOSING REMARKS / REMARQUES DE FERMETURE
SEQ 1_0 \* Arabic \n558 MR. FITZPATRICK: Thank you, Madam Commissioner.
SEQ 1_0 \* Arabic \n559 Aliant submits that this is all about EastLink as a BDU being able to use the authority of that position to discriminate against third parties that compete against it in another industry.
SEQ 1_0 \* Arabic \n560 This is not about incidental or unintentional discrimination or discrimination that has simply evolved over time based on historical patterns like the WIC and Shaw Cable situation. This is about targeted, intentional, singling out of Aliant for discrimination so as to cause it harm and to give an advantage to EastLink and its business partners.
SEQ 1_0 \* Arabic \n561 Aliant submits the harm to Aliant is real and significant due to the fact that EastLink is a monopoly cable TV provider where it operates.
SEQ 1_0 \* Arabic \n562 Aliant submits EastLink has not offered any compelling reason why discrimination toward Aliant is acceptable or justifiable on the basis of public policy.
SEQ 1_0 \* Arabic \n563 Aliant submits each case of discrimination must be judged on its own merits and in regard to the particular facts presented.
SEQ 1_0 \* Arabic \n564 Finally, Aliant respectfully requests that the Commission grant the relief as requested by Aliant.
SEQ 1_0 \* Arabic \n565 Thank you, Madam Commissioner.
SEQ 1_0 \* Arabic \n566 THE CHAIRPERSON: Thank you, Mr. Fitzpatrick.
SEQ 1_0 \* Arabic \n567 Miss MacDonald.
CLOSING REMARKS / REMARQUES DE FERMETURE
SEQ 1_0 \* Arabic \n568 MS MacDONALD: There is sufficient evidence on file and before the Commission to determine the applicable legislation at this point. EastLink maintains its position that the Broadcasting Act does apply and that the service clearly is a programming service.
SEQ 1_0 \* Arabic \n569 EastLink directs the Commission to its submissions filed on January 7th and on February 23rd as well as our interrogatory responses. We feel that these documents fully support EastLink's position that there is no material adverse impact on Aliant or any other person nor is there an impact on the policy objectives of the Broadcasting Act in EastLink denying Aliant advertising on its listing service.
SEQ 1_0 \* Arabic \n570 If the Commission determines that the Telecom Act applies, EastLink submits that the evidence before the Commission and arguments made in EastLink's submissions also establishes that any preference or disadvantage is not undue. The fact is that pursuant to the test under the Telecommunications Act, the establishment or continuance of a competitive market is not unduly impaired.
SEQ 1_0 \* Arabic \n571 To suggest there is even a minor impact to Aliant for failure to advertise on the listing service is an exaggeration given the minimal role the service would play in Aliant's overall advertising and marketing objectives.
SEQ 1_0 \* Arabic \n572 So the facts do not come close to establishing any undue impairments to the competitive market. In fact, the answer to Aliant's interrogatory 5 makes it clear that at least at that point in time, Aliant had no intention of advertising its other telecommunications services, which would lead one to clearly question how can there be harm when they didn't even think at the time of answering that response that they planned to advertise their other telecommunications services.
SEQ 1_0 \* Arabic \n573 In assessing this issue, EastLink notes that some individuals may have a personal level of distaste for a decision to refuse Aliant advertising. However, such an opinion does not equate to a breach of the legislation.
SEQ 1_0 \* Arabic \n574 The Commission may ask whether a decision dismissing this application will result in BDUs denying all companies' requests for advertising services.
SEQ 1_0 \* Arabic \n575 The fact is each case must be determined on an individual basis.
SEQ 1_0 \* Arabic \n576 The fact is that EastLink's decision will not result in a material impact to Aliant's business nor will it result in a substantial lessening of competition or the undue impairment of a competitive market.
SEQ 1_0 \* Arabic \n577 We ask the Commission to keep in mind the following facts when analyzing the issue of undue preference.
SEQ 1_0 \* Arabic \n578 The listing service is a service only received by EastLink cable subscribers. Even if Aliant speaks of viewers who may watch the service, the target is EastLink's subscribers. Mr. Fitzpatrick admitted that the hotel and out‑of‑town viewers are not interested in the advertisements. This brings the focus back to subscribers, not general viewers who may not be subscribers.
SEQ 1_0 \* Arabic \n579 The advertising is typically filled by smaller local companies who may not have budgets to do more significant broadcast advertising. For larger corporations, this service is typically a supplement or a secondary service to the core advertising plan of a large company.
SEQ 1_0 \* Arabic \n580 Aliant Mobility had been the only division to place ads on the service. Aliant Telecom never advertised its services on this service.
SEQ 1_0 \* Arabic \n581 The primary advertising medium Aliant uses are the more significant broadcast mediums such as local broadcasters, national broadcasters as well as newspaper, radio and other print media.
SEQ 1_0 \* Arabic \n582 Aliant's interrogatory responses indicate they access all advertising vehicles except the listing service and I think this is important in establishing whether there really is any negative impact or undue harm to Aliant.
SEQ 1_0 \* Arabic \n583 This can't possibly be a key impact in Aliant's overall advertising strategy nor would we expect that having this access will change the focus of Aliant's advertising plans in any relevant manner. This is merely a supplementary advertising avenue.
SEQ 1_0 \* Arabic \n584 The Commission also recognized BDUs do not have market power in advertising vehicles. Decision 98‑9 referred to at our January 7th submissions specifically references this decision.
SEQ 1_0 \* Arabic \n585 The Commission did not impose joint marketing restrictions on BDUs at a time when incumbent telcos did have those marketing restrictions and we would say that that is a somewhat analogous situation. EastLink is promoting some of its services and while at the same time it is not promoting Aliant's service on the listings channel.
SEQ 1_0 \* Arabic \n586 Aliant has provided no information to indicate any financial harm by the lack of advertising. EastLink submits this is because in the big scheme, the impact to Aliant is minimal, and in any case, it is not undue.
SEQ 1_0 \* Arabic \n587 Radio ads are no different in many respects. Aliant acknowledged themselves that the visual on the listing service is not that stimulating. The other component of a listing service is an audio component. We would say, therefore, that radio provides a very equivalent alternative avenue to the listing service, among others such as billboards, newspapers, et cetera, which are referred to in the submissions.
SEQ 1_0 \* Arabic \n588 If there is such a significant impact for failure to advertise, then why has there been such little interest to advertise the other services?
SEQ 1_0 \* Arabic \n589 While there may be little impact, the reverse is true for EastLink if EastLink is forced to advertise Aliant's services.
SEQ 1_0 \* Arabic \n590 Aliant's position is that it may not be able to gain new cable viewers to purchase its services, but if Aliant does advertise on the listings, any gain in customers is most likely to be a loss of more than one of EastLink's services per customer.
SEQ 1_0 \* Arabic \n591 The fact is that any service Aliant offers is now tied into Aliant bundles. The value packages are being heavily promoted. Even if Aliant only advertises its cellular services, Aliant personnel do promote Aliant's value packages.
SEQ 1_0 \* Arabic \n592 Value packages include internet service. Each time a customer takes an Aliant bundle that may have a cellular component or an internet component, that customer is taking Aliant's local service.
SEQ 1_0 \* Arabic \n593 EastLink's loss of the number of customers Aliant seeks to gain on the listing service will be a greater impact to EastLink. EastLink has expanded and upgraded its cable network to provision high‑speed internet and telephone service. To upgrade for telephone, EastLink has had to invest more capital.
SEQ 1_0 \* Arabic \n594 A loss of even a small number of customers to EastLink's telephone service would more significantly impact EastLink's business and recovery on investment than the small incremental gain Aliant may obtain in listing advertising on the listing service.
SEQ 1_0 \* Arabic \n595 Aliant is not so dependent on each individual customer since Aliant has been able to recover its investment for those customers through its rate base. Aliant is the incumbent in a local telephone market and EastLink is the entrant. Surely, there is no risk of harm there.
SEQ 1_0 \* Arabic \n596 Aliant's dial and high‑speed services make Aliant the dominant internet provider in its territory. In any case, there is no risk that the continuance of this competitive market is likely to be unduly impaired.
SEQ 1_0 \* Arabic \n597 Furthermore, Aliant has even stated in its interrogatory responses that it does not intend to advertise its other services, which have been touched on before.
SEQ 1_0 \* Arabic \n598 EastLink's position is that even advertising the mobility service places EastLink's business at risk since Aliant leverages its mobility to sell the other products in its value packages. While Aliant may not have the benefit of advertising in a listing service, it has numerous other avenues to promote its services.
SEQ 1_0 \* Arabic \n599 Aliant may have many preferences and EastLink does not have the benefit to bring these matters to the Commission. Many of these are referred to in EastLink's submissions with regard to specialized deals with dealers, technology stores where EastLink is not able to offer its advertisements.
SEQ 1_0 \* Arabic \n600 Aliant has denied EastLink access to previous advertising vehicles that Aliant had at its disposal, both of which have been referenced in our submissions.
SEQ 1_0 \* Arabic \n601 There are numerous scenarios. In fact, there are a lot of scenarios where Aliant has developed relationships with forums and public avenues that at least EastLink is denied access to and these are forums and public avenues that would put EastLink in direct contact with customers.
SEQ 1_0 \* Arabic \n602 So we would say that Aliant has numerous resources that make it obvious that they are not suffering any harm.
SEQ 1_0 \* Arabic \n603 EastLink's actions are no different than most other companies with advertising vehicles available to them, including Aliant. The public policy of the CBC also illustrates this point.
SEQ 1_0 \* Arabic \n604 EastLink also believes that its customers would not expect to see us promoting our competitors' services, Aliant services, on our listing service.
SEQ 1_0 \* Arabic \n605 THE CHAIRPERSON: Miss MacDonald, you have one minute left.
SEQ 1_0 \* Arabic \n606 MS MacDONALD: Okay.
SEQ 1_0 \* Arabic \n607 THE CHAIRPERSON: Wind up.
SEQ 1_0 \* Arabic \n608 MS MacDONALD: The Yellow Pages example that we touched on is not relevant. We would say that the Yellow Pages go to all consumers and it is in any directory publisher's business interest to maximize on that.
SEQ 1_0 \* Arabic \n609 Finally, we note that many companies that apply similar policies are regulated by the CRTC. Any decision should result in minimal Commission intervention and this is supported and referenced in our submissions, paragraph 17 of the January 7th submissions.
SEQ 1_0 \* Arabic \n610 It would be difficult for the Commission, as stated in that decision, and companies to ensure equitable access for all competitors and it would be likely that the Commission would have to involve itself extensively in complaint resolution.
SEQ 1_0 \* Arabic \n611 We ask that the Commission consider these principles in assessing the application.
SEQ 1_0 \* Arabic \n612 To conclude, for all the reasons set out, we do not think that Aliant, under the Broadcasting Act, has proven undue preference nor do we think ‑‑ and we think there is sufficient evidence under the Telecom Act that there is no impairment or likelihood of impairment of a competitive marketplace.
SEQ 1_0 \* Arabic \n613 THE CHAIRPERSON: Thank you, Miss MacDonald.
SEQ 1_0 \* Arabic \n614 Mr. Millington, there was some material that was to be filed. Perhaps you would address the time frames that we are looking at.
SEQ 1_0 \* Arabic \n615 MR. MILLINGTON: Would it be possible to get it by the end of the day tomorrow?
SEQ 1_0 \* Arabic \n616 MR. FITZPATRICK: (Nods assent).
SEQ 1_0 \* Arabic \n617 MS HARLEY: (Nods assent).
SEQ 1_0 \* Arabic \n618 MR. MILLINGTON: There was the advertising budget and the relative cost of TV listing advertising vis‑à‑vis standard broadcasting.
SEQ 1_0 \* Arabic \n619 Could you send that to procedures and send it by email to Paul Godin? You have his email address.
SEQ 1_0 \* Arabic \n620 MR. FITZPATRICK: Certainly, Mr. Millington.
SEQ 1_0 \* Arabic \n621 MR. MILLINGTON: Thank you.
SEQ 1_0 \* Arabic \n622 THE CHAIRPERSON: Thank you.
SEQ 1_0 \* Arabic \n623 That completes the process. I wish to thank my colleagues for their support, the staff for their invaluable help, our court reporter and stenographer for theirs, and last but not least the participants for their cooperation.
SEQ 1_0 \* Arabic \n624 The oral part of this process is now adjourned.
‑‑‑ Whereupon the hearing adjourned at 1245 /
L'audience est ajournée à
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