Microcell calls Bell and Rogers on unfair marketing practices; wants injunction

Microcell Telecommunications Inc. is striking back at two of its rivals for using deceptive, unfair and discriminatory marketing practices aimed at luring its most profitable post-paid subscribers over to their services. The company contends that Bell Mobility and Rogers Wireless Communications Inc. clearly crossed the line between competitive marketing practices and discriminatory activities under section 27 (2) of the Telecommunications Act by offering special deals to Fido’s highest-paying customers to convince them to switch. On August 30, Microcell filed a Part VII application with the commission asking it to force the two carriers to stop. In its petition, the Montreal-based operator alleges that Bell and Rogers have willfully engaged in discriminatory marketing practices that confer an unfair advantage on them. It contends the two companies are using Microcell’s precarious financial position as a means of encouraging post-paid subscribers to jump ship. It wants the commission to deal with this matter in the shortest time frame possible. "Rogers and Bell Mobility are both attempting to ‘purchase’ current Microcell post-paid customers, enticing these customers to leave Microcell by offering them exclusive products and services at greatly reduced rates, unavailable to the general public. Microcell submits that in doing so, Rogers and Bell Mobility are unjustly discriminating against Microcell contrary to section 27 (2) of the Act," the wireless operator writes in its August 30 petition. Microcell pulls no punches in denouncing the marketing activities of its rivals. "The Rogers Offer and the Bell Offer go beyond healthy, competitive and rivalrous behaviour in the marketplace. Rather, each is a deliberate attempt to discipline or eliminate a smaller competitor through inappropriate and indeed illegal means," it writes. To present a solid case against its competitors, the company provides advertising material, example of in-store promotions, conversations with Bell and Rogers sales staff and anecdotal evidence of increased dealer incentives. Microcell asked Rogers to take a look at its marketing practices for potentially discriminatory and misleading aspects in an August 22 letter, before it filed its Part VII application. Rogers replied that it didn’t see anything wrong with its current activities and was using the Microcell and Fido brands in a simple comparative situation. "We strongly believe that all marketing activities carried out or authorized by Rogers AT&T Wireless have been in accordance with all applicable laws and consistent with the highest standard of marketing practices in Canada," Rob Bruce, executive VP and chief marketing officer at Rogers, wrote on behalf of the company. The issue rose to the fore in July when tens of thousands of Microcell subscribers were spammed with messages from Rogers to switch service providers. Microcell contends there were three spamming waves during which nearly 67,000 subscribers received promotional offers to switch to Rogers. One such message sent to subscribers in the Toronto area during the August 17 to August 18 period stated: *fidopromo@rogers.com PROMO * Switch from Fido to Rogers and get 6 MONTHS UNLIMITED & FREE GSM phone! Expires Aug. 31. For details, call Ron @ (416) 816-7243. Rogers has since denounced the spamming activities, saying that it was the work of rogue dealers. Despite efforts to stop the spamming in July, Microcell evidence demonstrates the spamming started again in August. In its Part VII, Microcell maintains that the practices of Bell and Rogers are against the rules, and that there is substantial precedence supporting its claims. In citing Telecom Decision CRTC 96-14, it points out that the commission still has the right to intervene in situations of unjust discrimination and undue preference in the provision of mobile wireless services. That decision was further backed up by Telecom Decision CRTC 98-18 against NBTel. "It is of the view that consistent with Decision 96-14, it is important to retain subsections 27 (2), 27 (3) and 27 (4) in order to, for example, ensure that NBTel does not unjustly discriminate against other service providers or customers, or confer an undue preference or unreasonable preference with respect to access to their networks," stated Decision 98-18. Microcell also notes that, despite the imputation test established in Telecom Decision 94-13, the commission stated the imputation test wouldn’t suffice to address certain cases of unjust discrimination and undue preference. "As noted in Decision 94-13, the commission considers the application of the imputation test will be sufficient to ensure that rates are not anti-competitive. Therefore, the commission is satisfied that there should generally be no additional regulatory concerns with targeted pricing, absent any concerns over unjust discrimination or undue preference," Microcell points out in its petition. The wireless operator strengthens its case in noting that, since the marketing campaigns are aimed only at its post-paid subscribers and not the general public, the practices are clearly discriminatory. It uses the reasoning of Telecom Decision CRTC 95-2 as further evidence to the discriminatory nature of the offers. In that ruling, the commission deemed the telephone companies’ hotel and motel commission plans (HMCPs) were resale offers that conferred unfair preference on the telephone company and participating hotels and motels. "Decision 95-2 stands as a clear example of where an offer made to one desirable type of customer, and not to others (including potential competitors), should be considered to be unjustly discriminatory. Microcell submits that these circumstances apply even more clearly in the present case when looking at the discriminatory nature of the Rogers Offer and the Bell Offer," Microcell writes. The company also expresses great concern over misleading and derogatory statements from Rogers and Bell’s call centre staff and in-store sales representatives. In a phone conversation with a sales representative at a Rogers store in Vancouver on August 14, the salesperson noted that Microcell was going out of business. "Fido is going pretty much (out of) business pretty soon. I think all three major players, Telus, Rogers and Bell are dividing the customers up." Bell call centre staff have also made similar statements. The following is a translation from an alleged conversation held on August 12. "Given that Fido is having financial difficulty, I think that is the reason (Bell) decided to make this kind of offer." Microcell argues that neither Rogers nor Bell Mobility can hide behind the facts and that this may be one of the most "blatant and egregious" acts of unjust discriminatory, targeted pricing that has ever been brought to the commission’s attention. "In Microcell’s respectful submission, the commission should consider whether the actions of Rogers and Bell Mobility to weaken or undermine Microcell, outlined in this application, do not themselves show a certain contempt of the commission’s ongoing regulatory jurisdiction in the wireless market."

Microcell calls Bell and Rogers on unfair marketing practices; wants injunction

News | September 16, 2002

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