Proposed winback rule changes will help open MUD market: Bell ExpressVu

Bell ExpressVu says that the CRTC’s proposed changes to winback rules will help it crack the multiple unit dwelling (MUD) market. The proposed changes clarify that not only are cablecos prohibited from contacting for 90 days condo boards, but also from wooing back with special deals individual MUD residents. "How will the (proposed rule) change the situation? I think Rogers (Cable) interpreted the rule such that they could chase after the residents, and it was as if the winback rule didn’t exist," says Paul Armstrong, director of regulatory matters at Bell ExpressVu. "Because in a condo situation, where a building had signed a bulk agreement with Rogers, you could still as an individual get Bell ExpressVu for your suite or vice versa. So Rogers was under the impression that the only person it couldn’t go back to after for 90 days under the winback rules was the condo corporation itself (which had signed the bulk agreement). In other words, you couldn’t go back to the board and try to wrestle away the bulk contract. But if an individual switched, then it could go after each of the individual residents and say, ‘Hey you don’t need to switch. You don’t need to take this deal from ExpressVu. You can stay with us. In fact, if you stay, we’ll give you an arm, a leg, and so on and so forth.’" Armstrong tells Canadian Communications Reports that the change is one protective measure that could help Bell ExpressVu get a better hold on the MUD market. "You invest a lot of money in a building to put a facility in there, to market to the building, and so on. When you make that investment, you have to count on a certain penetration just to break even," he notes. "It really doesn’t matter if it’s a TV service or anything else. When you’re selling to a building, you have to count on a certain penetration level just to break even. If you open a donut store or something in the lobby, you have to assume a certain volume of sales to make your presence worthwhile. And if the donut store next door came along and suddenly said, ‘Don’t buy donuts from him. I’ll give them to you for half price,’ you have no opportunity then to make a business." He continues, "So are you going to go into another building and lose money there too? The cable company can chase you all over town until you run out of money. (The revised winback rule) is another measure that the commission has put in place to give competition an opportunity to get established…It’s only a 90-day opportunity to prove to customers that you have the ability to provide the service they want." Armstong says that Bell ExpressVu is faring better in the MUD market in Toronto, since the CRTC shot down Rogers’ practice of putting buy-back clauses on inside wiring in their agreements with MUD owners (CCR, Nov. 22/04). The modified winback rule should provide another boost in that direction, he points out. A Bell ExpressVu spokesperson said that the ruling against buy-back helped the satellite TV distributor last year sign bulk billing agreements with about 320 MUDs in Toronto, more than its target of 300. The Canadian Cable Telecommunications Association (CCTA), however, expresses concerns about the CRTC’s proposed changes to the winback rules, including the rationale for the modification and its impact on individual residents in MUDs. The CCTA says in its January 13 submission on the matter to the CRTC that the proposed changes go "well beyond what is necessary to achieve these objectives (preventing customers from even trying a new TV supplier, and denying the new entrant revenue) and, in fact, would undermine end-user choice and limit the benefits of competition for residents in MUDs. "Targeted marketing of these individual subscribers will not change the fact that they did not have the authority to cancel the bulk billing agreement in the first place and cannot individually decide to opt out of the new bulk billing agreement and switch back to the incumbent. They will continue to receive the bulk services from the new entrant regardless of the marketing efforts of the incumbent," the CCTA states. "…Winback restrictions are an unusual regulatory tool that is without economic basis." In a joint submission dated January 13, MTS and TELUS support the CRTC’s proposal. "MTS TV and TELUS support the commission’s proposed modification to the winback rules and submit that the broadcasting winback rules will only be effective in relation to the termination of a bulk billing agreement if the rules ensure that the incumbent BDU (broadcast distribution undertaking) cannot contact directly, during the established period, any of the residents of the MUD that were previously subject to the bulk billing agreement," states their submission. "…That is, the proposed modification would recognize that it is the end-user MUD resident that makes the final selection in respect of his or her basic cable service and that it is the end-user that is ultimately the target of any winback activities." Both MTS and TELUS are new entrants to the TV distribution business. Like the CCTA, the consumer group the Public Interest Advocacy Centre sees no need for change. It tells the CRTC that the winback restrictions should apply "only to those persons empowered to make a decision as to the supplier of basic cable service…If the landlord is continuing to bulk-supply basic cable service, but is merely changing supplier, tenants are not involved." The submission signed by PIAC executive director Michael Janigan continues, "If the landlord is terminating a bulk service agreement and will no longer provide basic cable service to tenants, it will be up to the tenants to sign up with a supplier. But at that point there is no incumbent, properly speaking, and hence no need for winback restrictions."

Proposed winback rule changes will help open MUD market: Bell ExpressVu

Broadcast | January 28, 2005

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