Winback rules could change in time for T.O. battle of the BDUs

As new hopefuls get the green light to set up BDUs servicing the multi-unit dwelling (MUD) market in Toronto, Rogers Communications Inc. is asking for a review of winback rules governing MUD buildings with Public Notice 2007-48.Ken Engelhart, Rogers VP of regulatory affairs, says that the rules - which have been in place since April 1999 - are out of step with the CRTC's thinking on the telecom side of the equation. The winback rules were all but dismantled as part of the local forbearance policy framework introduced in April 2007 by Industry Minister Maxime Bernier. "The government has said...we are not having winback rules in telecom," he says. "It seemed to me to be incongruous not to have the same rule on cable... the government says we're all about helping consumers to get the best deal that they can, and that's what predominates. If that's what predominates in telecom it seems to me it should predominate in cable too."The original two rules placed a 90-day "no-contact" period on incumbent cablecos with 6,000 or more customers, after being contacted by another BDU on behalf of a customer living in an MUD and wanting to switch service from the incumbent to the competitor. "That's very similar to the rule for telephone that has now been abolished," Engelhart notes.The second original rule stated that if the incumbent cable BDU was contacted by the customer himself or herself - rather than a competing BDU acting as his or her agent - the cable BDU is allowed to make a general offer to entice the customer to stay. That offer, however, must consist of promotions available to the general public at large.Those rules hearken back to a time when cable ruled the broadcast distribution landscape in Canada and the two DTH services, which launched in 1997, were fledgling businesses. But the commission again examined the rules in August 2004, five years after the launch of Bell ExpressVu and Star Choice. By that time, the two satellite operators had garnered more than two million customers and a 20% share of the BDU market in Canada.Instead of removing the winback rules at that time, as was requested by the now-defunct Canadian Cable Television Association, the regulator chose further expand them to include a third rule: in an MUD where an incumbent cableco predominated but where a competitor had recently gained access, the incumbent couldn't contact any resident of the building - regardless of the BDU they had a commercial relationship with - for 90 days."It's sort of beyond winback, because Bell never even really won them, so we're not really winning them back," says Engelhart. "It really should be considered to be more a non-contact rule."Further, if Bell does sign up that customer 89 days after first entering the MUD, a new 90-day no-contact window kicks in, which means Rogers is essentially prohibited from contacting that customer for six months."I guess I never really understood the CRTC's reasoning," he says. "The fact that there was all this satellite competition, in my mind, should have led to the removal of the winback rules when we applied the last time." "There really aren't any little competitors anymore," Engelhart continues. "The only one in our operating territory was Cable VDN, and they were bought by Bell. Really, all of our competitors, whether it's Cable VDN or ExpressVu or IPTV, it's all Bell."But while Rogers may see Bell as its biggest competitor in Toronto's largest city at the moment, others are poised to make their entry.Vancouver-based independent cable competitor Novus Entertainment Inc. - already an incumbent provider in several condominium developments on its home turf - is eyeing the MDU market in Toronto with its recently awarded licence.Its sole shareholder, Terry Hui, is also president and CEO of Concord Pacific Group Inc., a condo developer whose latest project is a $2-billion redevelopment of land along Sheppard Avenue East in Toronto's north end.But while that intimate connection with a leading development firm gives Novus a foothold as it into Canada's biggest city, it also disadvantages it in some instances, owing to its incumbent provider status in several MUDs back home."In most buildings we'll be second in," says Novus co-president and chief legal officer Donna Robertson, explaining how the current winback rules will affect her company. "But, in Vancouver, where we have been first into a building, we are considered the incumbent."Given that Rogers and Novus are both in the cable business, it will be interesting to see how the winback rules would work in any building that Novus gains access to where Rogers is the incumbent. In the submission that triggered PN 2007-48, Rogers told the CRTC that the rules "protect the telephone companies that have entered the BDU market, as well as Canada's two direct-to-home companies."And while Novus hasn't faced huge competition in Vancouver from either national DTH provider or from Telus' IPTV offering, Robertson is fully cognizant of the fact that Toronto is Rogers' country."Nobody does it better than Rogers in Canada, as far as I'm concerned," she says. "We've been studying their approach, and...they're going to be a formidable competitor, no question." She adds that Novus' greatest asset in its battle to win Toronto MUD customers will be corporate policies such as not locking customers into contracts and not charging a reconnection fee when customers move within the BDU's footprint.In addition to Novus, another Class 1 BDU licence was granted earlier this month to DSL wholesaler Venoa Communications Inc., which is not just targeting MUDs but all 1.8 million households in the Greater Toronto Area.While, like Novus, the firm still has to build a head-end in Toronto, Vladimir Niman, president, CEO and founder of Venoa, says his IPTV offering should be available by year's-end.The call for comments on the winback rules is open until June 6.

Winback rules could change in time for T.O. battle of the BDUs

Broadcast | May 17, 2007

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