Telus, Cogeco say negotiations with BCE have already led to competitive disadvantage

GATINEAU—Telus Corp. and Cogeco Cable Inc. told the CRTC Wednesday it should implement safeguards to protect them from undue preference under BCE Inc.’s acquisition of CTVglobemedia Inc., noting they have already experienced a competitive disadvantage in negotiations with Bell. “Telus has filed a complaint against Bell concerning its exclusive distribution of marquee sports programming from the NHL and NFL on its Mobile TV service,” Michael Hennessy, Telus’ senior vice-president of regulatory and government affairs, told the commission. “Exclusives regarding such marquee programming are harmful to competition and contrary to the public interest.” Wednesday was the second day of the commission’s public hearing on the transaction. On Tuesday BCE told the commission it was “open for business” when it came to selling content to competitors, but that it intended to make some content exclusively available on its services, particularly wireless. Hennessy told the commission Wednesday that Telus has been disadvantaged by Bell’s exclusive agreement to carry sports content from the NHL and NFL on its mobile services. “Consumers shouldn’t have to sign multiple wireless contracts to obtain all the programming they want on these new emerging platforms,” he said. Hennessy said the sports leagues have told Telus they would be open to providing sublicensing rights to Bell so the content could be available to other carriers. On Tuesday, Bell told the commission some of the content it intended to offer on an exclusive basis would be “add-ons” to the main content, but Telus indicated it is interested in access to all of Bell’s content. Hennessy also told the commission Telus has made attempts to negotiate access to content from CTV, including that of the Business News Network (BNN), but has failed. “Bell launched BNN on mobile on Sept. 6, a full five months ago, and yet they continue to drag their feet regarding any negotiations to offer this same content to us,” he said. “They stall by saying they haven’t fully developed their business plan for these mobile content rights.” Telus told the commission it shouldn’t take longer than 30 to 60 days to reach carriage agreements. Bell spokeswoman Jacqueline Michelis said by email that Bell’s NHL and NFL content is unrelated to the CRTC hearing. “We negotiated with the leagues for this content some time ago—our competitors were obviously free to attempt to win the content themselves, but either lost out or didn't bother to try. In fact, during the hearing the CRTC Chairman stated that he agreed with our position on this content,” Michelis said. On Tuesday CRTC chairman Konrad von Finckenstein said that exclusive content doesn’t necessarily mean a company is acting with undue preference, but added that it is difficult to determine where to draw the line. Mirko Bibic, Bell’s senior vice-president of regulatory and government affairs, said in an interview Tuesday that having exclusive content on mobile platforms does not constitute undue preference. “There is no way that a piece of content in an infinite universe of content available on wireless but not on another wireless provider is going to have that impact on the wireless market,” he said. Louis Audet, Cogeco’s president and CEO, said at the hearing the company has been disadvantaged by slow negotiations with CTV. “CTVglobemedia … will not negotiate renewals for expired affiliation agreements until it chooses to do so, and it will claim retroactive payments once it decides to do so,” he said. In a brief interview following the hearing, Audet said a number of Cogeco’s carriage agreements with CTV expired on Sept. 30 and Dec. 1 of last year. “We made repeated approaches to CTVglobemedia to enter into negotiations to renew these agreements, and much to our chagrin we have been brushed off,” he said. Audet said he believes CTV is delaying the negotiations until the acquisition has been approved. “We are very concerned that what they would want to do is increase our fees considerably,” he said. Audet told the commission that allowing the transaction to go ahead will create a conglomerate with overwhelming market power over competitors. “The agenda is clear. Should the proposed transaction be approved, the new BCE/CTVglobemedia conglomerate will have the market power to extract unreasonable affiliation fees from its competitors for some 30 specialty programming services, and additional carriage fees for CTV and A Channel conventional television signals if the value for signal regime is implemented,” he said. Cogeco also said in a press release Wednesday that approving the transaction would put CTV in a position to increase fees for popular specialty channels, such as TSN and RDS. CTV spokesman Scott Henderson said in an email statement that CTV has been in contact with its distribution partners regarding licence renewals. “We have been in contact with all of our major distribution partners regarding renewals. Beyond that, it is not appropriate for us to comment on private business negotiations,” he said. MTS Allstream also asked the commission Wednesday to implement safeguards to protect small distributors. “Although a Bell-affiliated CTV cannot grant Bell TV exclusive access to its content, it can set the prices of its discretionary programming at sufficiently high levels that other would be unable to afford to carry that programming,” Theresa Griffin-Muir, MTS Allstream’s vice-president of regulatory affairs, said. “As a result, Bell could end up with exclusivity by default on its TV platform or with premium pricing for premium pricing for CTV content—a win-win proposition for BCE, but a lose-lose situation for other distributors.” Telus told the commission it should impose a condition on the BCE transaction that prohibits the company from entering into exclusive carriage agreements on any viewing platform. Telus also requested that BCE and CTV immediately make available all CTV mobile and online content, and be given 30 days to negotiate commercial terms. As a third requirement, Telus suggested BCE be required to file with the commission all past and current affiliation agreements with CTV to serve as a baseline for comparison in cases of carriage disputes. Yves Mayrand, Cogeco’s vice-president of corporate affairs, also recommended that the commission approve the transaction under certain safeguards, including a prohibition against exclusive content agreements. Audet told The Wire Report that Cogeco is against exclusive content on any platform. “Our view is that this should be an open marketplace. All services and programming services should be available to everyone on fair terms, no matter what distribution means they use,” he said. Cogeco also recommended an extension of the reverse onus provisions—which require the accused to disprove allegations of undue preference—to all broadcasting services. Under the CRTC’s current policy, only terrestrial, satellite, mobile television, and new media distribution services are subject to the reverse onus provision; conventional, pay, specialty and video-on-demand television services are not. Cogeco also requested that the commission impose structural safeguards to prevent the leaking of sensitive information between CTV and Bell, a strengthening of dispute resolution provisions, and new reporting and disclosure provisions. MTS said it supports the safeguards proposed by Cogeco as well as the implementation of a cap on wholesale rates charged for programming. The hearing continues Thursday in Gatineau. kfournier@thewirereport.ca

Telus, Cogeco say negotiations with BCE have already led to competitive disadvantage

Broadcast | February 2, 2011

Unlock all the Canadian telecom, broadcasting and digital media news you need.

FREE TRIAL

SUBSCRIBE

Inside The Wire Report

Information

Hill Times Publishing

Get in Touch With Us