CRTC pushes vertical integration principles to avoid ‘avalanche of litigation’

GATINEAU, QUE.—The CRTC pushed for compromise Wednesday on a set of principles or a code of conduct that would find common ground between vertically integrated companies’ freedom to operate and independents’ concerns of being squeezed out. On day three of the commission’s vertical integration hearings, CRTC chair Konrad von Finckenstein pushed representatives from Shaw Communications Inc. to accept some form of guidelines that the company—along with BCE Inc. and Quebecor Media Inc.—rejected earlier this week. Von Finckenstein said a set of principles would make it easier for companies to plan their businesses and for the commission to deal with disputes in a world where four vertically integrated media companies dominate the industry and “the smaller players may not be able to serve the consumer because they are being unduly squeezed by the giants ... “By not having , we are looking forward to an avalanche of litigation,” von Finckenstein said. “Some of this is inevitable, it’s part of the business. But some of it we could easily avoid. What’s wrong with my thinking here? Where am I going off the rails?” Von Finckenstein pointed to the commission’s Internet traffic management practices policy, which establishes a set of principles to remove uncertainty but for which the commission only acts on the basis of complaints. But companies and interveners did not give the chair much to grasp at Wednesday, offering mixed reactions to the notion of a new code or set of principles. Just as Bell said Tuesday, Shaw told commissioners Wednesday that it acquired its media assets based on regulatory certainty. “Our main concern in this proceeding is that, after Shaw relied on the certainty provided by the commission’s comprehensive existing framework, interveners are now proposing new restrictive and unnecessary rules that will undermine our customer focus,” Ken Stein, Shaw’s senior vice-president of corporate and regulatory affairs, said. He added that new codes and regulations would “completely reverse the progress achieved over the last decade.” The current regime of undue preference and reverse onus is sufficient and new codes and ex ante rules are unnecessary would hinder consumer choice and innovation, Shaw CEO Brad Shaw said. “We’re opposed to a code. We’re opposed to more regulation that will affect, that will inhibit our ability to serve the customer, to innovate and to be creative in the things we do that we think Canadians and consumers want,” he said. “We believe that competition and customer choice is a big deterrent to anti-competitive behaviour.” Stein said it is “ironic” that some companies are calling for new rules at “a time when there has never been more consumer choice, when there has never been a stronger system, when there has never been more competition.” He said that with so many variables, a case-by-case approach to regulation is preferable to an ex ante set of rules that tries to anticipate every situation. Stein said the current process has worked so far. Jean Brazeau, Shaw’s senior vice-president of regulatory affairs, said that while Shaw would support a reverse onus provision for undue preference complaints, a “blanket” standstill like the one proposed by Rogers—where rights are given up while disputes are ongoing and until the terms determined at the end—“would encourage some regulatory gamesmanship.” Brazeau said a standstill could be useful in certain circumstances but that a blanket policy would be “overkill.” Shaw president Peter Bissonnette said other companies like Telus are building on hypothetical fears that come “from a very Machiavellian place.” “We don’t come from that place,” Bissonnette said. “If I worried about everything that could happen and that could go wrong in an elevator, I would never get off the first floor. To the extent that we can alleviate any concerns, you just have to look to our conduct.” In a presentation to the commission Wednesday, MTS Allstream said vertical integration creates opportunities for undue preference that are heightened by convergence and the emergence of new platforms. The company said it supports a new code. “A code of good business practices cannot replace clear regulations, which would provide a transparent framework for vertically integrated companies, although it could be used to supplement the regulations,” Teresa Griffin-Muir, vice-president of regulatory affairs, told commissioners. Muir added that any code should not be considered exhaustive and should include a reverse onus. Astral Media Inc. also called for “preventive measures that will be added to the rules that already exist and that would complement undue preference policies, aid dispute settlements and curtail anti-competitive behaviour.” The Writers Guild of Canada and the Directors Guild of Canada also called for additional measures to protect against undue preference. Also before the commission Wednesday, the Canadian Association of Public Educational Media called for an ex ante code of good commercial practices with a provision for standstill carriage arrangements during a dispute resolution process. The code would cover signal carriage and other terms of distribution. Independent broadcaster Channel Zero, which owns CHCH TV and CHEK Media Group, also presented Wednesday, and similarly recommended an ex ante rule that would require vertically integrated distributors to carry independent, local over-the-air channels in high definition before carrying their own over-the-air channels in HD. mburgess@thewirereport.ca

CRTC pushes vertical integration principles to avoid ‘avalanche of litigation’

Broadcast | June 22, 2011

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