Rogers says judge can ‘light a match’ to Competition Bureau case

TORONTO—Rogers Communications Inc. conducted industry standard tests to support its “fewer dropped calls” advertisements in 2010 that proved the ads to be true and now provide a basis to “light a match” to the Competition Bureau’s $10-million case against the company for misleading advertising, a lawyer for Rogers said at a court hearing Thursday. Kent Thomson, counsel with Davies Ward Phillips & Vineberg LLP who is representing Rogers in the civil case, told the Ontario Superior Court that the Competition Bureau’s use of network “switch data” to compare dropped call rates between Rogers and new wireless entrants is not the industry standard. The federal Competition Bureau, which presented opening arguments Wednesday and Thursday morning, is using network switch data obtained from carriers to compare actual dropped call rates and demonstrate that Rogers’ ads were misleading. It says that data show the Rogers network in question did not always have fewer dropped calls and that, when it did, the difference was “inconsequential and imperceptible to consumers.” The bureau launched a court action against Rogers in 2010, seeking a $10-million penalty for “misleading advertising” that ran in the summer and fall of 2010, in which Rogers’ discount brand Chatr advertised that it had “fewer dropped calls than new wireless carriers.” In his opening argument Thursday, Thomson said switch data is “highly variable” between carriers and “notoriously unreliable” for comparisons because companies tend to use different network builders, such as Nokia Siemens Networks, Alcatel-Lucent or Ericsson. Drive testing is the accepted standard in the wireless industry, he said. “If you accept that submission, you can light a match to commissioner’s case,” Thomson said, adding that the company will bring in former executives from Ericsson and U.K. wireless company O2 as witnesses to support the argument. “This is a foundation of sand. Switch data is foundation that cannot bear the weight of this case.” Thomson said Rogers did not receive all of the switch data for the new entrants until about 18 months after the case started, when it was released through the court process. By that time, he said, the raw data on which the numbers were disclosed was destroyed because the companies do not retain it permanently. He said the raw data is necessary to analyse and determine the dropped call rates. The civil case started “with huge fanfare,” Thomson said, with press releases issued by commissioner of competition Melanie Aitken and “the commissioner appearing on BNN, on CBC, giving interviews to The Globe and Mail,” while Rogers could not access the now-destroyed switch data on which allegations were based. “That’s a problem. That’s a very serious problem,” Thomson said. “It’s the commissioner’s problem, and I’d say it puts the commissioner out of court.” Thomson said the Competition Bureau expanded its court application to challenge Rogers’ network drive tests—in which wireless devices are tested while attached to a moving vehicle—because the bureau feared it could not win the case based on misleading advertising. The bureau originally filed its court application on Nov. 19, 2010, citing “misleading advertising” under the Competition Act. Five months later, Thomson said, the commissioner of competition amended the application to include a claim that Rogers did not conduct “adequate and proper” testing before it launched the comparative ads. He called this a “tactical” move because the court may have accepted Rogers’ drive tests as adequate. “You should take a very, very critical view of the attacks made by the commissioner on the drive tests in this case,” Thomson said. In its November 2010 court application, the Competition Bureau asked the court to order Rogers to stop the advertising campaign and refrain from similar campaigns for a 10 year period; pay restitution to affected wireless customers as well as an administrative monetary penalty of $10 million; and issue a corrective notice to inform the public about any order issued against it. The “new entrants” alluded to indirectly in the Chatr ads—Mobilicity, Wind Mobile, Public Mobile Inc., and Videotron Ltd. (owned by Quebecor Media Inc.)—all entered the market using spectrum licences purchased in Industry Canada’s 2008 AWS spectrum auction, which was structured to encourage new competitors in Canada’s wireless market. Rogers is arguing in the case that its network drive tests, conducted in 2010 before Chatr launched, demonstrated that its network performed better than networks of the new carriers. Thomson said the new entrant carriers operated on higher-frequency, less reliable networks and that customers experienced dropped calls when they roamed out of the new entrant’s home zone onto another carrier’s network. This was relevant information for consumers, he said, which Rogers pointed out in the advertising. Tom Curry, a lawyer with Lenczner Slaght representing the Competition Bureau, on Thursday outlined the extent of the Chatr advertising campaign, which launched in late July 2010 and ran French and English ads in markets across the country on radio, television, websites, social media, transit systems, billboards, and newspapers. The ads tended to depict one person talking on a Chatr phone who was juxtaposed to others experiencing dropped calls. They used the slogan “fewer dropped calls than new wireless carriers,” and later changed that to, “no worries about dropped calls.” The Competition Bureau says the ads in either case were misleading. In fine print, the “fewer dropped calls” ads cited the benefits of Chatr’s (or Rogers’) stronger network, noting it contained more cell sites, better indoor and underground wireless reception, and seamless call transitions between wireless zones. The ads did not cite any comparative network research, Curry said. Curry said the “mass market” campaign was targeted at average consumers who do not detect “subtleties or falsehoods” in advertising, and that the placement of the ads coincided with the wireless launches of the new entrants in urban markets. He said the network switch data is the best source of information to understand dropped call rates. Chatr subscribers operated on Rogers’ 2G network, Curry said, and the Competition Bureau believes Rogers made the ads based on its knowledge of the performance of its 2G network, not based on Chatr subscribers’ actual dropped calls. “ you take that representation ‘fewer dropped calls than new wireless carriers,’ you will have to write in a few additional asterisks,” Curry said. He said the ad's word “fewer” means fewer dropped calls in some cities but not others, and “dropped calls” means “failed calls and network reliability.” Ontario Superior Court Justice Frank Marrocco is hearing the case, which is scheduled to continue daily until mid-September. The Competition Bureau’s witnesses will include executives with new entrants Public Mobile and Wind Mobile. Videotron, unlike other carriers that entered the market with spectrum from the 2008 auction, did not complain about Rogers’ advertising to the competition commissioner and “wanted nothing to do with this case,” Thomson said. sdoyle@thewirereport.ca

Rogers says judge can ‘light a match’ to Competition Bureau case

News | August 9, 2012

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Rogers says judge can ‘light a match’ to Competition Bureau case

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