Granting Bell stay in mobile-TV case would hurt competitors: CNOC

Competitors will be harmed if BCE Inc. is not forced to comply with an April deadline in a CRTC directive to stop exempting its mobile-TV app from data caps, according to the Canadian Network Operators Consortium. CNOC said in a document filed with the Federal Court of Appeal on March 5 that a stay, which would allow Bell to continue to exempt mobile-TV streaming from data charges, would affect the “business case” of competing services that count against a user’s data cap. “Prospective entrants would be deterred from entry, existing players barred from competing, and the innovation and choice available to consumers lessened,” it said. Given that a stay could last for “months or years before all avenues of appeal were exhausted,” CNOC said it “could therefore have a prolonged chilling effect on market development.” Bell asked the court for a stay on the CRTC decision in its appeal of the commission’s Jan. 29 decision, in which the CRTC said Bell and Quebecor Inc.’s Videotron could no longer exempt their mobile-TV services from data charges, since doing so involves giving themselves an undue preference. The regulator gave Bell until April 29 to comply with that ruling, and said Videotron, which had told the CRTC it was already in the process of ending service to the affected apps, must confirm the shutdown by March 31. Rogers Communications Inc., which had also been the subject of the complaint, changed the pricing plan of its Anyplace TV app in August 2014. The Bell Mobile TV add-on is available to Bell’s wireless customers and costs $5 for five hours of viewing that will not affect a customers’ data plan, according to the company’s website. CNOC said that if a stay is granted, “emergence of a robust market for audiovisual services will be denied to consumers and citizens, as services offered by the largest mobile wireless carriers that are subject to data charge exemptions will have a significant head start.” It added that competitors’ customers are subject to data caps when consuming video. In a reply filed with the court on March 9, Bell noted that the CRTC said in its decision that Bell Mobile TV could hurt competition at a future time, “but the basis on which the CRTC reached its decision was a concern about long-term competitiveness, not short term market position.” Bell added: “it is notable that the CRTC found that Bell Mobile TV provided an undue preference because it may impede the growth of other services in the future and might result in the degradation of other services.” “While Bell Mobile TV no doubt provides Bell Mobility an advantage in the short term, it was the long term potential of the Service that the CRTC considered undue,” Bell said. In its filing, CNOC also said that if Bell customers had to pay for the data used to watch its mobile-TV service, the price would increase by 400 per cent, and that such a “pricing premium disadvantage impairs the use of other online video services no less than it would impair the use of Bell Mobility’s own Service.” It said that the increase to customers, from $5 to more than $25 a month, “is the very price structure by which competitors are required to offer consumers audiovisual services over mobile wireless data connections.” Bell would not suffer irreparable harm as a result of the decision, CNOC said, and noted that Videotron and Rogers chose to change the pricing of their mobile-TV services to eliminate the data cap exemption, and have not claimed that doing so was causing irreparable harm. “Were Bell Mobility to similarly abide by the Decision, it would merely expose the Service to competition on a level footing with other online video services, including the Rogers service, the Videotron service, and the services of CNOC members,” it said. CNOC added that BCE’s operating revenues in the fourth quarter of 2014 were more than $5.5 billion, and that “it is hard to imagine that any hardship suffered outweighs the public interest in a level playing field that allows a robust market for media services to emerge.” The group said that when a stay of CRTC decisions was granted in the past, it was in cases where, for example, not granting a stay would have meant the applicant could have been out of business in a matter of days. “There is no evidence to suggest that any harm alleged by Bell Mobility, were it to occur, would be other than transient in nature and consistent with what may be expected of a regulated industry,” CNOC argued. CNOC added that if a stay is granted, Bell would “preserve its undue preference relative to its competitors throughout the upcoming period of aggressive competition brought on by the Wireless Code.” Some experts consider that competition will ramp up in the coming months due to a “double cohort” effect caused by the Wireless Code. The organization also noted that Bell had said it would lose an average of $1,467 in revenue for every customer who signs a two-year agreement with another provider, and that a number that Bell considers “substantial” is “multiplied by an order of magnitude from the perspective of a wireless provider that operates on a much smaller scale.” CNOC added: “Competitors therefore face far greater harm from granting the stay than Bell Mobility’s exposure to harm from its refusal.” In its response, Bell said complying with the CRTC’s decision would require “a complete overhaul” of how customers consume and pay for the mobile-TV service, and that an “experienced Bell executive considers that these changes would permanently tarnish the Bell Mobile TV brand.” If a stay is not granted, “Bell Mobility will suffer severe harm to its market share and reputation, and its customers will be severely inconvenienced,” even if the court of appeal overrules the CRTC and decides Bell can keep the service exempt from data caps. “A brief stay, to maintain the status quo, would avoid this substantial harm, at a very limited cost,” the company added. Granting a stay, Bell said, would mean denying it also “the ability to use a unique, differentiated service to attract and retain customers at a crucial time in the wireless industry, when an unprecedented number of customers, of both Bell Mobility and its competitors, will be contestable due to the Wireless Code.” Any loss of market share would be long term, since customers under two-year contracts are unwilling to switch providers, Bell added. The company also said that making efforts to educate customers about changed pricing plans, and then potentially having to do so again if Bell’s appeal is successful, would cost approximately $10 million, and would be the sort of “fundamental change” that is “likely to confuse and frustrate customers, and make them less inclined to rely on Bell Mobility’s advertising in general.” It added that “if Bell Mobility is not successful on appeal, then the only cost is that the status quo, which has existed for years, will be maintained a few more months.” — With reporting by Anja Karadeglija at akarad@thewirereport.ca and editing by Peter Henderson at phenderson@thewirereport.ca

Granting Bell stay in mobile-TV case would hurt competitors: CNOC

Broadcast | March 11, 2015

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Granting Bell stay in mobile-TV case would hurt competitors: CNOC

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