Bell’s Wholesale Code appeal, conditions of licence ask face stiff opposition

BCE Inc. has “unclean hands” in its effort to have the Wholesale Code overturned by the federal Appeal Court while simultaneously applying to have removed certain conditions of licence imposed on vertically integrated entities in 2013 by the CRTC during the ongoing licence renewal process, lawyers argued in court documents responding to Bell’s appeal. In a memorandum of fact and law filed at the end of July, lawyers for a group of respondents that includes CBC/Radio-Canada, Blue Ant Media Inc., the Independent Broadcast Group, DHX Media Inc., Groupe V Media Inc. and Pelmorex Communications Inc. said that Bell isn’t entitled to a court remedy to the Wholesale Code because of “a lack of candour and an attempt to assert inconsistent positions before the CRTC and this Court” as well as “an attempt to use judicial review to acquire the Astral transaction assets free and clear of the behavioural safeguards imposed by the CRTC in 2013.” In December, the Federal Court of Appeal granted Bell leave to appeal the CRTC’s Wholesale Code governing the business relationships between TV service providers and channel operators that came into effect in January. And as part of the licence renewal process that began in the spring for large ownership groups — including Bell, Rogers Communications Inc., Corus Entertainment Inc. and Quebecor Inc. — Bell has said some conditions of licence, such as those “relating to requiring unreasonable rates, the factors to consider in establishing what represents fair market value and filing affiliation agreements, among other clauses, are all essentially the same as what is set out in the Wholesale Code” and should be deleted. But the court challenge to the Wholesale Code was not mentioned in Bell’s licence renewal application and the request to remove conditions of licence was not mentioned in Bell’s submissions to the court, the group’s lawyers argued. “Consequently, if Bell both prevailed in this Court and had its licence renewed by the CRTC on the terms that it requested, it would no longer be subject to any behavioural safeguards,” the memo said. Further, Bell also “invited the CRTC to exercise the very jurisdiction which Bell now claims” is outside of the regulator’s power — i.e. regulating economic relationships — when it was closing the acquisition of Astral Media, the respondents’ memorandum said. “Having benefitted from the exercise of this jurisdiction in the 2013 Astral transaction, and having been subject to the 2011 Wholesale Code for five years, it does not lie in Bell’s mouth to say that the CRTC lacks that jurisdiction now,” the memo said. The Wholesale Code isn’t a “spontaneous exercise of the CRTC’s jurisdiction,” Cogeco Inc. argued in its own Aug. 1 submission to the appeals court. “It is rather the culmination of an organic and fully transparent regulatory process in which all major stakeholders of the Canadian broadcasting system participated, including Bell.” Tossing out the entire Wholesale Code would “cast uncertainty over numerous CRTC decisions,” Cogeco said, disagreeing with Bell’s argument that its appeal was narrow in scope and that it is “likely to have wide-ranging implications should Bell succeed.” Bell was not alone in its effort to “minimize duplication” between the code and the conditions of licence, as it was framed it in its licence renewal application, as Rogers and Corus also recommended deleting certain conditions. Telus Corp., which also filed court documents in response to Bell’s appeal this summer, echoed its opposition to the trio’s request in its submission to the CRTC. The company said it disagrees with “Bell’s characterization of the conditions of licence in question being ‘substantially similar’ to provisions” in the Wholesale Code. “If this were a question of exploiting rights to the content that the vertically integrated entities themselves create, i.e. their own productions of Canadian content, there could be an argument in favour of greater control over the exploitation of their content rights,” Telus said in its intervention. “But the VI entities control the vast majority of distribution rights for foreign content in Canada. Therein lies the concern over market power and the ability to hamper innovation.” In its intervention to the CRTC, Cogeco emphasized that it “strongly opposes the removal of any conditions of licence relating to the behaviour of VI entities,” and supports that an “additional behavioural safeguard is warranted for VI entities with respect to ensuring that their linear channels are made available for distribution to competing BDUs.” Specifically, Cogeco said it wanted a provision requiring programming services to be offered on “reasonable renewal terms, based on fair market value” to other BDUs once affiliation agreements with independent BDUs expire. Bell, Rogers and Corus all defended their position in their replies to the interventions, which were posted to the CRTC’s website Friday. Rogers addressed the argument that should Bell win in court, the conditions of licence should be left as they are to “provide a ‘back-up’ regime.” “However, Rogers submits that should the Federal Court of Appeal find that the Commission has exceeded its jurisdiction in requiring adherence to the Code, it would be equally inappropriate for the Commission to impose these requirements on licensees through other COLs ,” Rogers’ reply said. “The concerns stem from the fact that these parties believe that only specific COLs prohibiting certain behaviours as opposed to a COL that requires adherence to the Wholesale Code will be sufficient when it comes to Vertically Integrated companies (VI),” Corus said in its reply. In its application, Corus requested replacing certain conditions of licence with a requirement for the licensee to “adhere to the Wholesale Code … in its dealings with any licenced or exempt broadcasting undertaking.” Corus said that since it is “a major pure play media player in the Canadian broadcasting system” and not a vertically integrated entity, the issue raised by those in opposition to its request to delete conditions of licence “simply do not apply to Corus as there is absolutely no evidence that Corus was involved in any of the alleged behaviours relating to access, access to advertising space or to wholesale rates.” In a lengthy reply, Bell bluntly stated that the argument that it is trying to “avoid the regulatory bargain" it agreed to as part of the Astral takeover “has no merit.” Bell noted that it wasn’t requesting to delete all of the 2013 conditions of licence, but seven of the nine that it said are now duplicated in the Wholesale Code. “We acknowledge that we have appealed the Wholesale Code,” Bell said in its reply, adding that if the court finds the code “to be invalidly enacted, then so too will our COLs, for the exact same reasons. On the other hand, if the Wholesale Code is determined to be valid, then we acknowledge that it would apply to our commercial negotiations as it does today.” Bell also took issue with what it said was “no less than nine new or modified COLs for all vertically integrated entities” that Telus proposed in its application. “This licence renewal hearing, the purpose of which is to implement the Commission's determinations from the TV Review decisions is not the proper forum for this kind of a policy discussion,” Bell said. A public hearing is scheduled for Nov. 22-24 in Laval, Que., for licences held by French-language ownership groups and Nov. 28 to Dec. 2 in Gatineau, Que., for licences held by English-language ownership groups. — With reporting by Charelle Evelyn at cevelyn@thewirereport.ca and editing by Ahmad Hathout at ahathout@thewirereport.ca

Bell’s Wholesale Code appeal, conditions of licence ask face stiff opposition

Broadcast | August 26, 2016

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Bell’s Wholesale Code appeal, conditions of licence ask face stiff opposition

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