Competitors rally behind Beanfield in fight against Rogers’ exclusive MDU agreements

Interventions coming in from the CRTC show competitor internet service providers (ISPs) and other independents backing up Beanfield Technologies Inc. in its claims against Rogers Communications Inc.’s bulk multiple dwelling unit (MDU) deals, while incumbent carriers and developers stand opposed. Competitors and their associations, including Cogeco Inc., CIK Telecom Inc., Execulink Telecom Inc., Cloudwifi Inc., the Competitive Network Operators of Canada (CNOC), and the Independent Telecommunications Providers Association (ITPA), along with the Public Interest Advocacy Centre (PIAC) and IT consulting firm Xoomler Inc., expressed support for Beanfield’s argument that bulk deals are anti-competitive and go against the CRTC’s MDU access condition by effectively limiting consumer choice and granting undue preference to the existing carrier. Incumbent carriers Telus Corp., BCE Inc., and Bragg Communications Inc.’s Eastlink, as well as several real estate developers and management companies opposed the claims, arguing that they are founded on an overly broad interpretation of the MDU access condition. They counter by arguing that bulk deals result in lower prices for consumers and are good for competition in both the telecom and housing sector. Last month’s application from Beanfield mainly targeted the bulk agreement practices of Rogers, pointing to provisions in Rogers agreement that it said rendered the contract’s non-exclusive and non-preferential clauses null. At the time of writing, any intervention from Rogers has not yet been published on the CRTC’s website. Beanfield alleged the agreements give Rogers “‘exclusive right and license’ to specified on-site marketing activities,” adding that they also prohibit the owner from endorsing any competitive products or services, and require them to keep other ISPs from conducting any on-site marketing initiatives. The bulk service agreement, to be assumed by the condo corporation from the developer, has an initial six-year term, extendable by a further four years if not otherwise terminated, wrote Beanfield. Beanfield said this should constitute a breach of the MDU access condition because although end-users retain a “theoretical legal right” to obtain other services, these agreements are entrenched at the developer level and “render this right meaningless.” This week’s comments expanded on Beanfield’s stance that bulk agreements effectively limit access to MDUs by other carriers. Bulk agreements “lock MDU residents out of the free market, creating an isolated monopoly created solely through restrictive contractual terms between the incumbent and the property developer,” said PIAC. It argued that exclusive marketing rights and requiring residents to pay for services from a provider within their condominium fees amount to an “artificial prevention of consumer choice.” Incumbents are granted undue preference, it said, not just through exclusive marketing rights, but by allowing them to build their network from the time of construction. Cogeco claimed that this gives them a head start on recouping the cost of their investment, which, even after the agreement has expired, allows them to outbid anyone offering a competitive alternative. The montreal-based telco explained that although it has been successful in negotiating access to MDUs in the past, it has been increasingly denied access in recent years. It claimed that certain developers in the Greater Toronto Area refuse to engage with Cogeco due to existing marketing and sales agreements with Rogers or Bell. Others have allegedly told the telco that they “‘don’t want the hassle’ of dealing with another service provider.” Cogeco estimates that it “cannot compete for, or even access,” approximately 25 per cent of the total MDU residents in its footprint given the alleged nature of their bulk agreement terms with Bell or Rogers. “Rather than promoting choice at the level of the resident already dwelling in their unit, instead promote end-user choice and competition at the MDU building level,” said Bell in its intervention. It argued that people have the freedom to choose which MDU to purchase or rent, and carriers are encouraged to compete against each other for deals with MDU developers and owners. PIAC argued that a condominium corporation “cannot declare itself the end-user to work its way around the MDU Access Condition.” “However,” it added, “the corporation is still the one who carries on the agreement with the incumbent, effectively taking away direct recourse, leverage, and choice that the actual end-users – the residents – would otherwise have in a direct-to-subscriber market.” Developers and management companies including Menkes Developments Ltd., Tridel, Cityzen Development Group, and Wilson Blanchard Management claim that bulk deals benefit both MDU owners and their residents. They say that being able to offer cheaper, and sometimes complimentary, internet allows them to differentiate their properties from competitors. “By rescinding these bulk agreements it would make our buildings less attractive to potential owners and renters. By rescinding bulk deals it would drive the prices for the supply of these services much higher and less affordable,” argued Mike Mullen, vice president of Wilson Blanchard Management. Despite prices being lower, PIAC argued choice is still limited, “especially where residents are unhappy with the service quality and customer treatment.” This further hurts competition, it says, because incumbents are not incentivized to improve their services for customers that are locked in. The developers also pointed to the potential risks they face if the CRTC were to prohibit bulk agreements, claiming buyers could pull their offers for ongoing projects if bulk internet is a deciding factor for them. “Developers argue that bulk agreements benefit both them and the future condo residents. But if these deals were as favorable as claimed, why the need for substantial payouts?” questioned Cloudwifi. The ISP claimed that in meetings with developers, it has seen significant cash offers from Bell and Rogers for signing exclusive bulk contracts. Cloudwifi claimed developers have pulled their business with the ISP, “explicitly Rogers’ sizable financial offer as the deciding factor.” In another alleged instance, it added, a customer was advised by another developer to not work with Cloudwifi but to contact Rogers instead, “as Rogers would ‘write them a big cheque.’” Cloudwifi gave several recommendations to the CRTC to address the issues mentioned in this proceeding. It recommended granting condo corporations the option to terminate their contracts if they were signed by a third party developer, mandate full financial disclosure between telcos and developers, make it illegal for third parties to receive financial incentives for signing deals that bind others, and better enforce the public disclosure of MDU access agreements. – Reporting by Phalen Tynes-MacDonald at pcreed@thewirereport.ca and editing by Jenna Cocullo at jcocullo@thewirereport.ca

Competitors rally behind Beanfield in fight against Rogers’ exclusive MDU agreements

News | October 27, 2023

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Competitors rally behind Beanfield in fight against Rogers’ exclusive MDU agreements

News | October 27, 2023

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