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Broadcasting Decision CRTC 2005-120
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Ottawa, 1 April
2005 |
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Complaint by Aliant Telecom Inc. against Bragg Communications
Incorporated and its subsidiaries alleging breaches of section 9 of the
Broadcasting Distribution Regulations and section 27(2) of the
Telecommunications Act
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The Commission concludes
that the TV Listings Channel, as distributed by Bragg Communications
Incorporated (Bragg) and its subsidiaries, is a program as defined under
section 2(1) of the Broadcasting Act and is therefore subject to
that Act. The Commission further concludes that Bragg did not contravene
section 9 of the Broadcasting Distribution Regulations, which
prohibits a licensee from giving an undue preference to any person,
including itself, or subject any person to an undue disadvantage. It
therefore dismisses the complaint filed by Aliant Telecom Inc. |
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The parties
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1. |
Bragg Communications
Incorporated, through its subsidiaries carrying on business under the
name EastLink (collectively Bragg), operates broadcasting distribution
undertakings (BDUs) providing cable television service in various
regions of Nova Scotia, Prince Edward Island and, to a lesser extent,
New Brunswick. It is thus subject to the Broadcasting Act and the
Broadcasting Distribution Regulations (the Regulations) made
thereunder. Bragg also offers local telephone service and high-speed
Internet in Nova Scotia, Prince Edward Island and, to a lesser extent,
New Brunswick; it is therefore, with regard to these activities, subject
to the Telecommunications Act and is recognized by the Commission
as a competitive local exchange carrier. |
2. |
Aliant Telecom Inc. (Aliant), a
company controlled by BCE Inc., provides telecommunications services
such as local telephony, long distance, Internet and wireless services
throughout New Brunswick, Nova Scotia, Prince Edward Island, and
Newfoundland and Labrador. It is recognized by the Commission as an
incumbent local exchange carrier. |
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The complaint
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3. |
On 8 December 2004, Aliant
filed a complaint with the Commission related to BDUs operated by Bragg
in Nova Scotia and Prince Edward Island. Aliant stated that, on
8 October 2004, Bragg informed Aliant that it would only accept Aliant
advertising on the Television Listings Channel of its BDUs in New
Brunswick. Aliant submitted that, by refusing to carry its
advertising in Nova Scotia and Prince Edward Island, Bragg was in
violation of section 9 of the Regulations or alternatively, of
section 27(2) of the Telecommunications Act. |
4. |
On 7 February 2005, the Commission
advised the parties that it would adjudicate this matter in accordance
with the expedited process established in Expedited procedure for
resolving competitive issues, Telecom Circular CRTC 2004-2,
10 February 2004. |
5. |
The matter was heard by a
panel of three Commissioners at a Public Hearing in Gatineau on 21 March
2005. In addition to the original 8 December 2004 letter of complaint
and the oral component of the proceeding, the Commission considered
Bragg’s answer dated 7 January 2005, Aliant’s reply dated 17 January
2005, their further arguments dated 23 February 2005, their responses to
Commission interrogatories dated 25 February 2005, and the material
requested by the Commission and received from the parties at the 21
March 2005 Public Hearing. |
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Broadcasting Act or Telecommunications Act
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Regulatory framework
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6. |
Section 2 of the
Telecommunications Act contains the following definition: |
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"telecommunications" means the emission, transmission or
reception of intelligence by any wire, cable, radio, optical or
other electromagnetic system, or by any similar technical system.
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7. |
The Telecommunications Act
excludes broadcasting and broadcasting activities from the scope of that
Act. Specifically, section 4 of the Telecommunications Act
states: |
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This Act does not apply in respect of broadcasting by a
broadcasting undertaking.
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8. |
Section 2 (1) of the
Broadcasting Act contains the following definitions: |
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"broadcasting" means any transmission of programs, whether or not
encrypted, by radio waves or other means of telecommunication for
reception by the public by means of broadcasting receiving
apparatus, but does not include any such transmission of programs
that is made solely for performance or display in a public place.
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"program" means sounds or visual images, or a combination of
sounds and visual images, that are intended to inform, enlighten or
entertain, but does not include visual images, whether or not
combined with sounds, that consist predominantly of alphanumeric
text.
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Meaning of the term
predominantly,
as employed in the definition of "program"
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9. |
In a letter dated 19 August
1991 from the CRTC to Gowling, Strathy & Henderson (Gowling Letter
Decision), the Commission discussed the meaning of the word
predominantly in the context of a program guide, one quarter of
which, as it appears on a television screen, consisting of full-motion
video and the remaining three quarters consisting of alphanumeric text.
The Commission determined, among other things, that the term
predominantly "has no special legal definition and is used in its
ordinary sense, i.e. that which is more influential or more powerful."
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10. |
In the Gowling Letter
Decision, the Commission expressed the view that, although the moving
image occupied only one quarter of the screen, the attention of a person
viewing the service was more likely drawn to and held by the moving
image. In the circumstances, the Commission concluded that the moving
image was the focus of attention and thus predominated, and that the
transmission was thus a "program" as defined in the Broadcasting Act
and subject to that Act. The Commission further concluded that
Parliament knowingly chose the word predominantly for use in its
definition of "program" so as to ensure that something that had the
essential characteristics of television would be regulated as
television. |
11. |
In Regulation of full Channel
TV services (e.g. alphanumeric services), Telecom Decision CRTC
97-2, 5 February
1997 (Decision 97-2),
the Commission reiterated its determination that the term predominantly,
as used in its ordinary sense, signified "…that which is more
influential or powerful." It concluded that, even where a moving
image occupies one-quarter of the screen, the service may be characterized
as a "program" if the moving image is the focus of attention. |
12. |
Further, in Complaint by
Wagg Communications against Shaw Communications Inc. alleging breaches
of the Broadcasting Distribution Regulations, Broadcasting Decision
CRTC 2003-518,
23 October 2003 (Decision 2003-518),
the Commission determined that the Shaw TV Listings Channel, which
consisted of still pictorial images and alphanumeric material on half
of the screen, and Shaw’s TV Listings on the other half of the screen,
was not primarily alphanumeric in nature as the still image material
was the focus of attention. |
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The question of whether
Bragg’s TV Listings Channel is a "program" under the Broadcasting Act
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Aliant’s position
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13. |
Aliant submitted that Bragg’s
TV Listings Channel consists predominantly of alphanumeric text and
meets the description of a "non-programming service" contained
in Decision 97-2.
It further emphasized the Commission’s statement in that decision
that any determination as to whether a service is a broadcasting service
or a telecommunications service must be made based on the specific
facts of each case. Aliant also argued that viewers seek out the TV
Listings Channel for the purpose of consulting the schedules of television
services, which are presented in alphanumeric form, and not the advertisements,
some of which include a combination of sound, video and alphanumeric
text. |
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Bragg’s position
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14. |
Bragg submitted that what is
predominant on the TV Listings Channel is not the alphanumeric
television listings on the left side of the screen, but is rather the
sound and visual images on the right side of the screen.
According to Bragg, the images on the right side of the screen fall
within the definition of a "program" set out in the Broadcasting Act.
Bragg argued that, since these images are the predominant aspect of the
TV Listings Channel, the service is not predominantly alphanumeric and
is a program for the purposes of the Broadcasting Act. |
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Commission analysis and determination
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15. |
Bragg’s TV Listings Channel
consists of a split screen, one half of which displays television
listings formatted as alphanumeric text. The other half of the service
displays image, sound and alphanumeric advertising content and moving
video clips promoting other services available to BDU subscribers. |
16. |
In both the Gowling Letter
Decision and Decision 97-2,
the Commission interpreted the term predominantly as meaning
that which is more influential or powerful. In Decision 97-2,
the Commission added that, even where a moving image occupies only
one-quarter of the screen, the service may be characterized as a "program"
if the moving image is "the focus of attention." |
17. |
The Commission finds that
Bragg’s TV Listings Channel is very similar to Shaw’s TV Listings
Channel considered in Decision 2003-518,
in that both employ a split screen to display, on one half of the
screen, alphanumeric television listings, and on the other half, image
and alphanumeric advertising content. In Decision 2003-518,
the Commission found that Shaw’s TV Listings Channel was not predominantly
alphanumeric as the still image material broadcast was the focus of
attention. The Commission further notes that, in contrast with Shaw’s
TV Listings Channel, the advertising content of Bragg’s TV Listing
Channel contains both still and full-motion video images. |
18. |
In the present case, the
Commission concludes that, regardless of why a viewer tunes to Bragg’s
TV Listings Channel, once the viewer has done so, it is the visual
images, whether still or moving, that are more likely the focus of the
viewer’s attention. The Commission therefore finds that Bragg’s TV
Listings Channel is not predominantly alphanumeric in nature, and
therefore meets the definition of a program as defined in section 2 of
the Broadcasting Act. The Commission therefore finds that,
because Bragg’s TV Listings Channel is "broadcasting", and thus falls
outside of the purview of the Telecommunications Act, Aliant’s
complaint of undue preference must be adjudicated under the
Broadcasting Act. |
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The issue of whether Bragg has given itself an undue preference or
subjected Aliant to an undue disadvantage
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Regulatory framework
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19. |
Section 9 of the Regulations
states: |
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No licensee shall give an undue preference to any person, including
itself, or subject any person to an undue disadvantage.
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20. |
In Complaint by Bell ExpressVu
Limited Partnership against Rogers Cable Inc. alleging certain
anti-competitive practices, Broadcasting Decision CRTC 2004-494,
12 November 2004, the Commission outlined the steps required
in analyzing a complaint under section 9 of the Regulations: |
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In analyzing a complaint under section 9, the Commission seeks to
determine, first, whether a party has given a preference to any
person, or subjected any person to a disadvantage. Second, the
Commission considers whether any such preference or disadvantage is
undue. In examining this second issue, the Commission considers
whether a preference or a disadvantage has had, or is likely to have,
a material adverse impact on the complainant or on any other person.
It also examines the impact the preference or disadvantage has had, or
is likely to have, on the achievement of the objectives of the
broadcasting policy for Canada set out in the [Broadcasting Act].
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Aliant’s position
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21. |
Aliant submitted that, through
Bragg’s refusal to accept Aliant’s telecom service advertisements for
broadcast on its TV Listings Channel, through Bragg’s distribution of
advertising for its own services and for those of its affiliates, and
through its acceptance of advertising from Bragg’s wireless partner,
Rogers Wireless Inc. (Rogers), Bragg has conferred an undue preference
on itself, its affiliates and on Rogers, and has subjected Aliant to an
undue disadvantage. |
22. |
Aliant also submitted that
Bragg is in a unique and powerful market position, both as the sole
cable BDU in its service area, including the key Halifax metro area, and
through its exclusive control of access by advertisers to its TV
Listings Channel and to those who view that channel. |
23. |
Aliant stated that its market
research has identified cable television viewers as a target market for
its cellular services, and that it considers this target market to be
very important, given that it includes every cable television viewer.
Aliant also noted that a far larger audience views the advertising on
the TV Listings Channel than would be indicated by the total numbers of
Bragg’s individual cable subscribers, and that the channel is thus a
very cost effective method of reaching that audience. |
24. |
Aliant argued that, while a
BDU should be able to refuse to distribute messages advertising the
services of other BDUs that compete directly with it, Bragg should not
be allowed to deny Aliant access to the TV Listings Channel, as Aliant
does not provide broadcasting services and is not a competitor of Bragg
in its capacity as a BDU. Aliant added that Bragg’s obligations as a BDU
are not diminished simply because Aliant, competes with Bragg and with
Bragg’s partner, Rogers, as providers of telecommunications services.
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25. |
Aliant stated that Bragg’s
action in denying Aliant access to the TV Listings Channel on the basis
of the fact that Aliant competes against Bragg in another industry was
contrary to the general policy, as set out in subsection 3(1)(t)(ii) of
the Broadcasting Act, that BDUs "…should provide efficient
delivery of programming at affordable rates, using the most effective
technologies available at reasonable cost." |
26. |
Aliant admitted that it was
unable to quantify the material adverse impact, in terms of financial
harm or loss of market share, of Bragg’s deliberate refusal to accept
its advertisements. However, it submitted that Bragg’s behaviour lessens
the competitive state of the telecommunications industry. It
added that, although Bragg’s behaviour does not directly affect the
achievement of the broadcasting policy, the Regulations were written in
a broader context. |
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Bragg’s position
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27. |
Bragg submitted that, if it had
conferred a preference on itself, and had subjected Aliant to a
disadvantage, neither the preference nor the disadvantage was undue.
It further submitted that a company should not be forced to promote
the products of its direct competitor to its own customers, thereby
risking the loss of customers to that competitor. |
28. |
Bragg asserted that it was
incumbent on Aliant to demonstrate whether the preference or
disadvantage is undue, i.e., whether the preference or the disadvantage
has had, or is likely to have, a material adverse impact on Aliant, on
any other person or on the achievement of the objectives of the
broadcasting policy for Canada. |
29. |
Bragg submitted that Aliant
provided no evidence to support its claim that Bragg’s refusal to
broadcast Aliant’s advertising on Bragg’s TV Listings Channel is causing
significant harm to Aliant or any other party, or that it will have a
material adverse impact on the achievement of the objectives of the
Broadcasting Act. |
30. |
Bragg also submitted that,
according to Aliant’s 3rd Quarter Report of October 2004,
there was growth in both the customer base and revenues of Aliant’s
wireless and Internet services in that quarter, relative to their levels
in the corresponding quarter of 2003. Bragg noted that this growth
occurred despite the fact that Aliant advertising was not distributed on
Bragg’s TV Listings Channel. According to Bragg, this clearly suggests
that Aliant is not experiencing substantial harm. |
31. |
Bragg also argued that
Aliant’s inability to advertise on Bragg’s TV Listings Channel will not
have a negative impact on consumers or Aliant. In Bragg’s view,
Aliant enjoys all the advantages of an incumbent, such as a significant
market share in both its regulated and non-regulated telecommunications
services, and the ability to advertise these services in various media,
including print and broadcast media, as well as in Aliant’s billing
inserts. Further, Bragg contended that Aliant had not
provided any evidence of a material adverse impact on the objectives of
the Broadcasting Act. Bragg submitted that Aliant’s complaint
should be dismissed as Aliant had failed to demonstrate a material
adverse impact. |
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Commission analysis and determination
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32. |
The Commission considers that
Bragg has given a preference to itself, its affiliates and to Rogers,
and has subjected Aliant to a disadvantage. The issue that
remains to be determined is whether the preference and/or disadvantage
are undue. This requires the Commission to determine whether the
preference and/or disadvantage have had, or are likely to have, a
material adverse impact on the complainant or on any other person. The
Commission has also to determine the impact that the preference or
disadvantage have had, or are likely to have, on the achievement of the
objectives of the broadcasting policy for Canada set out in the
Broadcasting Act. |
33. |
The Commission notes Aliant’s
admission that it was unable to quantify, in terms of financial harm or
loss of market share, the material adverse impact of Bragg’s refusal to
accept Aliant’s advertisements on its TV Listing Channel in Nova Scotia
and Prince Edward Island. The Commission considers that Bragg’s control
of the TV Listings Channel does not confer upon it market power in
advertising likely to cause material harm, due to the nature of the
channel and of the viewing of it, and in light of the fact that Aliant
has numerous, likely more effective, advertising alternatives that it
can use to reach potential customers. The Commission is therefore unable
to conclude that Bragg’s refusal of Aliant’s advertising on the TV
Listings Channel has had, or is likely to have, a material adverse
impact on Aliant. |
34. |
In light of the written record
and after having heard the parties during the course of the hearing, the
Commission is also unable to conclude that Bragg’s refusal to accept
Aliant’s advertising on its TV Listings Channel has had, or is likely to
have, an impact on the achievement of the objectives of the broadcasting
policy for Canada set out in the Broadcasting Act. |
35. |
Accordingly, the Commission is
unable to conclude that the preference and the disadvantage previously
found are undue, and finds that Bragg has not breached section 9 of the
Regulations. |
36. |
The Commission therefore
dismisses the complaint filed by Aliant Telecom Inc. |
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Secretary General |
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This decision is available
in alternative format upon request, and may also be examined in PDF
format or in HTML at the following Internet site: http://www.crtc.gc.ca
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