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Order CRTC 2001-119
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Ottawa, 7 February 2001 |
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Review of Order CRTC 2000-788 - Resale of Vidéotron's
retail high-speed Internet service
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Reference: 8646-C51-01/00
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With respect to the resale of Vidéotron's high speed Internet
services, the Commission removes the positive subscriber consent
requirement from Order CRTC 2000-788.
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1. |
In Order CRTC 2000-788, dated 18
August 2000, following an application by the Canadian Association of
Internet Providers (CAIP), the Commission directed Vidéotron
Communications Inc. to offer its high-speed Internet services for resale
at the monthly rate of $22.46 until it had (a) put in place
long-term contracts that are meaningfully different from its monthly
contracts; and (b) obtained the consent of its customers for the new
terms using one of the four methods set out in Order CRTC 2000-250
(Bell Canada's local link service), namely:
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- accepting a signed document as end-customer confirmation;
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- oral confirmation verified by an independent third party;
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- electronic confirmation through the use of a toll-free number; and
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- electronic confirmation via the Internet.
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2. |
The key events, which formed the backdrop to Order 2000-788
are set out below:
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- in Telecom Decision CRTC 98-9,
the Commission forbore from regulating the higher speed retail
Internet service provided by cable companies;
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- in Telecom Decision CRTC 99-11,
acting pursuant to section 24 of the Telecommunications Act (the
Act), the Commission ordered cable carriers to permit resale of their
higher speed retail Internet service at a 25% discount from the
lowest retail Internet service rate charged to a cable customer in
comparable serving areas during any one month period;
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- in a clarification dated 10 December 1999, the Commission stated
that the mandated resale pricing does not include, and is not to be
computed based on, bulk-rated or long-term rated services; and
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- in a letter of 20 January 2000, the Commission clarified the issue
of whether the 25% Internet service provider discount should be
applied to Vidéotron's generally prevalent retail Internet service
rate ($39.95) or to the net Internet service "multiservice
rate" charged to cable customers after they receive their $10
"multiservice loyalty" rebate. The Commission found that
although the $29.95 rate is characterized as $39.95 less a rebate, it
does not change the fact that, in substance, the retail price that
cable customers ultimately pay is $29.95. Accordingly, as $29.95 is
the lowest retail rate that Vidéotron Internet service cable
customers pay, that is the rate to which the mandated resale discount
applies.
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3. |
Following issuance of the order, it came to the attention of the
Commission that, contrary to the CRTC Telecommunications Rules of
Procedure, Vidéotron had not been served with a copy of the CAIP
reply of 8 May 2000. Given this, and given that CAIP's reply had
contained new material, the Commission, by letter dated 15 September
2000, established further process to give Vidéotron an opportunity to
address the new material in CAIP's reply. The Commission indicated it
would review Order 2000-788 in light
of these submissions.
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Vidéotron responds
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4. |
By letter dated 25 September 2000, Vidéotron submitted that the
sufficiency of the customers' notice of terms, the adequacy of their
consent to these terms, or the efficacy of any penalties must be
determined by the laws of Quebec – not by the standards applied by the
Commission to Bell Canada's regulated services. To apply these standards
to a service that has been forborne from regulation is, in Vidéotron's
submission, tantamount to re-regulation of Vidéotron's terms and
conditions of service and constitutes a review and vary of Decision 98-9
entitled Regulation under the Telecommunications Act of certain
telecommunications services offered by "broadcast carriers",
dated 9 July 1998.
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5. |
Vidéotron submitted that its contracts comply with the civil law of
Quebec, which the company argued contemplates that consent may be either
express or tacit, and that silence may signify consent in certain
circumstances, such as usage. According to Vidéotron, its Internet
service customers receive three e-mail messages the first time that they
log on to Vidéotron's Internet service. The first is a welcome message,
the second is the current Internet service contract in French, and the
third is the English-language version of the same contract. Vidéotron
also submitted that the following statement appears at the top of the
first page of the contract in bolded capitalized letters: "Please
read carefully. This contract contains the terms and conditions pursuant
to which Vidéotron's Internet access service is provided to you. This
contract cancels and supersedes any other prior contract. By accessing
the Internet through Vidéotron's Internet access service at any time
after the receipt of this contract, you agree to be bound by its
provisions."
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6. |
Vidéotron stated that it had decided in January to implement changes
to its rate structure and introduced a discount for customers that
committed to a long-term service contract. In order to implement these
changes, Vidéotron, in accordance with sections 7 and 8 of the old
contract, sent an e-mail to all of its existing month-to-month customers,
specifically notifying them that they would be switched to a six-month
contract if they did not call or write to Vidéotron within 10 days
objecting to the change, pursuant to section 14 of the old contract. The
e-mail contained links to a web site setting out Vidéotron's new prices
for its Internet service and to the new service contract. No e-mail was
sent to existing 12-month customers, as these customers were already
bound by a long-term service contract, and the company was not proposing
to alter the rates payable by these subscribers.
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7. |
Vidéotron stated that customers who continued to use the service
without requesting changes, effectively signaled their consent to a
six-month service contract, and became bound by the new terms and
conditions set forth in the new contract pursuant to articles 1385 and
1434 of the Civil Code of Quebec. Therefore, CAIP's allegation that
Vidéotron's six- and 12-month customers had not consented to the term is
wrong as a matter of law.
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8. |
Vidéotron submitted that similar customer service contracts and
notification processes are used throughout the Internet service provider
industry in Quebec. To illustrate this, Vidéotron provided excerpts from
service contracts utilized by other Internet service providers operating
in Quebec namely, Sympatico Quebec, Cogéco Câble, AT&T Canada,
Total.Net, AOL, Look, ColbatNet, and eisa.com, most of which are members
of CAIP.
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9. |
Vidéotron also addressed the issue of penalty clauses for prematurely
terminating long-term contracts and what is, in law, a long-term
contract. However, in the Commission's view, these issues are clearly not
within the scope of the proceeding initiated by the Commission's letter
of 15 September 2000.
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CAIP's responds to Vidéotron's comments
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10. |
In its reply of 29 September 2000, CAIP effectively disagreed with the
Commission's decision to allow Vidéotron to make further submissions and
requested that the Commission not consider them. However, in the event
that the Commission denied CAIP's request, CAIP provided reply comments
addressing some of Vidéotron's arguments.
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11. |
In particular, CAIP argued that Vidéotron had made a number of
contradictory statements in the further proceeding regarding the
procedures it followed in purporting to convert those subscribers who
prior to March 2000 were month-to-month subscribers to six- or 12-month
contracts. For example, in its 10 April 2000 answer, Vidéotron stated
that the month-to-month converted subscribers would be contacted in the
future (i.e., in the next week), either by telephone or by e-mail, to
confirm their consent to a monthly contract and associated rate.
Vidéotron also stated that the final version of its new contract was not
yet available for filing. In contrast, the 25 September 2000
submission states that an e-mail was sent in January to all of its
existing month-to-month customers notifying them of the change to the
six-month contract and providing electronic links to the new service
contract.
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12. |
CAIP also argued that contrary to Vidéotron's assertions, the
Commission's directive in Order 2000-788
requiring Vidéotron to resell its higher speed retail Internet service
to Internet service providers at $22.46 per month, subject to the
conditions therein does not vary the forbearance determination in
Decision 98-9, and is not
tantamount to re-regulation of Vidéotron's higher speed Internet
service. To the contrary, the mandatory discount resale directive in
Decision 99-11 and Order 2000-788
does not preclude Vidéotron from changing the prices of its higher speed
retail Internet service offerings nor does it require approved tariffs.
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Commission determinations
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13. |
As previously mentioned, Order 2000-788
directed Vidéotron to offer its Internet service to Internet service
providers for resale at the rate of $22.46 ($29.95 less 25%) until it had
fulfilled two conditions. The first was to put in place long-term
contracts that were meaningfully different from monthly contracts. The
second was to obtain the consent of its customers for the new longer
terms using one of the methods set out in Order 2000-250.
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Meaningfully different contracts
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14. |
The Commission rejects Vidéotron's suggestion that Order 2000-788
amounts to re-regulation of the company's high speed Internet services.
As was expressly stated in the order, the Commission was not examining
the appropriateness of Vidéotron's retail rates, but rather which retail
rate should be used for the purpose of calculating the 25% resale
discount. Order 2000-788 was
addressing Vidéotron's clear attempt to avoid giving resellers the rate
contemplated by the Commission's resale regime by unilaterally
transferring their existing monthly customers to long-term contracts
which were not meaningfully different from the revised monthly contracts.
The long-term contract provided for a penalty of $10 per month for early
termination effective from the beginning of the contract, i.e., monthly
customers who had been unilaterally migrated to those contracts and who
terminated them prematurely would be no worse off than if they had chosen
to remain monthly customers.
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15. |
Vidéotron subsequently advised the Commission, in a letter dated 10
October 2000, that it had implemented long-term contracts, which provide
that a penalty of 50% of the balance is to be paid for early termination.
The Commission notes that this is the same penalty provision it had
identified in Order 2000-788 as
illustrative of what would make a long-term contract meaningfully
different from a short-term contract.
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16. |
CAIP, however, in a submission dated 11 October 2000, argued that the
Commission should not consider this information from Vidéotron because
it was contained in a submission not contemplated by the Commission's
process letter and the information could have been included in the
company's 25 September 2000 pleading. The Commission, nonetheless,
considers that because this information is purely factual, and does not
involve argument, it should be considered. Moreover, the letter is of
assistance to the Commission in narrowing the issues.
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17. |
In the Commission's view, Vidéotron has now complied with the aspect
of Order 2000-788 that refers to the
requirement for a meaningful distinction between the monthly contract and
the long-term contract.
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Obtaining consent
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18. |
The Commission notes Vidéotron's assertion that the Commission could
not properly direct Vidéotron to offer the rate of $22.46 to Internet
service providers for resale until Vidéotron had obtained the consent of
its customers for the new terms using one of the methods set out in Order
2000-250.
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19. |
The Commission, in Decision 98-9,
retained its powers with respect to section 24 of the Act in order to (a)
maintain and impose certain conditions on the offering and provision of
underlying telecommunications services to competitive service providers,
and (b) to impose conditions on the offering and provision of these
services as may be necessary in the future.
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20. |
In Decision 99-11, the
Commission mandated that incumbent cable carriers offer their higher
speed retail Internet service to Internet service providers for resale,
under certain specific conditions, as a proxy for the interconnection
with underlying broadband services until the latter was available.
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21. |
The Commission was acting pursuant to section 24 of the Act, the
original legal basis for the imposition of the discounted resale regime,
by placing additional conditions on Vidéotron given the latter's
anti-competitive conduct. The Commission was not purporting to dictate to
Vidéotron what means of obtaining consent it should use in its dealings
with its own customers with respect to the retail service. The Commission
was merely specifying that to the extent that Vidéotron wished to avoid
having to offer its Internet service to Internet service providers for
resale at $22.46, it must first satisfy certain conditions to ensure that
the resale regime is not in fact being circumvented.
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22. |
The Commission notes that Vidéotron, in its 10 October 2000
letter, informed the Commission that it had decided to amend the Internet
service agreement to reflect the termination charges contemplated by
Order 2000-788. Vidéotron indicated
that it proposed to send an e-mail message containing a copy of the new
agreement to all of its high speed Internet service subscribers on record
as of 23 September 2000 (as distinct from the company's previous
notification practice of referring subscribers to Vidéotron's website
for the text of the retail contract). By letter dated 18 October
2000, Vidéotron stated that all of its high-speed Internet service
customers on record as of 23 September 2000 had received the new
agreement and are legally bound by it. According to Vidéotron, the
notification process it followed is even more rigorous than the legally
sanctioned process and represents the norm and usage in the industry. New
subscribers, i.e., those who first receive service on or after 23
September, are bound by the terms of this new agreement and receive a
copy of it consistent with the process indicated in the company's 25
September 2000 submission.
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23. |
The Commission further notes that in a pleading dated 11 October 2000,
CAIP objected to the Commission considering the above information.
Consistent with the view expressed with respect to termination charges,
the Commission considers that this information is of a factual nature and
does not modify Vidéotron's argument that the Commission is without
jurisdiction to impose the means of obtaining consent identified in Order
2000-250. Accordingly, this
information has been considered.
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24. |
The Commission finds that based on the record of the proceeding
initiated by the Commission's letter of 15 September 2000, the positive
consent requirement imposes a significant burden on the company and that,
on reconsideration of this matter, is not necessary given that there is
now a meaningful distinction between Vidéotron's short and long-term
contracts. Consequently, the Commission removes the positive subscriber
consent required in Order 2000-788.
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Secretary General
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This document is available in alternative format upon request and
may also be examined at the following Internet site: http://www.crtc.gc.ca |