|
Telecom Decision CRTC 2006-16
|
|
Ottawa, 6 April 2006 |
|
Bell Canada and Saskatchewan Telecommunications' request that
the Commission stop applying the local exchange service winback
restrictions on the basis that they unjustifiably infringe the right to
freedom of expression in section 2(b) of the Canadian Charter of
Rights and Freedoms
|
|
Reference: 8622-B2-200505068
and 8680-B2-200513707 |
|
In this Decision, the Commission denies
Bell Canada and Saskatchewan Telecommunications' request that
the Commission stop applying the local exchange service winback restrictions,
as they existed at the time of the request, on the basis that they
unjustifiably infringed freedom of expression under section 2(b)
of the Canadian Charter of Rights and Freedoms (the Charter).
The Commission concludes that while the winback restrictions in question
infringe section 2(b) of the Charter, the infringement is a reasonable
limit prescribed by law that is demonstrably justified in a free and
democratic society, consistent with section 1 of the Charter. |
|
Introduction
|
|
The Application
|
1. |
On 25 April 2005, Bell Canada and
Saskatchewan Telecommunications (SaskTel) (collectively, the Companies)
filed a Part VII application (the Application) requesting that the
Commission stop applying the local exchange service winback restrictions
on the basis that they violated the applicants' and consumers' freedom
of expression under section 2(b) of the Canadian Charter of Rights
and Freedoms (the Charter)1 and could not be justified under
section 1 of the Charter.2 |
2. |
On 24 October 2005, the Commission re-opened
and extended the proceeding in order to receive submissions from the
interested parties with respect to the constitutionality, under the
Charter, of the Commission's statement of the local exchange service
winback restrictions in Regulatory framework for voice communication
services using Internet Protocol, Telecom Decision CRTC 2005-28,
12 May 2005, as amended by Telecom Decision CRTC 2005-28-1,
30 June 2005 (Decision 2005-28),
which extended the scope of the local exchange service winback restrictions
to local voice over Internet protocol (VoIP) services. In addition,
the Commission addressed interrogatories to the applicants and to
a number of other parties. The record of the proceeding closed
on 12 December 2005. |
3. |
The record of this proceeding includes
submissions from the Companies, Aliant Telecom Inc. (Aliant Telecom),
TELUS Communications Inc. (TCI), MTS Allstream Inc. (MTS Allstream),
who, in its initial comments, filed on behalf of itself and Call-Net
Enterprises Inc.3
(Call-Net), and as such made submissions not only as an incumbent local
exchange carrier (ILEC) but also as a competitive local exchange carrier
(CLEC) (collectively, MTS Allstream/Call-Net), Bragg Communications
Inc., carrying on business as EastLink (EastLink), Rogers Communications
Inc. (Rogers), Quebecor Media Inc. (QMI), the Canadian Cable
Telecommunications Association (CCTA), ARCH: A Legal Resource Centre for
People with Disabilities4
(ARCH) and the Coalition for Competitive Telecommunications (the
Coalition). The parties, other than the Companies, Aliant Telecom and
TCI, are referred to as the "Respondents." |
4. |
The positions of the parties have
necessarily been summarized; however, the Commission has carefully
reviewed and considered the submissions of all parties. |
|
The
winback rule and Decision 2006-15
|
5. |
The local exchange service winback restrictions,
which are the subject of the current proceeding, were stated by the
Commission in Decision 2005-28-1
as follows: |
|
[A]n ILEC is not to attempt to win back a business customer with
respect to primary exchange service [(PES)] or local VoIP service,5
and in the case of a residential customer of local exchange service
(i.e. PES or local VoIP service), with respect to any service, for a
period commencing at the time of the local service request and
terminating three months, in the case of a business customer, and
12 months, in the case of a residential customer, after that
customer's primary local exchange service or local VoIP service has
been completely transferred to another local service provider, with
one exception: ILECs should be allowed to win back customers who call
to advise them that they intend to change local service provider.
|
|
The above will be referred to in this
Decision as the "winback rule." |
6. |
In Forbearance from the regulation of
retail local exchange services, Telecom Decision CRTC 2006-15,
6 April 2006 (Decision 2006-15), released
today, the Commission modified the winback rule, as it relates to
residential customers, by reducing the period during which the winback
rule applies to a given former local exchange service customer (the
no-winback period) from 12 to three months. In the proceeding
leading to this Decision, the Commission set out to determine the
framework according to which it would forbear from regulation in the
local exchange services market. It also examined whether there should
be a transitional regime, in which certain competitive safeguards,
such as the winback rule, would be reduced or removed prior to forbearance.
In Decision 2006-15, the Commission determined
that reducing the no-winback period for former residential local exchange
service customers from 12 to three months would be a part of
the transitional regime, effective immediately.6 |
7. |
The Commission notes that the arguments
and evidence submitted by the parties in this proceeding relate to
the winback rule as it existed prior to Decision 2006-15.
The Commission considers that it would be inappropriate to make findings
in this proceeding regarding the Decision 2006-15
winback rule. However, since the Decision 2006-15
winback rule only modifies the no-winback period in relation to residential
customers, and maintains all other aspects of the winback rule, the
Commission considers there is merit in setting out its determinations
with respect to the constitutionality of the prior winback rule. |
|
Background
|
|
Regulatory framework for competition
|
8. |
In 1993, Parliament enacted the
Telecommunications Act (the Act), replacing the
telecommunications-related provisions of the Railway Act. The Act
affirmed many of the policy objectives that the Commission had been
giving effect to under the Railway Act since the 1970s, including
the introduction of competition in various telecommunications markets. |
9. |
Section 7 of the Act articulates the
objectives of Canadian telecommunications policy. Several of these
objectives relate to the promotion of competition in telecommunications,
including: |
|
- enhancing the efficiency and competitiveness of Canadian
telecommunications at the national and international levels;
|
|
- stimulating research and development in Canada in the field of
telecommunications and encouraging innovation in the provision of
telecommunications services; and
|
|
- fostering increased reliance on market forces for the provision of
telecommunications services and ensuring that regulation, where
required, is efficient and effective.
|
10. |
Section 47 of the Act requires that the
Commission exercise its powers and perform its duties in furtherance of
the telecommunications policy objectives in section 7. |
11. |
In Review of regulatory framework,
Telecom Decision CRTC 94-19,
16 September 1994 (Decision 94-19),
the Commission established a comprehensive regulatory framework for
the telecommunications industry, in light of the policy objectives
of the Act and the evolution of the telecommunications environment.
The Commission stated that market forces would generally be preferable
for governing the behaviour of telecommunications service providers
in markets that were sufficiently competitive. The Commission also
stated that greater reliance on market forces would allow for greater
choice and supplier responsiveness and would ensure that user applications,
not regulators, drove supply considerations. |
12. |
The Decision 94-19
framework encompassed a wide range of regulatory issues, as well as
a framework for the introduction of competition into the local exchange
service market. In particular, the Commission found that the potential
existed for meaningful competition in the local exchange service market.
The Commission considered that encouraging this potential would lead
to benefits, such as productivity improvements, service innovation,
and enhanced choices for consumers, and found that in order to achieve
these objectives, there was a need to remove barriers to entry and
adopt conditions to safeguard competition. |
13. |
In Decision 94-19,
the Commission noted that "the key concern of competitors in
this proceeding has been the potential for telephone companies to
abuse market power arising from their vertically integrated structure
and historically dominant market position."7
The Commission also noted that "regulation is necessary to ensure
that service is affordable, where market forces are not sufficient
to provide that assurance, and to address issues of undue preference
and unjust discrimination that arise due to the vertically integrated
nature of the telephone companies and their dominance in some markets."8 |
14. |
Order in Council P.C. 1994-1689, 8 October
1994 (Order in Council), underscored the high importance that the
Government of Canada ascribed to the promotion of competition in
telecommunications. The Government noted that competition "stimulates
investment and innovation and reduces the gap between the development
and the deployment of new technologies, products and services, thereby
quickly expanding the range of products and services available to
consumers",9
and can also serve to reduce prices. The Government stated that the
regulatory framework "must ensure that obligations and opportunities are
shared equitably by all participants, i.e. the competitive model must
allow each participant an equal opportunity to succeed, or fail, based
on their efforts."10 |
15. |
In Local competition, Telecom Decision
CRTC 97-8,
1 May 1997 (Decision 97-8),
the Commission established a framework for the implementation of local
competition, in accordance with the principles enunciated in Decision
94-19. The Commission found that
efficient and effective competition would be best achieved through
facilities-based competitive service providers. The Commission considered
that, without facilities-based competition, competition would only
develop at the retail level, with the ILECs retaining monopoly control
of wholesale level distribution. The Commission adopted the principle
that CLECs were not simply customers of ILECs, but were carriers of
equal stature to the ILECs in the local exchange market. |
16. |
In Decision 97-8,
the Commission found that there were several barriers to competitive
entry into the local exchange market. The Commission recognized that
technical and operational modifications would be needed to allow CLECs
to interconnect their network facilities to the ubiquitous networks
of the ILECs in a manner that would allow them to offer local exchange
services to end-users. The Commission found that absent mandatory
unbundling of telephone company networks, including fair rates and
terms of access to the ILECs' essential and near-essential facilities,
CLECs would be forced to make prohibitively expensive capital expenditures
to enter the market. The Commission also implemented a set of competitive
safeguards related to pricing, so as to ensure that CLECs were charged
fair rates for the use of ILEC essential facilities, and so as to
prevent anti-competitive pricing charged to consumers. |
17. |
Following Decision 97-8,
the Commission conducted a number of proceedings addressing barriers
to competition, including proceedings relating to co-location11
and unbundling12,
as well as access to support structures13,
rights-of-way14
and multi-dwelling units.15
The Commission continues to deal with many of these issues on
an ongoing basis. |
|
The adoption and
evolution of the winback rule |
18. |
The Commission established the winback
rule as one of a series of measures that flowed from the regulatory
framework adopted by the Commission in Decisions 94-19
and 97-8 to foster
sustainable facilities-based local competition. |
19. |
The first version of the winback rule in
respect of local exchange service was set out by the Commission in its
letter entitled Commission Decision Regarding CRTC Interconnection
Steering Committee Dispute on Competitive Winback Guidelines issued
on 16 April 1998 (the Winback Letter). In the Winback Letter, the
Commission prohibited the ILECs from attempting to win back former
customers for PES, for a period of three months. The Commission stated: |
|
The Commission is of the view that asymmetrical winback guidelines
should be put in place for a specific period of time to facilitate
CLEC entry into the local market. The Commission notes, in this
regard, that without such guidelines, ILECs would potentially be able
to win back customers even before local service is effectively
transferred to a CLEC because ILECs control and have access to
customer specific information, such as leased loops, directory
listings, and 911 information. The Commission notes that asymmetrical
winback guidelines will not prevent ILECS from advertising to the
general public. Instead, ILECs will not be allowed to communicate with
customers on an individual basis for a limited period of time
following transfer of the customer's service to another local service
provider.
|
|
The Commission is of the view that asymmetrical winback guidelines
will help to protect customers and ensure effective competitive entry…
The Commission therefore directs that an ILEC is not to attempt to win
back a customer for a period of three months after that customer's
service has been completely transferred to another local service
provider, with one exception: ILECs should be allowed to win back
customers who call to advise them that they intend to change local
service provider.
|
20. |
In Application of the winback rules
with respect to primary exchange service, Telecom Decision CRTC 2002-1,
10 January 2002 (Decision 2002-1),
in recognition of the evolution in the way in which telecommunications
services, including local exchange service, were being marketed to
consumers, the Commission directed ILECs to refrain from attempting
to win back a residential customer, either for PES or any other service,
for a period of three months after the customer's PES had been
completely transferred: |
|
The Commission notes that circumstances have changed since the
winback rules were first applied in 1998. In particular, there has
been an increase in the marketing of bundled service offerings. In
this regard, the Commission notes that an attempt by an ILEC to sell a
bundle that included optional local services to a lost residential
primary exchange customer would generally constitute a winback
activity for primary exchange service since its acceptance would
generally mean that the customer, for technical reasons, would be
obliged to switch back to the ILEC's primary exchange service.
|
|
In the case of the bundling of other services such as Internet and
long distance with primary exchange service or optional local
services, the Commission notes that a winback of a long distance or
Internet customer would also inevitably repatriate the primary
exchange service, despite the fact that such service might not be the
target of the winback in question.16
|
21. |
In Call-Net
Enterprises Inc. v. Bell Canada - Compliance with winback rules,
Telecom Decision CRTC 2002-73,
4 December 2002 (Decision 2002-73),
the Commission responded to a complaint by Call-Net that Bell Canada
had been contacting customers immediately after receiving Call-Net's
local service requests (LSRs), before the customers had migrated onto
the Call-Net network. The Commission determined that the no-winback
period starts at the time that the customer's decision to change service
providers is communicated in an LSR. The Commission found Bell Canada
to be in violation of the winback rule, and required Bell Canada
to develop and implement internal procedures to ensure its compliance
with the winback rule.17 |
22. |
In Call-Net Part VII Application
- Promotion of local residential competition, Telecom Decision
CRTC 2004-4, 27 January 2004
(Decision 2004-4), the Commission
noted that while winback activity can be a feature of a mature competitive
market, the local telephone market was not such a market, and that
competition had not grown as rapidly as had been anticipated when
the winback rule was imposed in 1998. The Commission determined that
it would extend the no-winback period in respect of residential customers
from three to 12 months, on the following grounds: |
|
The Commission agrees with Call-Net's argument that sustainable
competition can only be achieved if CLECs have the opportunity to
develop a stable customer base. The Commission also notes that,
according to the POLLARA survey, more than half of the residential
customers who left Bell Canada did so because the CLEC offered a
better price or rate. While price may be a key method for a CLEC to
win customers, the Commission considers that if a CLEC is to retain
customers and build a stable customer base, it must have a reasonable
opportunity to demonstrate the quality and reliability of its
services.
|
|
The Commission notes that the vast majority, if not all of a CLEC's
customers will be former ILEC customers. As a result, an ILEC will
have knowledge of the customer's telecommunications needs, preferences
and calling patterns. That knowledge would give the ILEC an advantage
when targeting winback activity to that customer. Given the
predominance of the ILECs in the residential local market, the
Commission considers that this enhanced ability to target former
customers constitutes an undue or unfair advantage during the period
CLECs require to establish a stable relationship with their customers.
|
|
The Commission also considers that targeted winback activities
increase churn and administrative costs for all [local exchange
carriers (LECs)]. Increased churn is likely to be especially
detrimental to CLECs as they do not have a large stable base of
customers capable of funding the CLEC's ongoing operations. In this
regard, the Commission accepts Call-Net's evidence that customer churn
decreased significantly after a customer had received service from
Sprint Canada for a year or more.18
|
23. |
In Decision 2005-28,
the Commission extended the application of the winback rule to local
VoIP services: |
|
The Commission has considered winback rules to be necessary and
appropriate to prevent anti-competitive behaviour. In Decision
2004-4, the Commission
stated that although winback activity could be a feature of mature
competitive markets, the local services market was far from being
a mature competitive market. The Commission considers that the
same concerns regarding the potential for anti-competitive conduct
by ILECs arise in the case of winning back local VoIP customers.
The Commission considers that, absent the winback rules, the ILECs
could use the same incumbency advantages to win back local VoIP
customers as they could use to win back PES customers.
|
|
For example, the Commission considers that since most local VoIP
customers will be former ILEC PES customers, the ILECs will have
knowledge of the customers' telecommunications needs, preferences and
calling patterns. Winback rules will prevent ILECs from attempting to
win back former PES or local VoIP service customers before they have
sufficient experience with a competitor's VoIP service in order to be
in a position to evaluate the service fairly. The Commission considers
that winback rules allow competitive VoIP service providers an
appropriate period of time to demonstrate the reliability and quality
of their services, before the ILEC can attempt to regain the customer.19
|
|
Procedural objections regarding material filed on the record
|
|
Evidence filed by the
Respondents |
24. |
The Companies and TCI argued that evidence
filed by the Respondents that related to ILEC pricing and targeted
pricing strategies was outside the scope of this proceeding, and
therefore should be disregarded. TCI argued that this proceeding was
concerned only with the constitutionality of the winback rule, not the
other marketing restrictions to which ILECs remained subject. In TCI's
view, even if the winback rule was eliminated, the rule against rate
de-averaging, the near-ban on promotions, and the restrictions on
bundling would remain in effect and would continue to constrain the
normal competitive responses of the ILECs. |
25. |
Aliant Telecom argued that certain
submissions filed by the Respondents were premised upon the irrelevant
assumption that there would be ILEC violations of bundling, promotion or
below cost pricing requirements, should the winback rule be eliminated.
Aliant Telecom submitted that these submissions should be disregarded by
the Commission as they were irrelevant to the interrogatories posed and
were outside the scope of this process. |
26. |
In response, the CCTA argued that its
evidence spoke directly to the incentives that ILECs had to engage in
winback activity and how targeting special offers narrowly at only the
customers lost to competitors was an economically rational pursuit. The
CCTA argued that: |
|
- While winback activity might occur in any number of markets, the
circumstances in the local market presented additional incentives for
the ILEC to pursue these strategies. Unlike other markets, competitors
seeking to make gains in the local market did not have the option to
pursue potential customers not served by the ILEC by virtue of the
ILEC's incumbent position and the high penetration of local service.
There were no residential local customers that could not and would not
be targeted by the ILECs.
|
|
- Removing the winback restrictions would substantially and
irrevocably enhance the ability of the ILECs to act on strong
incentives to maximize their profits by repatriating customers from
competitors. Competitors would not be able to recover their costs,
including high costs of customer acquisition. As a result, competitors
would be put under greater financial pressure, lost market share would
revert back to the ILECs and, ultimately, the competitiveness of the
local market would be undermined.
|
27. |
The Commission considers that the only
issue in this proceeding is the constitutionality of the winback rule
under the Charter. As will be discussed further below, the winback
rule relates to the ability of ILECs to directly communicate with
former local exchange service customers for the purpose of a winback
attempt; it is not designed to resolve concerns regarding the specific
service offering being communicated to those former customers. These
concerns, which relate to the rates and conditions according to which
the service offering may be provided by the ILECs, are addressed by
the Commission's pricing safeguards and other pricing rules, and in
particular, those set out in Promotions of local wireline services,
Telecom Decision CRTC 2005-25,
27 April 2005 (Decision 2005-25).
The Commission therefore finds that these rules are outside the
scope of this proceeding. Accordingly, the Commission has not considered
material filed in relation to pricing and pricing strategies of the
ILECs for the purpose of its determinations in this proceeding. |
28. |
The Companies also argued that the
Respondents had attempted to introduce other argument beyond the scope
of this proceeding. In support of this statement, the Companies referred
to a statement by QMI in relation to Bell Digital Voice service. The
Commission agrees that the issue of what is or is not a VoIP service is
not a matter in question in this proceeding. Accordingly, the Commission
has not considered any submissions relating to this issue in the course
of its deliberations in this proceeding. |
|
Evidence filed by the
Companies |
29. |
MTS Allstream requested that certain
material filed by the Companies in response to Commission
interrogatories and in their supplemental comments be disregarded, on
the grounds that it could have been presented with the Application and,
more importantly, had no relevance to the issues raised at that stage of
the proceeding. In response, the Companies argued that this information
was relevant to the proceeding and directly responsive to the Commission
interrogatories. |
30. |
The Commission finds that the material
referred to is relevant to this proceeding, with the exception of
portions of the VoIP CRTC Ruling Report, a consumer survey
conducted by Ipsos-Reid on behalf of ILECs (Ipsos-Reid Report) and filed
by Bell Canada in this proceeding. For the reasons discussed in
paragraph 27 above, the Commission has not considered for the purpose of
its determinations in this proceeding those parts of the Ipsos-Reid
Report relating to the prices of services and the requirement to obtain
tariff approval of bundles pursuant to section 25 of the Act. As will be
discussed further below, the Commission has considered that part of the
Ipsos-Reid Report which related to the winback rule. |
|
|
31. |
The parties generally agreed that the issue
in this proceeding was whether the winback rule was justifiable under
section 1 of the Charter. The Commission has considered, for the purpose
of this analysis, that the winback rule constitutes an infringement of
freedom of expression, the limited nature and scope of which is examined
starting at paragraph 53 below, and therefore, that it is necessary to
determine whether the winback rule is consistent with section 1 of
the Charter. |
32. |
In R. v. Oakes, [1986] 1 S.C.R. 103
(Oakes), the Supreme Court of Canada (the Court) set out the
analytical framework to be used to determine whether a law that
infringes a Charter right constitutes a reasonable limit under section 1
(the Oakes test).20 |
33. |
The Oakes test has two major parts. The
test requires first that a determination be made as to whether or not
the infringing measure has a "pressing and substantial" objective. If
the measure does not have a pressing and substantial objective, then it
will not fall within section 1, and there is no need to proceed to the
second part of the test. |
34. |
If, however, a pressing and substantial
objective is identified, the analysis proceeds to the second part of the
Oakes test, which is to assess the measure's proportionality (the
proportionality test). A finding of proportionality requires that all
three of the following branches be satisfied: the first requires that
the measure adopted be rationally connected to the objective in question
(the rational connection branch); the second requires that the measure
impairs the freedom no more than reasonably necessary to attain the
objective (the minimal impairment branch); the third requires that there
be proportionality both between the deleterious effects of the
measure and its objective, and between the deleterious and salutary
effects of the measure (the proportionate effects branch).21 |
35. |
The standard of proof for all stages of the
Oakes test is proof on a balance of probabilities.22
In most cases, conclusive scientific evidence is not required for
the purpose of defending an impugned measure. |
36. |
The Commission notes that a number of
similar arguments were raised by different parties in addressing the
different stages of the Oakes test. In order to avoid repetition, the
Commission has generally addressed these arguments under only one stage
of the Oakes test. |
37. |
The Commission notes that in order to
assess whether the winback rule meets the requirements of the Oakes
test, it is first necessary to consider the context in which the winback
rule was adopted, and the nature and scope of its infringement on
freedom of expression. |
|
The context in which the winback rule was adopted and the nature and
scope of the infringement
|
|
Positions of parties
|
|
The ILECs |
38. |
With respect to the nature of the
infringement, the Companies submitted that, as a result of the winback
rule, a customer who decided to switch from an ILEC was cut off from all
contact initiated by the ILEC for the relevant no-winback period, and
was therefore unable to make the same informed choices available to
other customers. The Companies argued that such contact merited
significant Charter protection, as most individuals found local and long
distance telephone services, Internet access and broadcasting
distribution services to be important to their daily lives. In the
Companies' view, low-income families were also likely to consume
telecommunications services, yet the current winback rule restricted the
information they could receive about lower-cost plans or providers. The
Companies argued that, unlike the case of Irwin Toy Ltd. v.
Quebec (Attorney General), [1989] 1 S.C.R. 927 (Irwin Toy),
which dealt with advertising directed at children, the winback rule was
not intended to protect a vulnerable group of consumers. |
39. |
TCI submitted that the Court had held that
commercial expression merited strong protection under section 2(b) of
the Charter, citing Irwin Toy, Ford v. Quebec (Attorney
General), [1988] 2 S.C.R. 712 (Ford), and Rocket v. Royal
College of Dental Surgeons of Ontario, [1990] 2 S.C.R. 232 (Rocket),
as examples of where the Court had found commercial expression
worthy of Charter protection in respect of both the speaker and the
listener. |
|
Respondents |
40. |
Citing RJR-MacDonald and Irwin
Toy, the CCTA argued that a lower standard of section 1
justification was appropriate where the legislator or policy-maker was
mediating between different groups, as opposed to where the state was
acting as a singular antagonist of the individual. The CCTA submitted
that the winback rule sought to balance the rights and interests of
consumers and ILECs in the short term to establish a competitive
environment in the long term where such a rule would be unnecessary. |
41. |
The CCTA submitted that the Companies
improperly omitted reference to the contextual approach generally
applied in commercial expression cases. Relying on Rocket,
the CCTA submitted that the Court stated that when the motive for
commercial expression was "primarily economic", restrictions on
commercial expression "might be easier to justify than other
infringements of section 2(b)."23
The CCTA also relied on the Court's statement in Thomson Newspapers
Co. v. Canada (Attorney General), [1998] 1 S.C.R. 877 (Thomson
Newspapers) at paragraph 91 to the effect that "the low value of the
expression may be more easily outweighed by the government objective."
The CCTA submitted that the Companies had insufficiently considered that
the appropriate standard of proof on the proportionality analysis is the
balance of probabilities, and that this reflected a degree of deference
to Parliament's (or, in this case, the Commission's) choice. |
42. |
The CCTA argued that the Companies exaggerated
the winback rule's impact because the winback rule only affected a
limited subset of customers. The CCTA submitted that Decision 2005-28
reaffirmed that the winback rule only applied to ILEC-initiated contact
with "customers who have decided to switch their local residential
services [where the purpose of that contact is] to win them back"24
and that the winback rule "will only be triggered when a VoIP
[or other local exchange] service provider contacts an ILEC to notify
the ILEC of a change of service."25
According to the CCTA, the winback rule had no effect on the Companies'
ability to market their services generally or on the choice of medium
or message, nor did it prevent customers from reviewing any offer
made by the Companies to the general public through print, television,
radio, their retail outlets, websites or any other communication medium. |
43. |
MTS Allstream/Call-Net argued that the
winback rule had not been introduced into a fully competitive marketplace,
unlike the markets in Irwin Toy (dealing with advertising directed
at children) and Rocket (dealing with advertising for
dental services), but rather into an incomplete transition from a
monopoly to a competitive telecommunications market. MTS Allstream/Call-Net
submitted that, following the passage of the Act and Decision 94-19,
the Commission imposed certain regulatory safeguards in order to facilitate
the transition to a competitive environment, including the winback
rule, to offset the market power and advantages that naturally accrued
to the ILECs by virtue of their historic monopoly, and to protect
CLECs from the potential for abuse that stemmed from these advantages. |
44. |
MTS Allstream/Call-Net characterized the
expression at issue as motivated primarily by economic interest on the
basis that it attempted to win back lost customers. MTS Allstream/
Call-Net argued that the winback rule did not affect customer choice,
because the customers who had switched could be presumed to be aware of
ILEC services and that they had choice. In MTS Allstream/Call-Net's
view, the only restricted information would relate to any change in ILEC
services since the customer decided to switch, and such change was
unlikely, given the short time in which the winback rule applied –
three months for business and 12 months for residential.
MTS Allstream/Call-Net further argued that any claimed impact of the
winback rule was theoretical, as customers could still obtain up-to-date
information about ILEC services through advertising and marketing in all
forms, other than direct solicitation, and when customers called the
ILEC to indicate their intention to switch local providers. |
45. |
ARCH submitted that the Court had
repeatedly stated that legislative bodies that were called upon to
balance the claims of competing groups must be afforded wide latitude to
determine the proper distribution of resources throughout society
because they were well placed to make such decisions. ARCH submitted
that this was especially true where the competing interests under
consideration included those of disadvantaged groups. |
|
The Companies' reply |
46. |
The Companies argued that the Respondents'
attempts to discount the value of commercial expression were
fundamentally at odds with the Court's jurisprudence. The Companies
submitted that restrictions on "information which would be useful to the
public and present no serious danger of misleading the public or
undercutting professionalism"26
– the type of information affected by the winback rule – were not
justified. They further argued that the element of consumer protection
from qualitative claims about professional services that could not be
assessed by non-specialists, which favoured the regulation of certain
types of dentists' advertising in Rocket, was entirely absent in
this case. The Companies argued that winback activity was not behaviour
that was abusive, improper or illegal; rather, the clear evidence from
consumers and business on the record of this proceeding was that
customers whose access to winback messages was denied were not a
vulnerable class, and that they appreciated and welcomed these messages
as they provided timely, accurate information to better enable customers
to exercise informed choice amongst service providers. |
47. |
The Companies cited the Winback Letter to
argue that, notwithstanding the sentence quoted by the CCTA from Decision
2005-28, throughout the seven
years that the winback rule had been in force, the only exception
was when a customer called the ILEC directly to advise that the customer
intended to change local service providers (LSPs).27
The Companies submitted that, at the very least, the exception was
unclear, and requested clarification of whether the exception applied
to all customer-initiated calls to the ILECs or just to customer-initiated
calls in which the customer specifically advised the ILEC that
he or she intended to change LSPs. |
|
Commission determinations
|
|
Context |
48. |
The Commission notes that the Court has
consistently determined that a claim under the Charter must be assessed
in light of the context in which the claim arises, as "[c]ontext is relevant both with respect to the
delineation of the meaning and scope of Charter rights, as well as to
the determination of the balance to be struck between individual rights
and the interests of society."28 |
49. |
As explained above, the comprehensive competition
framework that was established in Decisions 94-19
and 97-8 constituted
the regulatory context in which the Commission adopted the winback
rule. The Commission considers that facilitating the transition from
monopoly to competition in the provision of local exchange services,
through the adoption of specific measures aimed at mitigating the
advantages of ILECs relative to competitors that create barriers to
competition, is a complex problem that lies at the heart of the Commission's
mandate under the Act. The winback rule is one example of the Commission's
attempt to mediate between the needs and interests of ILECs and those
of competing service providers, as well as consumers, in furtherance
of the objectives of the Act. In this respect, the winback rule does
not differ from other measures adopted by the Commission aimed at
allowing for a level playing field among incumbent carriers and new
entrants, to the ultimate benefit of consumers. The winback rule is
also, in this respect, similar to the rules the Commission has established,
in furtherance of its objectives under the Broadcasting Act,
to limit the ability of certain incumbent cable companies to directly
contact their former customers for winback purposes. These rules necessarily
differ in scope from the winback rule in order to address the different
circumstances in which they are applied. |
50. |
The Commission notes that the winback rule
was adopted within the context of ILEC dominance in the local exchange
services market. When the winback rule was first adopted in 1998,
competitive entrants had 4.5 percent of local business lines,
and such a statistically insignificant share of the local residential
market that ILECs were reported to have 100 percent of local
residential lines.29
Although ILEC market share has declined since 1998, until recently
the rate of decline has been slow. As noted in Decision 2004-4,
at the end of 2001, the ILECs had 99.4 percent of all residential
customers in Canada, and at the end of 2002, their market share had
only dropped slightly to 98.6 percent. The Commission's most
recently published data reveals that while CLECs' market share in
2004 had improved from the year before, the ILECs continued to remain
dominant, with CLECs having attained 3.2 percent of local residential
lines and 12.4 percent of business lines at the end of 2004.30 |
|
The nature and scope of the infringement |
51. |
The Commission notes that there was some
debate on the record as to the constitutional value of the particular
expression at issue in this proceeding. The Companies and other ILECs
submitted that commercial speech had traditionally been accorded a
fairly high level of protection under section 2(b) of the Charter, while
the Respondents submitted that commercial speech had been considered to
be of lower value than other forms of speech, notably political speech,
which was closer to the core principles of section 2(b) of the Charter. |
52. |
The Commission notes that the Court has
stated that commercial speech serves an important public interest where
it plays an important role in enabling consumers to make informed
choices.31 |
53. |
The Commission notes that former local
exchange service customers to whom the winback rule applies have access
to service and product information generally available at the ILEC's
retail outlets, by means of advertising in the media and through other
marketing activities that do not involve a direct communication for
winback purposes, as well as by means of the ILEC's websites. |
54. |
The Commission further notes that the
winback rule does not prevent: |
|
- an ILEC's current local exchange service customers, including
those who have switched other services to competitors, from receiving
direct communications from the ILEC at any time; and
|
|
- an ILEC's former local exchange service customers from receiving
direct communications from the ILEC at any time in relation to any
service that the customer continues to obtain from the ILEC or any
service that the customer had not previously purchased from the ILEC.
|
55. |
Rather, the winback rule prevents an ILEC's
former local exchange service customers from being targeted through a
direct communication by an ILEC for a winback attempt in respect of
local exchange service, in the case of a business customer, and in
respect of all services that the customer switched to a competitor, in
the case of a residential customer, during the applicable no-winback
period. |
56. |
The Commission notes that parties in this
proceeding disagreed as to the scope of the exception contained in the
winback rule for customer-initiated contact. In the Application, the
Companies submitted that where a customer called the ILEC to request
information on local exchange services, a sales representative was free
to offer the customer information and to transfer the service back to
the ILEC if the customer so requested. The Commission agrees that the
circumstances identified by the Companies properly fall within the scope
of the exception contained in the winback rule. |
57. |
In light of all the foregoing, the
Commission finds that the winback rule restricts in a limited manner the
ability of ILECs to convey information to former local exchange service
customers, and does not materially interfere with the ability of
consumers to make informed economic choices concerning the
telecommunications services and products that the ILECs provide in
accordance with the Act. |
|
|
|
Positions of parties
|
|
The ILECs |
58. |
The Companies submitted that the purpose
of the winback rule initially articulated in the Winback Letter and
Decisions 2002-1 and 2002-73
was to foster competitive entry by preventing ILECs from attempting
to win back customers before local service was effectively transferred. |
59. |
The Companies further submitted that when
the Commission extended the winback rule in Decision 2004-4,
the purpose was changed to providing a CLEC with "a reasonable
opportunity to demonstrate the quality and reliability of its services"
in order to "build a stable customer base." The Companies
argued that this purpose was diametrically opposed to Canadian telecommunications
policy objectives, as it denied consumers valuable information about
the value and price of competing telecommunications services and service
providers, protected CLECs from competition and the promotion of efficiency,
and placed market forces on hold, rather than subjecting competitors
to the discipline of full market forces. According to the Companies,
this purpose did not benefit consumers, nor enable them to choose
their services and suppliers, which the Commission acknowledged in
Decision 94-19 as its purpose in
attempting to foster competition. The Companies submitted that the
Commission's mandate in the Act was to facilitate competition, not
to manage competition by favouring one carrier relative to another
at the expense of consumers. |
60. |
According to the Companies, the incumbent
cable companies had long-standing relationships with the same pool of
potential customers as the ILECs. The Companies submitted that it could
not be a pressing and substantial objective to suppress an important
element of competition, namely the free exchange and receipt of
commercial information amongst ILECs and their former customers, in
order to protect well-capitalized, vigorous competitors. |
61. |
In addition, the Companies submitted that
the previous concern that ILECs had an advantage over competitors in
respect of assembling bundles containing non-local services as a means
to win back their former local service customers was no longer
justified. The Companies argued that for consumers interested in
bundles, the market was increasingly a battle between the bundles of
competitors versus those of the ILECs. The Companies submitted that in
many instances, the ILECs' bundles were lacking the crucial broadcast
distribution service element. |
62. |
The Companies also noted that Rogers'
market research indicated that a significant number of customers did not
want to be tied to a single service provider because they perceived
services as constantly evolving and improving. The Companies submitted
that rules that prevented customers from receiving timely information to
assist them in making informed decisions about the service provider that
best met their needs could hardly be termed pressing and substantial. |
63. |
With respect to VoIP services, the
Companies submitted that the winback rule did not satisfy the pressing
and substantial test. The Companies submitted that given the novelty of
VoIP technology, the large number of new entrant VoIP providers, the
wide variation in the features provided by such services and the high
level of competition in the VoIP segment of the local services market,
it was now more important than ever for consumers to receive
communications of all types, including direct communications from ILECs,
about local VoIP services. |
64. |
In its response to interrogatories,
Bell Canada submitted that the survey results in the Ipsos-Reid Report
showed that a significant majority of recently surveyed Canadians
strongly favoured winback activity, noting that 64 percent of survey
respondents considered the Commission's policy restricting ILECs from
engaging in winback activity with former customers in respect of VoIP
services to be bad for them as consumers.
Accordingly, the Companies suggested that these results refuted the
Commission's initial assessment of the underlying purpose of the winback
rule, and demonstrated that restricting Canadians from receiving direct
communications that helped make them more informed consumers was no
longer a pressing and substantial objective. |
65. |
The Companies argued that, for the reasons
above, the purposes underlying the extension of the no-winback period
from three to 12 months and the extension of the winback rule to all
services in respect of former residential customers' local
telecommunications services failed the pressing and substantial purpose
test. In the Companies' view, at a minimum, the 12-month aspect of the
winback rule and its application to all services other than residential
local services had to be withdrawn by the Commission immediately. |
66. |
Aliant Telecom submitted that the
Commission's stated objective in imposing the winback rule on ILECs was
to provide CLECs with a reasonable opportunity to demonstrate the
quality and reliability of their services in order to retain customers
and build a stable customer base. Aliant Telecom argued that the
Commission's objective of fostering a stable customer base might be
unsustainable, as competition by its very nature was dynamic.
Aliant Telecom further argued that it was impossible to regulate a
successful outcome for any particular company or group of companies
without effectively eliminating competition. |
67. |
TCI submitted that on the face of the
Commission's previous decisions, the winback rule had two objectives.
TCI submitted that the first objective, protection of the abuse of
customer confidential information during the local service transfer
stage, was a legitimate objective of the winback rule. TCI submitted
that no local exchange carrier should be able to take advantage of such
information during the local service transfer stage. TCI submitted that
the protection of abuse of confidential customer information at the
local service transfer stage could not, however, be the objective the
Commission was trying to achieve with the winback rule. TCI argued that
if this were the objective, the winback rule would have to be designed
whereby it applied to all local service providers. |
68. |
TCI submitted that the other objective of
the winback rule was to facilitate CLEC local entry by competitors and
that this was not a pressing and substantial objective, since
infringements upon freedom of expression should only be allowed where
the object of the law was to restrict expression that might be harmful
to its audience or to restrict expression to a vulnerable group. TCI
noted that past cases that upheld freedom of expression infringements
included cases that dealt with obscene materials,32
child pornography,33
defamatory statements,34
and the protection of children from the effects of advertising
(Irwin Toy). TCI submitted that there was nothing
inherently dangerous about the content of the restricted expression and
that there was no group whose protection in this manner could be
economically justified; rather, the objective was to protect the
economic interests of competitors from the full effects of competition. |
69. |
TCI submitted that the extension of the
winback rule to VoIP services unnecessarily aided the entry of cable
companies and access-independent VoIP providers. TCI submitted that
promoting and preferring the interests of cable companies, foreign VoIP
providers and domestic VoIP providers at the expense of customers was
not a pressing and substantial objective that justified the infringement
of a fundamental freedom protected by the Charter. |
70. |
TCI submitted that
the winback rule actually inflicted harm on the audience. TCI argued
that because certain former ILEC customers were not able to be reached
by the ILEC in a direct manner, the winback rule restricted the ability
of customers to compare offers in the market between competing
providers. TCI also argued that because information on competing offers
was restricted, competitors were shielded from the full effects of
competition. TCI submitted that this distortion of the competitive
market could serve to maintain prices at levels above what might prevail
in a fully competitive market, to the detriment of customers and the
competitive process. |
|
Respondents |
71. |
The CCTA argued that the objective of the
Commission's winback restrictions in the local exchange market was
first and foremost to promote sustainable facilities-based competition
in this market, as described most recently in Aliant Telecom Inc.'s
request for interim relief with respect to the local winback rule
and wireline promotion rules, Telecom Decision CRTC 2005-53,
14 September 2005 (Decision 2005-53).
The CCTA submitted that the Commission's objective had been stated
as precisely and specifically as possible, and that contrary to the
claims of the Companies, other factors cited by the Commission in
its previous deliberations on the winback restrictions did not revise
or replace this objective. The CCTA further argued that the Commission's
references to factors such as the establishment of a stable customer
base simply described outcomes that were consistent with the achievement
of sustainable competition. In the CCTA's view, the Commission's
modifications to the winback rule over the years were in response
to the ILECs' opportunity and incentive for anti-competitive behaviour.
The CCTA submitted that the pressing and substantial objective of
the winback rule was also borne out by the evidence on the state of
competition in the local exchange market, which showed that competition
in the local exchange market remained weak, particularly in the residential
segment. |
72. |
The CCTA also submitted that the contextual
approach applied in RJR-MacDonald, Thomson Newspapers,
Sharpe and Butler required that the Commission take
note of the winback rule's objective in the larger context of the
objectives in section 7 of the Act. Citing Decisions 94-19
and 97-8, the
CCTA argued that all aspects of the framework for local competition,
including the winback rule, must be read in conjunction with and considered
integral to the objective of a competitive market for local telecommunications
services and that, without rules supporting competitive entry, local
competition could never take root. |
73. |
According to MTS Allstream/Call-Net, the
overriding purpose of the winback rule was to promote the very values
that the Companies claimed underlie the expression at issue: informed
customer choice and competition. Citing section 7 of the Act and the
Order in Council, MTS Allstream/Call-Net submitted that Parliament and
the Government of Canada had mandated that it was in the best interests
of all Canadians to have a competitive structure for the
telecommunications sector and, on this basis, that the objective and the
concerns addressed by the winback rule were both pressing and
substantial. |
74. |
According to MTS Allstream/Call-Net, the
winback rule addressed the ILECs' actual and potential abuse of their
dominance and incumbency advantages, and the effect of such abuse on
competition. MTS Allstream/Call-Net submitted that ILECs provided local
phone services to every subscriber in their serving areas and, as a
result, had extensive information about their customers' needs, habits
and buying patterns, unparalleled brand recognition and customer
relationships. In MTS Allstream/Call-Net's view, these advantages
combined to give ILECs both the incentive and ability to preempt or
thwart the development of competition through the use of winbacks. |
75. |
MTS Allstream/Call-Net included a table
showing competitors' shares of total local lines for each of the
residential and business markets between 1999 and 2003 in support of
their argument that competition had barely progressed in the local
residential market and had progressed slowly in the business market
since the winback rule was first imposed in 1998. The table shows that
as of 2003, the incumbents retained 98 percent of total local lines in
the residential market, and almost 89 percent of local lines in the
business sector.35 |
76. |
MTS Allstream submitted that although VoIP
might be a new technology, this did not change the fundamental nature of
the speech at issue, which was commercial speech, and therefore did not
materially alter the constitutional analysis. |
77. |
MTS Allstream submitted that Bell Canada's
argument with respect to VoIP service was misplaced for several reasons.
Firstly, because the central finding of the VoIP decision was that local
VoIP and local circuit-switched voice services constituted the same
market, MTS Allstream submitted that allowing the Companies to attempt
to win back customers for VoIP services rather than for circuit-switched
voice services would be not only inconsistent with this finding but
virtually impossible to implement. Secondly, MTS Allstream submitted
that, just as in the local circuit-switched voice services market, the
winback rule did not prevent the Companies from disseminating
information in any number of ways to all its current customers directly
(which included over 97 percent of the market for local residential
services), and to all its current and potential customers through mass
media and marketing to the general public. Thirdly, MTS Allstream
submitted that the very fact that customers had switched to a competitor
for VoIP services indicated that they were aware that they had a choice.
Finally, MTS Allstream submitted that it was absurd to argue, as the
Companies did, that it was now more important than ever for consumers to
receive communications of all types, including direct communications
from ILECs, about VoIP services, when Bell Canada was the only ILEC
providing any "so-called" VoIP service at all at present. MTS Allstream
argued that there was also no evidence that the failure of other ILECs
to provide VoIP services was connected to the existence of the winback
rule. |
78. |
QMI submitted that the purpose of the
winback rule was not to protect competitors, but to promote local
competition by preventing the ILECs from undermining the ability of
competitors to build stable customer bases. In QMI's view, the character
of the competitor was irrelevant, as competition could not evolve if
competitors, of any type, were unable to build an economically viable
base of local telephony customers. |
79. |
QMI submitted that from the perspective of
the pressing and substantial purpose test, the application of the
winback rule to VoIP services added no new dimensions to the issues and
no new weight to the claims of Bell Canada and SaskTel. |
80. |
According to QMI, the reason that
Bell Canada and SaskTel objected so vigorously to the winback rule was
because it worked. QMI submitted that in a situation where an ILEC could
focus its resources on a very small percentage of customers, while its
competitors must market to virtually everyone in the market, the ILEC
had a significant advantage. QMI argued that the winback rule nullified
that advantage and established a much more level playing field. QMI
submitted that the Companies wanted to regain the marketing advantage
that went with their market dominance by eliminating the winback rule.
QMI submitted that this fact, in and of itself, demonstrated that the
winback rule met the pressing and substantial purpose test. |
81. |
Rogers submitted that Bell Canada's own
responses further confirmed that it sought the elimination of the
winback rule so that it could attack new entrants' customers directly
and with greater success; and that it would have had significantly
greater success in preventing new entrants from gaining and/or retaining
customers but for the winback rule. Rogers submitted that the ILECs'
evidence strongly supported its position that the objective of the
winback rule – to facilitate competitive entry and promote sustainable
and enduring local competition in the face of the ILECs' market power
and incumbency advantages – remained as pressing and substantial now as
when the winback rule was first established. |
82. |
Rogers submitted that once it was accepted
that there was no distinction between the markets for VoIP services and
for circuit-switched services as far as competition and regulation in
the market for local services was concerned, then the ILECs must not be
allowed to use VoIP service to circumvent the goal of the winback rule. |
83. |
MTS Allstream and QMI submitted that
Bell Canada's submissions regarding the survey results of the Ipsos-Reid
Report purporting to demonstrate that a majority of Canadians were
opposed to the application of the winback rule to VoIP local services
were irrelevant and should be disregarded by the Commission.
MTS Allstream and Rogers argued that the survey results were flawed,
because had the survey respondents been advised clearly that VoIP was
only one way of providing local service in a market in which Bell Canada
still retained more than 95 percent market share, and had the objective
of the winback rule been explained to the survey respondents in context,
their responses would most likely have been different. Rogers submitted
that it was notable that, notwithstanding the flaws in the survey, some
36 percent of the survey respondents still believed that the winback
rule should apply to the ILECs' VoIP services. Rogers further submitted
that the survey did not solicit consumers' views about the relationship
between the winback rule and receiving information about VoIP
technology; rather, the respondents were asked whether they thought
prohibiting Bell Canada from offering them promotions to win them back
from a competitor was bad for them as consumers. |
84. |
EastLink submitted that the winback rule
was an important and necessary factor in reaching the Commission's
objective of sustainable facilities-based competition. |
85. |
The Coalition submitted that the winback
rule, as it applied to local business services, served no legitimate
public policy purpose, as it denied businesses the information they
required to make the most appropriate choices regarding their
telecommunications services. |
|
The Companies' reply |
86. |
According to the Companies, the winback
rule paternalistically assumed that customers who were contacted
directly by their former ILEC would "forget" their reasons for switching
and would be incapable of assessing whether their experience with the
CLEC had been long enough to decide whether to remain with the CLEC. The
Companies submitted that Thomson Newspapers rejected similar
assumptions about the inability of Canadian voters to assess surveys
published in the three days prior to an election and held that such
assumptions did not meet the pressing and substantial test.36 |
87. |
The Companies further submitted that it
contradicted the essence of competition to protect a competitor from
market pressures to innovate, market and deliver high quality services
while working to establish its brand and customer loyalty. |
88. |
The Companies argued that the Commission
had emphasized repeatedly since Decision 94-19
that market share was not a determinative criterion upon which to
determine whether a market was truly competitive. The Companies submitted
that a Charter infringing measure that purported to deliver "stable"
market share, in the hope that this would promote competition, when
the Commission itself had downplayed the importance of market share
as a measure of effective competition, could not be a pressing and
substantial purpose. The Companies further noted that there was no
evidence on the record indicating whether any of the Respondents would
be financially viable or sustainable or not, absent the winback rule. |
89. |
The Companies argued that the purpose of
inhibiting direct communications between ILECs and their former
customers to enable CLECs to build a stable customer base in the local
wireline market could only be a pressing and substantial purpose if it
were consistent with the purposes of the Act as a whole.37
The Companies argued that prohibiting consumers from receiving true,
non-misleading information about their communications options, solely to
prevent them from making an informed decision to purchase local
telecommunications services (or, in the case of residential customers,
any services) from an ILEC, undermined the policies set out in the Act,
and as such, were inconsistent with the purposes of the Act, and hence
could not advance a pressing and substantial purpose sufficient to
justify the violation of a Charter right. |
90. |
The Companies noted QMI's assertion that
the winback rule had a pressing and substantial objective because it
nullified the ILECs' advantage of having to market to too few
subscribers, whereas CLECs must market to too many. The Companies
submitted that this argument conveniently ignored the fact that it was
much more efficient for competitors to advertise broadly through the
mass media than it was for ILECs to narrowly tailor the message
individually and directly to a segment of the market. |
91. |
The Companies submitted that the CCTA was
incorrect both in law and in fact when it cited Decision 2005-53
and asserted that the Commission's objective underlying the winback
rule was to promote sustainable facilities-based competition in this
market. The Companies submitted that the Commission's restatement
of the purpose in Decision 2005-53
was not made in the context of the Application or the proceeding to
further extend, vary or interpret the application of the winback rule;
rather, that Decision served to deny Aliant Telecom's application
for relief from the application of the winback rule in its territory.
The Companies submitted that the Court had repeatedly warned against
the inappropriate shifting of purposes, particularly in circumstances
where the nature of the rule had not changed, as was the case in Decision
2005-53.38 |
92. |
In the Companies' view, there was no
evidence that CLECs and new entrants were not economically viable or
sustainable to justify the infringement of ILECs' constitutionally
protected rights to directly communicate messages regarding their local
and, in the case of residential subscribers, any other services, and of
customers' right to receive such messages. The Companies argued that
there was no evidence that the winback rule promoted sustainable
competition. |
93. |
The Companies submitted that the
Respondents had relied exclusively upon market share and churn evidence
as proof of the pressing and substantial purpose of the winback rule.
The Companies suggested that this evidence was irrelevant because: i)
market share data alone told nothing about the state of competition; ii)
the relevant market had not yet been defined; iii) the relevant indicia
to determine the level of competition in a market had also yet to be
defined; iv) the appropriate purpose of the "pressing and substantial
test" was the promotion of stable customer bases, not the promotion of
competition; and v) evidence of churn told nothing about whether the
defined mischief was pressing and substantial. |
94. |
The Companies further argued that while the
Respondents submitted that their churn data indicated that churn might
have declined as the winback rule had changed and lengthened, this data
might equally indicate that churn levels were declining as the quality
and value of the Respondents' services increased over time. In the
Companies' view, the data was unclear because it did not appear to track
churn according to the service provider to whom the churning customer
migrated. The Companies maintained that churn rates did not tell whether
customers had a sufficient period to evaluate the Respondents' services;
churn data did not indicate whether the Respondents' subscriber bases
were stable, whether they would become more or less so, or whether at
the current levels of churn their telecom businesses were sustainable. |
|
|
95. |
As indicated earlier, it is necessary under
the Oakes test to demonstrate that the objective of the winback rule is
pressing and substantial. For the reasons outlined below, the Commission
considers that the objective of the winback rule is pressing and
substantial. |
96. |
As set out above, the Commission's local
competition framework was established to foster sustainable
facilities-based competition, which the Commission considered would best
promote greater choice for consumers of local exchange services. The
competition framework addressed the numerous incumbency advantages
enjoyed by the ILECs by virtue of their having been monopoly local
service providers. These advantages related to the ILECs' ownership and
control of ubiquitous networks – connected to virtually every residence
and business in the ILECs' respective territories – and the ILECs'
long-standing relationships with almost all local exchange service
consumers. The Commission adopted measures that would address these
barriers to competition in a manner that would afford all participants a
fair opportunity to succeed, or fail, based on their efforts. |
97. |
The Commission considers that in
identifying the specific objective of the winback rule, it is helpful to
identify, through a review of the Commission's decisions, the specific
ILEC advantage(s) or competitive barrier(s) that the winback rule was
designed to address. |
98. |
In the Winback Letter, the Commission
determined that the winback rule would facilitate CLEC entry into the
local exchange services market and prevent the ILECs from winning back
customers through their control of, and access to, customer-specific
information, such as leased loops, directory listings, and 911
information. |
99. |
In Decision 2002-1,
the Commission expanded the winback rule to cover all services for
residential customers, in response to the increasing importance of
bundled offerings. In that Decision, the Commission reiterated that
without the winback rule, the ILECs would be able to win back customers
because they control and have access to customer-specific information. |
100. |
In Decision 2004-4,
the Commission extended the no-winback period with respect to residential
customers from three to 12 months, in response to the slower
than anticipated emergence of competition in the local PES market.
The Commission noted that the vast majority, if not all, of a CLEC's
customers would be former ILEC customers, and that as a result, an
ILEC would have knowledge of the customer's telecommunications needs,
preferences and calling patterns, which would give the ILEC an advantage
when targeting winback activity to that customer. |
101. |
Finally, in Decision 2005-28,
the Commission held that the winback rule would also apply to local
VoIP service. The Commission considered that, absent the winback rule,
the ILECs could use the same incumbency advantages to win back
local VoIP customers as they could use to win back PES customers.
Specifically, the Commission considered that since most local VoIP
customers would be former ILEC PES customers, the ILECs would have
knowledge of the customers' needs, preferences and calling patterns. |
102. |
The Commission finds that while it has
continually adapted the winback rule in response to the dynamics of the
marketplace, the specific underlying objective of the winback rule that
has consistently been identified relates to the incumbency advantages
that ILECs have by virtue of being the former monopoly provider, and in
particular, their control of, and access to, detailed customer-specific
information concerning almost all local exchange service customers. In
imposing the winback rule, the Commission's specific objective is to
prevent the ILECs from deriving an unfair or undue competitive
advantage, or benefiting from an unfair opportunity, arising from this
enhanced ability to directly communicate with competitors' customers for
winback purposes. The type of direct communication in question deprives
CLECs of a fair opportunity to retain customers. Absent the winback
rule, ILEC winback activity would inhibit the development of sustainable
facilities-based local competition, and undermine the Commission's
overall objective of promoting greater choice for consumers of local
exchange services, consistent with the telecommunications policy
objectives in section 7 of the Act. |
103. |
The Companies' understanding of the
objective of the original winback rule, as being focused on the winning
back of customers before local service is effectively transferred, is
incorrect. The Commission finds that while it did evoke the possibility
of customer repatriation by the ILEC during the period of customer
migration to the CLEC, the Commission's concern was not limited to the
period of time before the transfer is complete, which is evident given
that it established a three-month no-winback period from the outset of
the adoption of the winback rule in the Winback Letter. |
104. |
The Commission notes the submission of several
of the parties that in Decision 2004-4,
in which the Commission extended the no-winback period for residential
customers from three to 12 months, its stated rationale was that
"sustainable competition can only be achieved if CLECs have the
opportunity to develop a stable customer base", and that "if
a CLEC is to retain customers and build a stable customer base, it
must have a reasonable opportunity to demonstrate the quality and
reliability of its services." |
105. |
In Decision 2004-4,
the Commission accepted Call-Net's evidence that customer churn increased
when ILECs were allowed to contact local customers, and that customer
churn decreased after a customer had received service from Sprint
Canada for a year or more. The Commission found that the extended
winback rule would serve to prevent the ILECs' undue or unfair competitive
advantage with respect to their use of customer-specific information
when targeting former customers after the expiry of the three-month
no-winback period. |
106. |
The Commission finds that allowing CLECs to
develop a stable customer base, and affording them an opportunity to
demonstrate the quality and reliability of their services, while
important to furthering the Commission's general objective of
facilitating sustainable competition, did not supplant the specific
objective of the rule. |
107. |
The Commission notes the Companies' argument
that it was inappropriate for the Commission to rely on market share
to justify the pressing and substantial nature of the winback rule,
because the Commission itself had downplayed the importance of market
share evidence as a measure of effective competition. The Commission
notes that at the time of the adoption of the winback rule, there
was not, in effect, any competition in the residential market, and
competition in the business market had only just begun to emerge.
The Commission has found that it is only recently that the market
realities are beginning to evolve and that competition is increasing
more rapidly. To address this development, in Forbearance from
regulation of local exchange services, Telecom Public Notice CRTC 2005-2,
28 April 2005, the Commission initiated a proceeding to determine
the framework, including the criteria, for forbearance from the regulation
of residential and business local exchange services. The Commission's
determinations in that proceeding are set out in Decision 2006-15
issued today. |
108. |
In Decision 2006-15,
the Commission notes that the local exchange services market
is rapidly evolving, that more and more Canadians have competitive
options available to them for local exchange services, and that hundreds
of thousands of Canadians are choosing those competitive options.
Consequently, in Decision 2006-15,
the Commission has decided that the 12-month no-winback period for
residential customers is no longer appropriate. The no-winback period
has accordingly been reduced to three months. The winback rule
will be removed completely in forborne markets. In addition, prior
to forbearance, an ILEC will be able to apply to have the winback
rule removed completely if certain criteria are met. |
109. |
The Commission notes the disagreement
between the parties as to the proper conclusions to be drawn from the
survey data presented in the Ipsos-Reid Report. |
110. |
The Commission notes the following question
that was posed to survey respondents: |
|
Question: "If you were to switch your local telephone service to a
competitor's VOIP service, the CRTC currently prohibits traditional
telephone companies from contacting you for one year to offer you
special promotions or offers on any service they provide and to
encourage you to switch back. Thinking about your interests as a
consumer, do you believe this is a good or bad policy?"39
|
111. |
According to the Ipsos-Reid Report, 64 percent
of the 1,200 survey respondents answered that they considered this
to be a bad policy, while 33 percent of survey respondents regarded
it as a good policy. In contrast to the Commission's conclusion in
Decision 2004-4 that the potential
harm to the ILECs' former customers in not receiving direct winback
communications would be outweighed by the overall benefit to all consumers,
Bell Canada argued that its survey was not limited to its former
customers, and that its results therefore reflected the views of all
Canadians. Bell Canada argued that these results refuted the
Commission's initial assessment of the winback rule's underlying purpose
and demonstrated that restricting Canadians from receiving direct
communications that helped make them more informed consumers was no
longer a pressing and substantial purpose. |
112. |
The Commission considers that the question
lacks clarity and fails to provide adequate context. As noted by QMI,
the above survey question did not focus exclusively on the winback rule,
but also referred to special promotions and offers. Accordingly, the
Commission finds that it is not possible to identify the issue to which
the survey respondents were reacting when they provided their views.
Therefore, the Commission concludes that it would be inappropriate to
draw any conclusions with respect to the survey respondents' views of
the winback rule, based solely on the above question. |
113. |
Even if it were to accept that only
33 percent of consumers support the winback rule, the Commission notes
that in adopting the winback rule, it had to weigh any potential
short-term benefit to former ILEC local exchange service customers of
receiving direct ILEC winback communications during the no-winback
period, with the long-term benefit to all consumers of ultimately having
a competitive local exchange market that would provide greater choice
for all consumers in services and service providers. |
114. |
With regard to the argument by certain parties
that the extension of the rule to VoIP providers did not relate to
a pressing and substantial objective, the Commission notes that in
Decision 2005-28, it considered
that in determining the appropriate regulatory framework for local
VoIP services, the issue was not the technology being used, but the
nature of the service being provided. The Commission found that local
VoIP services are close substitutes for circuit-switched local exchange
services, and therefore are part of the same relevant market as circuit-switched
services. As a result, the Commission found that the same potential
for anti-competitive conduct by ILECs arose in the winning back of
local VoIP customers as in the winning back of circuit-switched local
exchange services customers. |
115. |
Given its determinations in Decision 2005-28,
the Commission concludes that mitigating the ILECs' enhanced
ability to target former local VoIP customers for winback purposes
is as pressing and substantial an objective as it is in the circuit-switched
local exchange services market. |
116. |
The Commission notes the ILECs' argument
that the application of the winback rule with respect to former ILEC
customers who have switched local exchange service to cable companies
could not relate to a pressing and substantial objective, given the
cable companies' tremendous resources and their status as incumbents. In
this regard, the Commission notes that while the cable companies may
have long-standing relationships with many of the same customers as the
ILECs, these relationships are predominantly based on the provision of
broadcasting services. The Commission notes that cable companies have
little, if any experience in providing local exchange services to their
customers. Cable companies that provide local exchange services are new
entrants and, as such, are subject to the regulatory framework
applicable to CLECs. |
117. |
In light of all the foregoing, the
Commission concludes that the winback rule's specific objective relates
to the pressing and substantial concern of preventing the ILECs from
unfairly using their enhanced ability to directly communicate with
competitors' customers for winback purposes, which deprives CLECs of a
fair opportunity to retain customers. In so doing, the winback rule
furthers the wider pressing and substantial objective of promoting
greater choice for consumers of local exchange services by allowing for
sustainable facilities-based local competition, consistent with the
telecommunications policy objectives in section 7 of the Act. |
|
|
|
|
|
Positions of parties
|
|
The ILECs |
118. |
The Companies submitted that the Commission
had no reasonable basis on the evidence tendered for concluding that the
winback rule would achieve the stated objective. The Companies argued
that the mischief that the winback rule was originally intended to
remedy was the potential for ILECs to win back customers before service
was transferred, because ILECs controlled and had access to
customer-specific information. The Companies further submitted that
there was no connection between the prevention of this mischief and the
winback rule, which primarily targeted ILEC conduct after that
problematic period. |
119. |
The Companies pointed to evidence on the
record of Decision 2004-4 demonstrating
that winback activities were not the cause of CLECs' slower than predicted
market entry. The Companies argued that even the statistics cited
by Call-Net showed that the majority of Call-Net customers who discontinued
their Call-Net service did so for reasons unrelated to Bell Canada's
winback activities. The Companies submitted that Call-Net's own statistics
showed that, in most cases, customers who left its service did so
during the first three months after switching, while winback
activity was prohibited. The Companies submitted that customers generally
left Call-Net for reasons unrelated to winbacks, likely related to
quality of service or pricing. |
120. |
The Companies submitted that Rogers
conceded in its response to interrogatories in this proceeding that of
the top five reasons identified by its customers for discontinuing their
service with Rogers (whether it be within 12 months or after), three
involved poor service quality, with the other two relating to price and
the customer wanting high-speed Internet service. The Companies
submitted that all five of these reasons could be viewed as customer
dissatisfaction with Rogers' overall value proposition. The Companies
argued that these survey responses demonstrated that providing a CLEC
with a 12-month reprieve from ILEC winback activity did not enable a
CLEC to demonstrate the quality and reliability of its services.
Instead, Rogers continued to experience churn, notwithstanding the
12-month no-winback period. The Companies argued that the winback rule
therefore only served to deny dissatisfied customers the benefit of
information received via direct ILEC winback contact. |
121. |
The Companies noted that according to
Rogers' own evidence in its response to interrogatories, the greater
proportion of its customers migrated to a competitor during the first
three months of service. The Companies argued that this evidence
demonstrated that most customers only required between one day and
three months to make an informed judgment as to the value proposition.
In the Companies' view, this demonstrated, at a minimum, that any
no-winback period longer than three months was unreasonably long. |
122. |
TCI submitted that as the result of the
evolution of the telecommunications market, ILECs offered many services
on a unique basis, without the need for the customer to purchase local
service. TCI argued that the continued inclusion of the expanded list of
services beyond local service therefore had no connection to the
facilitation of entry into the local market. |
123. |
TCI argued that protecting incumbent cable
companies had no rational connection to nurturing CLEC local entry, in
light of the Commission's extension of the winback rule to VoIP
services. TCI submitted that cable companies had their own
infrastructure to deliver VoIP, independent of the ILECs' facilities,
and already had stable customer bases from their incumbent cable
offerings. |
124. |
TCI argued that constraining the ILECs from
communication with former customers regarding bundled offerings was not
rationally connected to facilitating local entry, because all major
providers now offered some sort of bundled offering to their customers. |
125. |
Aliant Telecom noted the CCTA's submission
that the effect on its members of eliminating the winback rule would be
an increase in churn. Aliant Telecom argued that this missed the point.
Aliant Telecom submitted that in order for there to be a rational
connection under section 1 of the Charter between the objective
(fostering stable customer bases and sustainable competition) and the
Charter-impairing measure, the latter had to be shown to promote the
former. Aliant Telecom noted that nowhere did the CCTA state that in a
world without winbacks, any of its members would be economically
unviable. Aliant Telecom submitted that the Respondents had failed to
prove that winback restrictions would lead to sustainable competition.
Aliant Telecom further submitted that the Commission had not yet defined
what sustainable competition was; therefore, without knowing how to
measure a successful objective, it was impossible to establish an
effective and minimally harmful measure to reach that objective.
Aliant Telecom argued that for these reasons, the Respondents failed to
prove that the imposition of winback restrictions on the ILECs was
rationally connected to the objective of fostering competition and
ensuring a stable competitor customer base. |
|
Respondents |
126. |
MTS Allstream/Call-Net submitted that there
was a rational connection between the winback rule and the goal of
increased customer choice and sustainable competition because the
winback rule was aimed at the problem of market dominance by the ILECs
and was intended to facilitate customer choice and competition.
MTS Allstream/Call-Net referred to evidence in the proceedings dealing
with the winback rule to show the weak state of competition, as well as
the impact of ILEC winbacks on competition, which was demonstrated most
clearly in statistics showing that churn increased with winback
activity. MTS Allstream/Call-Net also referred to evidence showing that
customer churn was costly for new entrants, as marketing and customer
provisioning expenditures increased the cost base without a
corresponding increase in customers or revenues. MTS Allstream/Call-Net
argued that this resulted in more time required for recovery of costs
from new customer acquisition. |
127. |
MTS Allstream/Call-Net submitted that while
churn rates still rose when an ILEC targeted a competitor with winback
activity, the overall churn rate of competitors had clearly decreased as
a result of the winback rule and other competitive safeguards imposed by
the Commission. |
128. |
In response to the Companies' argument that
the Commission was managing rather than facilitating competition,
MTS Allstream/Call-Net submitted that the role of the Commission was to
mediate among competing groups and interests. MTS Allstream/Call-Net
argued that the Commission had implemented and extended the winback rule
based on evidence respecting the state of the market and subscriber
churn, as well as its knowledge of and expertise in the industry in the
Canadian context. MTS Allstream/Call-Net submitted that all of these
factors showed a rational connection between the purpose of the
restriction and the means adopted to effect it. |
129. |
The CCTA argued that it was unsurprising
that the record of Decision 2004-4
showed customers leaving Call-Net for reasons unrelated to winbacks,
since the winback rule had been in place since 1998. The CCTA argued
that this evidence nonetheless showed the enhanced susceptibility
of new CLEC customers to offers from the ILECs during the time that
the customers were evaluating the quality of CLEC services, and that
the objective of fostering competition was accordingly logically furthered
by the winback rule. |
130. |
Rogers submitted that the winback rule was
squarely aimed at ensuring that new entrants had a fair opportunity to
gain and retain customers in the face of the ILECs' 100 years of
monopoly and incumbency advantages, and their proven incentives and
ability to retain market share. Rogers further submitted that the
Commission's most recent monitoring report revealed that new entrants
had yet to make any significant headway in gaining and retaining
customers. Rogers argued that the ILECs' as well as Rogers' responses to
interrogatories further established that the winback rule had been very
instrumental to the market share that competitors had gained so far,
albeit a modest market share. |
131. |
With regard to the Companies' argument that
Rogers' survey of former customers demonstrated that those customers
left Rogers as a result of its poor quality of service and overall value
proposition, and not because of winback activity, Rogers submitted that
the factors cited by survey respondents strongly reinforced the rational
connection between the winback rule and facilitating local competition.
Rogers submitted that customers discontinued service because of
incentives offered during the winback call, including: discounts offered
by the ILEC; exploitation by the ILEC of the new entrant's learning
curve in the local market in matters such as provisioning and billing;
unfair and illegal restrictions on the customer by the ILEC; or outright
delay in service activation, customer cut-over, etc. Rogers argued that
its evidence showed that, during their early tenure, customers were more
vulnerable and more likely to respond positively to an ILEC's winback
call in which any of the factors listed above was used as a winback
incentive by the ILEC. Rogers submitted that the purpose of the winback
rule was to ensure that the competitor was able to establish a more
solid relationship with the customer so that if, at the expiry of the
no-winback period, the ILEC came calling, the customer could make a
decision based on a fair comparison of the competitor's offer versus the
ILEC's. |
132. |
With regard to the Companies' argument that
Rogers' evidence showed that customers were most vulnerable to churn in
the early tenure (three months), and therefore did not require a
one-year period to assess the quality and reliability of the company's
services, Rogers submitted that from the point of view of rational
connection, if customers were most vulnerable to churn in the first
three months, it followed that prohibiting ILEC winback calls for any
period beyond the initial three months would ensure that ILECs did not
take advantage of that vulnerability. |
133. |
Rogers submitted that Bell Canada itself
had argued in support of the winback rule in the broadcast distribution
undertaking (BDU) market in order to promote a more competitive market,
and had consistently opposed the elimination of the rule in that market.
Rogers argued that it was not open to Bell Canada to assert the rational
connection between the winback rule and competition only when it
favoured its interests. |
134. |
With respect to the Companies' arguments
regarding Rogers' customer survey, QMI submitted that it was precisely
because of the winback rule that the customers who chose to leave Rogers
had an opportunity to reasonably assess the quality of Rogers' service,
undisturbed by the direct marketing activities of the local ILEC. QMI
submitted that the fact that some customers chose to leave Rogers
indicated that the winback rule was rationally connected, as customers
had the necessary time to decide. QMI submitted that dissatisfied
customers knew that they could return to the ILEC, and that there was
therefore no need for an ILEC to engage in winback activity to identify
this option to the customer. |
135. |
With regard to the Companies' argument that
the decrease in churn over time implied that the 12-month no-winback
period was inappropriate, QMI submitted that all parties had accepted
that churn decreased with the length of time a customer had been with a
service provider. QMI submitted that the relevant question was whether
winback activity affected churn for the full 12-month period. QMI
submitted that the evidence indicated that there was an increase
in churn for customers once the no-winback period ended, which
demonstrated a clear relationship between the presence, or absence, of
the winback rule and the level of churn. QMI argued that there was thus
a rational connection between the rule and the objective. |
|
The Companies' reply |
136. |
The Companies argued that there was no
evidence showing that the existing churn rates had made the Respondents'
business cases viable, or any more viable. The Companies submitted that
the churn rates similarly did not demonstrate any link between denying
customers access to ILECs' winback messages and what constituted a
"reasonable opportunity" for a new customer to experience the
competitors' wares. |
137. |
In response to Rogers' argument that the
Companies should be barred from challenging the rational connection of
the winback rule because Bell Canada had previously adduced evidence
that there was a rational connection supporting the constitutionality of
winback rule in the broadcasting distribution industry, the Companies
submitted that this was irrelevant to this proceeding. The Companies
submitted that the section 1 analysis was necessarily contextual and
fact-specific and that the scope, content and breadth of the BDU winback
rule and the markets in which they operated and the incumbent BDUs to
which they applied, were all fundamentally different from the relevant
local PES markets, which had yet to be defined. |
138. |
The Companies submitted that
MTS Allstream/Call-Net had concluded that the local services market was
not a mature market without providing any evidence of the products,
services and geographic scope of the market. They argued that the
nationally aggregated data used by MTS Allstream said nothing about the
nature and extent of competition. According to the Companies, the
objective of the winback rule, even if it were the promotion of local
competition, could not be rationally connected to the winback rule
because, without first having conducted the market analysis, there was
no evidence, and no common sense, reason or logic, indicating that the
winback rule was required or continued to be required in any particular
local service market. |
|
Commission determinations
|
139. |
The Commission notes that in order to
satisfy the rational connection test, it is necessary to show |
|
… a causal connection between the infringement and the benefit
sought on the basis of reason or logic. To put it another way, [it]
must show that the restriction on rights serves the intended purpose.40
|
140. |
The Commission finds that the evidence on
the record of this proceeding demonstrates that ILECs contact their
former customers to win them back (i.e. former long distance customers,
and, after the applicable winback period has expired, former local
exchange service customers), that winback attempts are successful, and
that CLECs' churn rates are lower during the no-winback period. In
addition, the Commission finds that the evidence demonstrates that
CLECs' monthly churn rates declined during the period where the
Commission continually broadened the scope and duration of the winback
rule. |
141. |
Based on the evidence, as well as common
sense and logic, the Commission finds that the ILECs benefit from their
enhanced ability to win back former local exchange service customers
through direct communications, to the detriment of CLECs, and that the
CLECs' churn rates decrease when the winback rule is in effect. |
142. |
The Commission therefore finds that the
winback rule prevents the ILECs from deriving an undue or unfair
competitive advantage, or benefiting from an unfair opportunity, arising
from their enhanced ability to win back their former local exchange
service customers through direct communications with those customers,
and thereby provides CLECs with a fair opportunity to retain customers.
The Commission therefore concludes that the winback rule serves its
objective. |
143. |
The Commission notes that a number of ILECs
argued that a rational connection could not and had not been shown,
because the Commission had never defined the scope of the local
communications service market in terms of products, services and
geography, nor had it ever attempted to analyze the state of competition
within such markets. |
144. |
The Commission notes that it has analyzed
the state of local competition in a number of decisions. For example,
in Regulatory framework for second price cap period, Telecom
Decision CRTC 2002-34, 30
May 2002, the Commission found that the evidence in that proceeding
showed that facilities-based competition was generally limited to
the business market in large urban areas, and that there was little,
if any, competition of any type in the residential market. Similarly,
in Review of price floor safeguards for retail tariffed services
and related issues, Telecom Decision CRTC 2005-27,
29 April 2005, the Commission found that, in light of the evidence
before it, the state of competition in local markets remained weak.
In Decision 2005-28, the Commission
found that while market share may not always be determinative of market
power, it was clear that the ILECs were the dominant providers of
local exchange services in Canada. The Commission also found that
there was no evidence presented in that proceeding to demonstrate
that market shares had altered materially since the end of 2003
or that the ILECs did not have market power in relation to local exchange
services. |
145. |
The Commission notes that from the time it
was first established, the winback rule was intended to be in force
only for so long as the lack of competition in the local exchange
services market was such that the ILECs could derive an undue or unfair
competitive advantage, or benefit from an unfair opportunity, arising
from their enhanced ability to directly communicate with competitors'
customers for winback purposes. The Commission further notes that
in today's Decision 2006-15, it has determined
the specific conditions that must be met in order for the Commission
to remove the winback rule and to forbear from regulation. |
146. |
In light of all the foregoing, the
Commission concludes that the winback rule satisfies the rational
connection test. |
|
|
|
Positions of parties
|
|
The ILECs |
147. |
The Companies argued that the winback rule
failed the minimal impairment branch because its restrictions on freedom
of expression were not reasonably tailored to its objectives. The
Companies supported their argument, first, by asserting that the winback
rule was part of what was effectively a complete Commission ban on the
advertising of ILEC local service promotions and telecommunications
services because of the effect of the winback rule, in combination with
the Commission not considering applications by ILECs for local exchange
promotions. The Companies submitted that the Court emphasized in
RJR-MacDonald that in the case of a complete ban, the minimal
impairment test would only be satisfied where it could be demonstrated
that only a full ban would enable the government to meet its objective.41 |
148. |
The Companies argued that, even if the
Commission relaxed its suspension of considering ILEC local exchange
services promotions, the winback rule would fail the minimal impairment
branch on its own. The Companies submitted that in the case of
residential customers, the application of the winback rule's 12-month
no-winback period trenched upon expression relating to services that
were forborne from regulation and sufficiently competitive, namely,
Internet, long distance, and cellular services. The Companies argued
that it was unreasonable for the Commission to extend the winback rule
to these services, regardless of whether they were marketed in a bundle
with local services, as it was unnecessary to restrict ILECs'
communications regarding such services in an attempt to limit the
marketing of local exchange services. |
149. |
As another example of the winback rule's
over breadth, the Companies pointed out that retail end-users who did
not subscribe to Bell Canada's local exchange service or who subscribed
to the local service of a competitor that leased the local loop from
Bell Canada could obtain access to Bell Canada's Sympatico Internet
service using the dry copper facility (a local loop not used to provide
local telephone service) to that location, which meant that the winback
of a Sympatico Internet customer would not inevitably lead to
Bell Canada winning back that customer's local service. |
150. |
The Companies submitted that the winback
rule failed to minimally impair section 2(b) of the Charter on the
following grounds: i) through its extension to VoIP services; ii) by
virtue of the new evidence demonstrating the unreasonable length of the
one-year residential embargo period; and iii) through its unnecessary
and unreasonable protection of incumbent cable companies. The Companies
submitted that Rogers' evidence indicating that its highest rate of
churn continued to occur amongst those customers who had been
subscribers for three months or less called into question the
reasonableness of a ban that extended beyond three months – the greatest
proportion of Rogers customers who switched to a competitor did so
within the first three months even with a winback rule in place. The
Companies maintained that this was compelling proof that customers no
longer required anywhere near a full year in which to reasonably
evaluate the quality of the service. |
151. |
The Companies further submitted that
the 12-month no-winback period was four times longer than any
of the winback restrictions implemented by the Commission in respect
of the BDU, high-speed retail Internet and long distance markets.
The Companies also argued that Call-Net's evidence in the Decision
2004-4 proceeding demonstrated
that, in most cases, customers who left
Call-Net's service did so during the first 90 days after switching,
while winback activity was prohibited. |
152. |
The Companies argued that the experience in
the United States with local service winback restrictions only served to
confirm the unreasonableness of the one-year residential embargo period.
The Companies submitted that there were no regulator-imposed
restrictions on ILEC winback activities in the large majority of states.
The Companies submitted that 31 of the 38 states surveyed by Bell Canada
did not have such prohibitions, and in those that did, the ILECs were
prohibited from contacting former customers who switched to an
alternative local exchange carrier for a period of time for purposes of
winning them back. The Companies submitted, however, that the mandatory
no-winback periods were very short, typically seven or 10 days, with the
single exception being a 17-day no-winback period that applied to the
incumbent carrier in Indiana. The Companies submitted that it was also
noteworthy that winback promotions were common in these states once the
no-winback period had expired. |
153. |
The Companies submitted that the Federal
Communications Commission (FCC), while initially prohibiting carriers
from using customer proprietary network information to win back
customers, subsequently reversed itself, maintaining the prohibition
only until customers had actually made the switch to the competitor. The
Companies submitted that the FCC concluded that to maintain the
prohibition after the transfer had taken place might "deprive customers
of the benefits of a competitive market."42 |
154. |
TCI argued that it was difficult for ILECs
to justify using general advertising to reach a small subset of their
audience, i.e. former local customers, given the expense involved and,
accordingly, the practical effect of the winback rule was to constitute
a complete ban on the ILECs from reaching a particular part of their
desired audience for a designated period of time. |
155. |
TCI argued that, contrary to a minimal
impairment upon freedom of expression within the local services market
only, the winback rule reduced freedom of expression to such a degree as
to create a tremendously distorted market for a variety of
telecommunications and broadcasting services, ultimately harming
customers. TCI argued that the winback rule had an overreaching effect
upon the high-speed Internet access market, to the detriment of
customers, because the ILECs could not specifically reach previous local
customers with high-speed Internet access service information and
special Internet promotions. TCI further argued that the winback rule
unnecessarily hamstrung ILECs from marketing their own "triple-play"
bundles to former telephone customers and prevented ILECs from being
able to market stand-alone digital subscriber line or television
services directly to their former telephone customers. |
156. |
TCI argued that all providers, including
the ILECs, were either offering, or planning to offer, new VoIP services
that required demonstration to their customers and, therefore, in the
VoIP world, the winback rule gave one set of entrants a priority head
start in the market at the expense of another set of entrants, the
ILECs. In TCI's view, this was not the same situation as giving a CLEC
an opportunity to show that its resold loop-based service was comparable
in quality to that of the ILEC. |
157. |
TCI argued that cable companies did not
need 12 months to develop a stable customer base in the residential
market. In any event, in TCI's view, the evidence demonstrated that
winback activities decreased in success as the time elapsed after a
customer had been transitioned to a new provider, which occurred well
before 12 months. TCI noted that while its data was founded upon its
experience in residential long distance, it would expect that the
residential local winback success rate would mimic the residential long
distance trend. Accordingly, TCI argued that the effects upon freedom of
expression rights for ILECs and their former customers could hardly be
said to be a minimal impairment. |
158. |
Aliant Telecom submitted that it did not
see how restricting customer access to direct communications about
fast-changing and forborne services benefited customers, nor how it
impaired Aliant Telecom's or customers' Charter rights as minimally as
possible. Aliant Telecom submitted that customers possessed the
intelligence to decide for themselves which service offering gave them
the greatest benefits and the best value, and that, provided with full
information about product offerings, customers would make informed
choices on the products and services that best fit their needs and
circumstances. |
|
Respondents |
159. |
The CCTA submitted that so long as the
winback rule fell within a range of reasonable alternatives, it would
not be considered overbroad merely because of a conceivable alternative
that might better tailor the infringement to the objective.43
The CCTA argued that if the winback rule were any lighter, it might
prove incapable of contributing to the objectives and that, regardless
of whether consumers were contacted directly by the ILEC, all the
information remained freely available and accessible to the customer
through the Companies' other marketing efforts and, if the customer
initiated the contact, directly from the Companies. |
160. |
MTS Allstream/Call-Net argued that the
Companies had overstated the impact of the winback rule. MTS Allstream/Call-Net
submitted that the means chosen did not have to be the least restrictive
possible, but must be reasonable in view of the ends sought to be
achieved.44
MTS Allstream/Call-Net argued that it was unnecessary to consider
the higher standard from RJR-MacDonald to justify a complete
ban, because the winback rule did not constitute a complete ban. MTS Allstream/Call-Net
submitted that the winback rule did not affect the Companies' contact
with existing customers, and that the winback rule's impact was limited
to prohibiting ILECs from contacting those few customers who had decided
to switch but had not yet switched or who had switched during the
preceding three months (in the case of business customers) or
12 months (in the case of residential customers). MTS Allstream/Call-Net
submitted that the winback rule did not restrict the Companies from
marketing messages to these customers through general advertising
or other marketing strategies, nor did the winback rule prevent the
Companies from attempting to win back customers who called to inform
the ILEC that they were planning to change providers. MTS Allstream/Call-Net
also pointed out that, in Decision 2005-25,
the Commission reinstated the ILECs' ability to make local service
promotions available to the general public. |
161. |
MTS Allstream/Call-Net noted the Companies'
argument that, for residential customers, the winback rule infringed
expression with respect to services other than local exchange services.
Citing the Commission's views in Decision 2002-1,
MTS Allstream/Call-Net argued that the impact of this aspect
of the winback rule on the ILECs was negligible at best because so
few subscribers (2 percent nationally) had chosen to switch their
residential local exchange service. MTS Allstream/Call-Net further
argued that ILECs could still try to win back customers who had switched
services other than residential local exchange and could continue
to advertise a variety of their services to the general public. MTS Allstream/Call-Net
submitted that, since customers of competitors were equally exposed
to radio, print and television advertising, there was no basis
for arguing that the winback rule prevented ILECs from marketing their
other services. |
162. |
MTS Allstream/Call-Net submitted that
the rationale in Decision 2002-1
remained well-founded, regardless of the Companies' submission that
customers who did not subscribe to Bell Canada's local service
could access Bell Canada's Internet service by using dry loops.
In MTS Allstream/Call-Net's view, a call by an ILEC to a former
customer respecting any service other than local exchange services
would in all probability lead to a discussion of a customer's overall
telecommunications needs, including local exchange. To MTS Allstream/Call-Net's
knowledge, Bell Canada was the only ILEC providing dry loops
at that time, and changing the winback rule based on the capability
of one provider was, at best, premature. |
163. |
In response to the Companies' submission
that the application periods of the winback rule were too long, MTS Allstream/Call-Net
presented the following arguments. First, in response to the point
that the winback rule was only intended to apply from the time of
the transfer request to the time of the transfer, the Winback Letter
prohibited an ILEC from attempting to win back a customer for three months
after service had been completely transferred. Second, in response
to the point that extending the application period in Decision 2004-4
was unwarranted, the evidence filed by Call-Net, supported by the
submissions of FCI Broadband and Microcell and accepted by the Commission,
showed that competitors who retained customers for one year were more
likely to build a stable customer base. MTS Allstream/Call-Net
submitted that, given that the purpose of the winback rule was to
facilitate competition, it was reasonable, based on this evidence,
for the Commission to decide that competition would be most sustainable
if competitors were given a chance to retain their customer base.
|
164. |
In response to the argument that cable
service providers did not require the winback rule's protection,
MTS Allstream/Call-Net countered that, despite the advantages enjoyed by
cable service providers that independent CLECs might not have, the
underlying purpose of the winback rule applied to cable service
providers. Firstly, an ILEC could glean information in the customer
transfer process and had information about each local telephone
subscriber that no entrant possessed. Secondly, even though they had
infrastructure, the cable companies would also require time to
demonstrate the reliability of their service, which the winback rule was
designed to provide by alleviating high customer churn. Thirdly, while
some cable companies had greater economies of scale than other
competitors, ILECs remained dominant in the local telephony market and
could use their market power to impede competition.
MTS Allstream/Call-Net submitted that the winback rule was appropriately
applied to cable service providers until actual market conditions proved
that they had made genuine inroads in the local residential telephone
market. |
165. |
According to MTS Allstream/Call-Net, the
winback rule was intended to be temporary, and the example of winback
restrictions in the BDU sector showed that, once competition had been
established and the potential for abuse had been sufficiently reduced,
the Commission had proven open to reducing the restrictions.
MTS Allstream/Call-Net submitted that the Commission evaluated the
winback rule on an ongoing basis to ensure that it was appropriate. |
166. |
With regard to the Companies' argument that
the extension of the winback rule to VoIP prevented former customers
from receiving commercial messages from the ILECs about the ILECs' VoIP
services, MTS Allstream argued that the winback rule did not prevent the
Companies from directly disseminating information about their present or
prospective VoIP services to their current customers, nor from marketing
their services to the public at large, which included by necessity
customers of their competitors. MTS Allstream argued that in
this respect, the winback rule was minimally impairing of the Companies'
right to freedom of expression. |
167. |
In response to the Companies' argument that
because VoIP services were a new and recent class of services,
consumers required more direct and timely communications about them,
MTS Allstream submitted that the Companies ignored the central
fact that in Decision 2005-28,
the Commission found that local VoIP was substitutable for local voice
service. MTS Allstream argued that, as a result, local VoIP and
local voice were part of the same market – a market in which the ILECs
remained overwhelmingly dominant. MTS Allstream submitted that
allowing the Companies to solicit customers to return to their local
VoIP services, while retaining the winback rule for local circuit-switched
voice services, would be inconsistent with the Commission's determination
and would create an ill-defined and unworkable technological exception
from regulation. MTS Allstream argued that such an exception
would be nearly impossible to implement, as it would lead to endless
regulatory proceedings to determine where the boundaries of this exception
begin and end, and would be open to widespread abuse and regulatory
gamesmanship on the part of the Companies. |
168. |
With regard to the Companies' argument that
the extension of the winback rule to 12 months was overbroad,
MTS Allstream noted that in an interrogatory, the ILECs were asked to
compare the success of their winback activities targeted at residential
customers upon the expiry of the previous three-month no-winback period
as compared to the 12-month no-winback period. According to
MTS Allstream, it was significant that the ILECs were unable to provide
the requested information. MTS Allstream pointed to Bell Canada and
Aliant Telecom's submissions that in the long distance sector, the
success rate of winbacks declined the longer the period after the
customers switched, and that the evidence provided by the Respondents
confirmed the effectiveness of the winback rule. MTS Allstream argued
that, in sum, this demonstrated that a longer no-winback period
accomplished exactly what it was designed to do: it reduced customer
churn, thus fostering sustainable competition and customer choice. |
169. |
With regard to the Companies' submission of
evidence regarding the regulatory treatment of the winback rule in the
United States, MTS Allstream argued that the evidence was irrelevant to
the Canadian context.45 |
170. |
Rogers submitted that Bell Canada offered
no evidence to support its assertion that reaching former customers
through the general media was becoming less effective. Rogers further
submitted that even if this assertion were accepted, this would not
cause the winback rule to fail the minimal impairment test. Rogers
argued that in Sharpe, McLachlin C.J. explained that to meet the
minimal impairment test, the means chosen need not be the least
restrictive possible, but rather had to be reasonable in light of the
ends achieved.46 |
171. |
With regard to Bell Canada's argument that,
due to the increasing importance of service bundles, the harmful impact
of the winback rule had increased because it prevented the ILECs from
being able to market other forborne services, Rogers submitted that
Bell Canada grossly overstated the impact of the winback rule on its
marketing ability. Rogers submitted that even though the winback rule
prohibited the ILECs from contacting the residential customer for any
service during the relevant period, that customer must nevertheless
subscribe to a competitor's local service in order to be protected under
the winback rule. Rogers argued that this meant that, at most, the
number of customers to whom Bell Canada was prohibited from directly
marketing other services for 12 months was about 2 percent of the total
market. |
172. |
In response to the Companies' submission
that the 12-month prohibition for residential customers was too long,
Rogers argued that Bell Canada's response to interrogatories indicated
that the winback rule had been more effective because it was extended
from three months to 12 months. Rogers referred to Bell Canada's
statement that the success of winback activity inversely correlated
strongly to the duration of the time period between the time the
customer transferred service to a competitor and the time of the winback
contact. Rogers reiterated that for a measure to be minimally impairing,
it need not be the least restrictive possible; it was sufficient if it
was reasonable in view of the ends sought to be achieved. |
173. |
Rogers submitted that all parties were in
general agreement that the winback rule had facilitated new entrants'
ability to gain and retain customers and that the longer the no-winback
period, the greater this benefit. Rogers submitted that Bell Canada's
responses confirmed unequivocally that it would have been able to retain
significantly greater market share but for the 12-month no-winback
period. Rogers submitted that, in short, the pressing and substantial
objective of local competition would have been less successful or an
outright failure but for the 12-month no-winback period. |
174. |
With regard to the extension of the winback
rule to local VoIP services, Rogers submitted that the arguments in
support of the winback rule as it related to PES also applied to local
VoIP services. Rogers added that there was no evidence that the public
required targeted winback offers from the ILECs in order to be informed
about VoIP service and technology. Rogers submitted that the public
appeared to be well informed about the new technology in spite of the
winback rule. |
175. |
EastLink submitted that its responses to
the Commission's interrogatories indicated that bundling of other
services impacted churn of local exchange service back to
Aliant Telecom. EastLink further submitted that today, customers seeking
Aliant Telecom's digital TV service, for instance, must take
Aliant Telecom's High Speed Internet service and that those customers
were more likely to take Aliant Telecom's telephone services as well. |
176. |
With regard to the Companies' argument that
the extension of the winback rule to VoIP services was overbroad, QMI
submitted that to the extent that there was a need for information about
new VoIP services, this need existed for all customers, not just
potential winbacks. |
|
The Companies' reply |
177. |
The Companies submitted that the winback
rule constituted a complete ban of a particular form of ILEC advertising,
i.e. ILEC-initiated direct contact with former local service customers
in respect of attempts to market local service, in person, by mail,
telephone, fax or e-mail. The Companies also
submitted that Decision 2005-25
clearly prohibited ILEC local exchange service promotions that targeted
the customers of the ILECs' competitors, a group that necessarily
included the ILECs' former customers. The Companies argued that, when
read together, Decision 2005-25
and the winback rule prohibited ILECs from engaging in all forms of
contact with their former customers, including direct contact and
mass media based advertising. The Companies argued that the fact that
they might advertise in the general media in no way mitigated the
completeness of the ban on direct marketing. The Companies submitted
that this argument was tantamount to requiring the ILECs to communicate
messages they did not wish to communicate via media that they
did not wish to utilize. |
178. |
The Companies further argued that the
"temporary" nature of the ban did not change its over breadth. The
Companies submitted that the Commission had never considered non-Charter
infringing measures as a means to provide competitors with a "reasonable
period" to demonstrate the quality and reliability of their services.
The Companies argued that Rogers' evidence was that the majority of its
migrations continued to occur amongst customers within their first
three months of service, at a time when these customers were denied
access to direct winback communications from ILECs. In the Companies'
submissions, this evidence confirmed that customers could and did make
up their minds within the first three months of receiving service. The
Companies argued that it was contrary to logic, common sense and the
evidence to suggest that residential consumers were incapable of making
an informed choice about local service providers unless they had first
subscribed to a CLEC's service for a full year. |
179. |
In response to the Respondents' arguments
that the United States evidence was irrelevant in Canada because of the
differences in competitive conditions as between the two countries, the
Companies submitted that their evidence demonstrated that even when
CLECs' share of the local residential or local access services markets
in a state was zero, or otherwise at a very low level, the relevant
state regulatory authority deemed it inappropriate to ever impose a
winback embargo period. |
180. |
The Companies argued that, contrary to the
Respondents' suggestion that the number of people affected by a Charter
violation could be used to water down the Oakes test, the fact that
there were Canadians whose Charter rights were not currently being
violated by the winback rule did not reduce the burden on the
Respondents to establish that it was reasonably necessary to violate the
free speech rights of all the individuals who were affected. In the
Companies' view, the violation of even one individual's free speech
rights placed an onus on the party seeking to uphold that restriction to
satisfy every element of the Oakes test. |
181. |
The Companies asserted that none of the
Respondents' arguments refuted the point that extending the winback rule
to forborne and non-telecommunications services broadened the forms of
protected expression prohibited under the winback rule. The Companies
argued that the fact that cable companies were equally capable of
assembling bundles consisting of the same or comparable services (i.e.,
local and long distance telephony, local calling features, Internet and
broadcast distribution services, and in some cases wireless services) at
competitive prices undermined the Commission's reasons for adopting the
winback rule. The Companies submitted that in
light of these new realities, the concern that the ILECs might once have
had an advantage over competitors when it came to the ability to
assemble bundles containing non-local services as a means to winback
their former local service customers was no longer present. |
182. |
The Companies submitted that the
Respondents offered no evidence that contact regarding any service would
in all probability lead to discussing a customer's overall
telecommunications needs, including local. According to the Companies,
such speculation was not sufficient grounds upon which to ban
Charter-protected speech and ignored the Commission's rationale for
extending the winback rule to Internet service, which was that a winback
of an Internet customer would "also inevitably repatriate the primary
exchange service."47 |
183. |
The Companies argued that the possibility
that the winback rule might be curtailed or eliminated at some time in
the future was irrelevant to the extent to which it infringed freedom of
expression today. According to the Companies, the winback rule had been
in force for over seven years and was intended, among other things, to
foster "sustainable competition" and result in "a stable customer base"
for competitors, terms which had never been defined. The Companies
argued that, as a result, it was unclear what, if any, preconditions
must be met for the winback rule to be relaxed or withdrawn and that, to
the extent the Commission might address the winback rule in the Local
Forbearance Proceeding, the earliest that would take place was in March
2006. |
184. |
The Companies submitted that the
application of the winback rule to protect cable companies further
demonstrated the over breadth of the winback rule. The Companies argued
that it could not be minimally impairing to suppress an important
element of competition, namely the free and timely exchange and receipt
of commercial information amongst ILECs and their former customers, in
order to protect well-capitalized, vigorous competitors, such as the
incumbent cable companies. The Companies submitted that contrary to the
CCTA's suggestion, the purpose of the winback rule was not to counter
anti-competitive targeting by the ILECs, since the Commission's local
promotion and pricing rules provided an adequate safeguard against such
activity. |
|
Commission
determinations |
185. |
The Commission notes that the appropriate
standard by which to assess whether a measure is minimally impairing was
set out by the Court as follows: |
|
[T]he government must show that the measures at issue impair the
right of free expression as little as reasonably possible in order to
achieve the legislative objective. The impairment must be "minimal",
that is, the law must be carefully tailored so that rights are
impaired no more than necessary. The tailoring process seldom admits
of perfection and the courts must accord some leeway to the
legislator. If the law falls within a range of reasonable
alternatives, the courts will not find it overbroad merely because
they can conceive of an alternative which might better tailor
objective to infringement…On the other hand, if the government fails
to explain why a significantly less intrusive and equally effective
measure was not chosen, the law may fail.48
|
186. |
For the reasons outlined below, the
Commission concludes that the winback rule satisfies the minimal
impairment test. |
|
Partial versus complete ban |
187. |
The Commission notes that the Court has
stated that "it will be more difficult to justify a complete ban on a
form of expression than a partial ban[.]"49 |
188. |
The Companies and TCI submitted that the
winback rule constituted a complete ban of a particular form of ILEC
advertising. |
189. |
In the Commission's view, the Companies'
characterization of the winback rule as a complete ban on communications
between ILECs and their former local exchange service customers
artificially defines both the form and the content of the restricted
expression in a very narrow manner. The Commission considers that to
classify the winback rule as a complete ban in this manner would be to
collapse the distinction between what constitutes a partial ban and a
complete ban, as it would fail to take into account the range of ILEC
expression to which the winback rule does not apply. |
190. |
As discussed above, the winback rule only
applies for a specified period of time to direct communications which
attempt to win back former local exchange service customers, for
local services, in the case of a business customer, and for all
services, in the case of a residential customer. |
191. |
The winback rule does not prevent an ILEC
from directly communicating with: |
|
- its current local exchange service customers, including those who
have switched other services to competitors from the ILEC;
|
|
- its former local exchange service customers in relation to any
service that the customer continues to obtain from the ILEC or any
service that the customer had not previously purchased from the ILEC;
or
|
|
- a former local exchange service customer who has called the ILEC
in relation to local exchange service.
|
|
In addition, the winback rule has no effect
on an ILEC's ability to advertise in the general media, on the Internet
or through its retail outlets, or to conduct other marketing activities
that do not involve a direct communication with former local exchange
service customers in which the ILEC attempts to win them back. |
192. |
The Commission notes that in contrast to
situations involving a complete ban dealt with in the case law, where
consumers are deprived of receiving information to make informed
choices, the winback rule only affects former local exchange service
customers during a defined period of time, and furthermore, these
consumers have multiple means by which to obtain information from the
ILECs concerning the services and products the ILECs provide in
accordance with the Act. |
193. |
The Commission notes the Companies' argument
that the winback rule, together with the restrictions on local service
promotions in Decision 2005-25,
constituted a complete ban. The Commission notes that the tariffing
rules in Decision 2005-25 relate
to the specific rate that the ILECs can legally charge for a telecommunications
service and the conditions upon which the Commission would be prepared
to approve a tariff for the service offering, in accordance with sections 25
and 27 of the Act. As such, the tariffing rules are distinct and independent
from the winback rule and, as discussed above, are not at issue in
this proceeding. In any event, the Commission finds that the fact
that these tariffing rules require that the ILECs must make available
and promote equally to all customers within a given rate band any
discounts or other promotional offers that they wish to make available
to competitors' customers within that band, and that any such offering
must meet certain pricing safeguards, do not have the effect of making
the winback rule a complete ban. |
194. |
In light of all the foregoing, the
Commission concludes that the winback rule, being a prohibition that is
limited to certain customers, under certain circumstances, for a certain
period of time, is properly characterized as a partial ban. |
|
Non-impairing
alternatives |
195. |
The Companies argued that the Commission
did not consider non-impairing alternatives to the winback rule. The
Commission finds that no non-impairing alternative to the winback rule
is available that would enable it to achieve the objective of the rule,
given that it is the direct communication between the ILECs and their
former local exchange service customers for winback purposes that gives
rise to the harm that the winback rule has always sought to prevent. |
|
History of the impugned measure |
196. |
The Commission notes that the modifications
in the scope of the winback rule since 1998 reflect its tailoring of the
measure as precisely as possible in the face of changes in the
telecommunications market, for the reasons outlined below. |
|
(i) Extension of the winback rule to
all services – Decision
2002-1
|
197. |
In Decision 2002-1,
the Commission addressed the new circumstances in the provision of
local exchange services as a result of a significant increase in bundled
service offerings. The Commission responded by extending the winback
rule's application with respect to former residential customers to
attempts to win back such customers in respect of any service that
a customer has switched to a competitor. The Commission notes that
there were two aspects to this extension of the winback rule. |
198. |
First, the Commission clarified that an
offer to a former local exchange service customer that involved a bundle
of services which included local exchange service would necessarily
require the customer to switch back to the ILEC's local exchange
service. Similarly, an offer involving a bundle of services that
included services, such as optional local services, that are technically
dependent on the ILEC's local exchange service, would constitute a
winback activity in respect of local exchange service, since acceptance
of such an offer would mean that the customer, for technical reasons,
would be obliged to switch back to the ILEC's local exchange service.
The Commission found that an offer involving a bundle of services that
includes local exchange service or optional local service (or any other
service that, for technical reasons, requires the customer to obtain
local exchange service from the ILEC) would be tantamount to an attempt
to win back local exchange service, since the customer would be required
to subscribe to local exchange service as part of the bundle. |
199. |
The second aspect of this extension was
that it included attempts to win back a former residential local
exchange service customer with respect to any telecommunications service
that the customer had switched to a competitor, even where the ILEC's
offer did not involve a bundle including local exchange service or a
service dependent on local exchange service. The rationale for this
extension was that if a former local exchange service customer who has
also switched other services to a competitor is convinced to switch
their non-local exchange services back to the ILEC, the customer could
reasonably be expected to be won back for local exchange service as
well. |
200. |
The Commission finds that the record of this
proceeding is consistent with its determinations in Decision 2002-1.
The evidence demonstrates that the vast majority of residential consumers
purchase at least one additional telecommunications service from their
local exchange service provider, that a significant majority purchase
two additional services; and that the convenience of dealing with
a single provider, on one bill, is an important consideration for
many consumers. In addition, the Commission notes that it has considered
the ILECs' confidential evidence with respect to the number of services
to which residential customers subscribe when they switch back to
the ILEC from a competitor as well as EastLink's submission that a
loss of a customer for one service typically means a loss for multiple
services. |
201. |
Accordingly, based on the evidence, the
Commission finds that where an ILEC contacts former residential local
exchange service customers in an attempt to win them back in relation to
a non-local exchange service that they have switched to a competitor,
should the customer decide to switch back for the non-local exchange
service, then the customer can reasonably be expected to be won back for
local exchange service as well. |
202. |
The Companies further submitted that the
winback rule extended to forborne and non-telecommunications services
and in this respect was unreasonable. Firstly, the Commission notes that
the winback rule applies only to telecommunications services that a
former local exchange customer has switched to a competitor, and not,
for example, to broadcasting services (unless the non-telecommunications
service is offered on the condition that the customer subscribe to a
telecommunications service). Secondly, as discussed above, if a former
residential local exchange service customer switches back a forborne
service to an ILEC, it is reasonable to expect that the customer will be
won back for local exchange service as well. |
|
(ii) Extension of the winback rule from
3 to 12 months: Decision 2004-4
|
203. |
The Commission notes the Companies' argument
that the Commission's extension of the winback rule to 12 months
with respect to residential customers was overbroad because Call-Net's
evidence in the Decision 2004-4
proceeding demonstrated that in most cases
customers who left Call-Net did so during the first 90 days after
switching. |
204. |
The Commission notes that in the proceeding
for Decision 2004-4, Call-Net referred
to a focus group study that showed that, depending on the month,
between 8 and 34 percent of respondents left Sprint Canada as
a result of phone calls from Bell Canada. Call-Net noted that
the variance in monthly percentages correlated to the level
of Bell Canada's winback activity. The Call-Net evidence in that
proceeding, to which the Companies referred, indicated that churn
increased by 25 percent following the expiry of the then applicable
three-month no-winback period. Call-Net's evidence also indicated
that, once customers had been retained for a period of one year, churn
dropped to 17 percent of the level experienced in the first 30
days after a customer switched to Sprint Canada. In the proceeding
for Decision 2004-4, there was
also evidence of the impact that churn had on Call-Net's costs. |
205. |
The Commission finds that both the ILEC and
CLEC evidence in this proceeding demonstrate that, in general, the
longer the customer remains with the CLEC, the lower the churn rate of
the CLEC and the winback success rate of the ILEC. |
206. |
Recognizing that winback success in long
distance is not necessarily equivalent to winback success in the local
service market, the Commission accepts the Companies' submission that
the "[long distance] data illustrates the point that the success rate of
winback activity inversely correlates strongly to the duration of the
time period between the time the customer transfers service to a
competitor and the time of the winback contact." TCI also noted that it
would expect that the residential local winback success rate would mimic
the similar residential long distance trend experienced by the company. |
207. |
The Commission considers that it would be
difficult to prove conclusively that the churn rate after a 12-month
no-winback period is significantly lower than what the churn rate would
be after a shorter no-winback period. In order to do so, it would be
necessary to isolate the impact of the winback rule from other exogenous
factors that could affect churn rate, such as the particular competitors
in the market at the time; the nature of the competitive offerings, both
in terms of both type of service and pricing; a strike at the ILEC or
the competitor; the level of winback activity; or other circumstances
that could significantly affect customer service in a specific period of
time. |
208. |
Further, the Commission notes that the
specific objective of the winback rule is not to decrease the number of
customers that ILECs win back, nor to ensure that CLECs retain their
customers; rather, it is to ensure that ILECs do not win back customers
as a result of an undue or unfair advantage, or as a result of an unfair
opportunity, and that CLECs have a fair opportunity to retain their
customers. The Commission therefore considers that churn rate data,
while they may provide an indication as to the need for and the
effectiveness of the winback rule, are not determinative of these
issues. |
209. |
The Commission finds, in light of the circumstances
in which the winback rule was extended to 12 months and which
prevailed until recently, that 12 months was a necessary and
appropriate no-winback period in order to obtain the winback rule's
objective. As noted above, in Decision 2006-15,
the Commission has reduced the no-winback period for residential customers
from 12 to three months in light of the new circumstances in
the market. |
210. |
The Companies also argued that there was
no evidence that competitors required 12 months to recover the
costs of acquiring a new customer. The Commission notes, however,
that the winback rule was not extended to 12 months on the basis
that CLECs required 12 months to recover the costs of acquiring
a new customer. Rather, as discussed above, the winback rule in respect
of residential local exchange services was extended on the basis that
competition had emerged more slowly than anticipated, and that the
ILECs derived an undue or unfair competitive advantage, or benefited
from an unfair opportunity, arising from their enhanced ability to
directly communicate with competitors' customers for winback purposes.
The Commission found that an extension to the rule was necessary and
appropriate to help CLECs to have a fair opportunity to retain customers.
In any event, the Commission notes that while no specific cost information
was provided in this regard on the record of this proceeding, the
Respondents have submitted that a longer period of time affords the
competitor an opportunity to recoup more of its initial investment
in acquiring the customer. In Decision 2004-4,
the Commission considered that customer churn is costly to all LECs,
and especially detrimental to CLECs, as they do not have a large stable
base of customers capable of funding their ongoing operations. |
|
The international context |
211. |
The Companies argued that the experience in
the United States with respect to local service winback restrictions
only served to confirm the unreasonableness of the one-year residential
embargo period. The Companies submitted that the majority of states in
the United States had no winback restrictions at all, and that the
no-winback periods in states that did impose winback restrictions were
much shorter than those in Canada. The Companies also referred to an FCC
decision in which the FCC came to different conclusions than the
Commission as to the effect of winback activity on competition. |
212. |
The Commission notes that there is no
consensus among state regulators in the United States as to either the
need for, or the appropriate ambit of, winback restrictions on
telecommunications carriers. The Commission further finds that there is
insufficient evidence on the record to explain why the winback rules
adopted by various state regulators or by the FCC, or the lack of such
rules, is compelling in this proceeding, given the different regulatory
context and state of competition for local exchange services in Canada.
Accordingly, the Commission concludes that the regulatory measures
adopted – or not adopted – by various states in the United States, or by
the FCC, do not carry much weight in assessing the reasonableness of the
winback rule in Canada. |
|
Conclusions |
213. |
In summary, based on the evidence and in
light of the regulatory context in which the winback rule was imposed,
as well as the nature and scope of the infringement on ILECs' and
consumers' freedom of expression, the Commission concludes that the
winback rule impairs freedom of expression no more than is reasonably
necessary to obtain its objective and therefore satisfies the minimal
impairment test. |
|
|
|
Positions of parties
|
|
The ILECs |
214. |
The Companies argued that there was no
proportionality between the deleterious and the salutary effects of the
winback rule, and that the extensions of the winback rule had
significantly increased its deleterious effects, without demonstrably
increasing its salutary effects. |
215. |
The Companies submitted that the extended
winback rule had reduced consumers' access to useful information, which
had inhibited consumers' ability to make informed choices. The Companies
argued that many consumers would avoid switching their services to
competitive LSPs if they knew that this would disqualify them from
eligibility for other promotions. The Companies argued that the extended
restrictions had a deleterious impact upon ILEC marketing in those areas
in which they were most vulnerable to competition, such as Internet,
wireless communications and long distance services. The Companies
further argued that taken as a whole, these deleterious effects were
disproportionate to the salutary effects of the winback rule. |
216. |
The Companies argued that Bell Canada's
decision to cease outbound marketing activity in respect of all services
to small and medium-sized business (SMB) customers who had switched
local service to a competitor was largely attributable to the winback
rule. In its response to interrogatories,
Bell Canada further submitted that the combined effect of the
winback rule, Decision 2005-25's
continuing prohibition on ILECs from engaging in local exchange service
promotions that were directed solely to customers of competitors or
offered only in geographic areas where competitors were providing
services, and Decision 2005-28's
extension of the winback rule to local VoIP service promotions, was
to render it uneconomical for Bell Canada to engage in outbound
marketing activity to SMB customers. These customers continued to
have a high expectation that they would be offered bundles that include
local service and, in order to be encouraged to return to Bell Canada,
these customers demanded, at a minimum, financial or other inducements
to do so, including the waiver of service initiation charges. Bell Canada
submitted that because of these factors, its success rate was "virtually
nil" in winning back SMB customers. |
217. |
TCI argued that the deleterious effects of
the winback rule were so pervasive and substantial that they could not
be judged to be proportionate in their effects. TCI argued that the
winback rule impaired the operation of a competitive local services
market; detracted from the development of VoIP in Canada; damaged the
reputation of the ILECs amongst their former local customers; and harmed
customers and their freedom of expression rights. |
218. |
TCI argued that the Commission's
interrogatories would not provide sufficient evidence for the Commission
to satisfy its onus requirements in justifying the section 2(b)
infringement. |
|
Respondents |
219. |
MTS Allstream/Call-Net submitted that the
winback rule's minor restriction of speech was demonstrably outweighed
by the benefits of facilitating customer choice and competition.
MTS Allstream/Call-Net argued that in order to make informed choices,
customers needed access to information about competitive providers but
did not need contact with the Companies, with whom they were already
familiar and from whom they could receive information through
advertising or by contacting the company themselves.
MTS Allstream/Call-Net submitted that the Companies had provided no
evidence of a deleterious impact on ILEC marketing of competitive
services. |
220. |
MTS Allstream/Call-Net submitted that the
winback rule partially mitigated the Companies' incumbency advantages
and market power, and facilitated genuine competition and customer
choice by allowing competitors to retain customers for either three or
12 months before being subject to winbacks. MTS Allstream/Call-Net
further submitted that a competitive market would result in lower
prices, a wider variety of providers and service offerings, new product
innovation, and long-term economic health. |
221. |
Regarding the Companies' submission that
they had ceased outbound marketing activity for all services to SMB
customers, MTS Allstream/Call-Net noted that the winback rule did not
prohibit the Companies from marketing services other than local exchange
to business customers and that the Commission must not judge the
constitutionality of the winback rule based on the unnecessarily
restrictive implementation of the winback rule by the Companies. |
222. |
The CCTA argued that the Companies provided
neither evidence nor a detailed description of the deleterious effects
of the winback rule on consumers or on ILEC marketing of competitive
services. The CCTA further submitted that there were no grounds on which
the Commission could conclude that the winback rule was deleterious,
much less disproportionately so. |
223. |
Rogers argued that Bell Canada's responses
to interrogatories had not challenged Rogers' submission that the
winback rule did not materially inhibit consumers' ability to make
informed choices. Rogers submitted that consumers did not need direct,
individual and targeted communication initiated by the ILEC in order to
be informed. Rogers submitted that these customers were former customers
of the ILEC and were already familiar with the ILECs' services, and
could still receive information about new products and pricing through
general advertising. |
224. |
QMI submitted that there was a clear
proportionality between the extent of the infringement of freedom of
expression and the benefit achieved by the winback rule in respect of
the development of competition. QMI submitted that the winback rule
promoted competition in local telephony, in accordance with the policy
objectives set out in section 7 of the Act. QMI submitted that the
winback rule implemented the objective of promoting competition
by imposing a minimal constraint on freedom of expression – a
prohibition on ILEC direct communications with former customers for the
purpose of winning back their business. QMI submitted that this
prohibition had the demonstrated result of reducing churn, thereby
helping competitors build economically viable customer bases, which
would enable the development of sustainable competition. |
225. |
QMI submitted that the winback rule did not
restrict in any other way the ability of an ILEC to communicate
information about its services to the public, including potential
winback customers. QMI submitted that the winback rule also did not
prevent competitor customers from asking for such information directly
from an ILEC or from shifting their business back to the ILEC, either
with or without the benefit of additional information. |
226. |
EastLink submitted that the evidence filed
in this proceeding confirmed that the winback rule was proportional to
the Commission's objective of promoting sustainable facilities-based
competition in this market; the winback rule impaired the ILECs' rights
under the Charter as little as reasonably possible; and the salutary
effects of the winback rule overrode its deleterious effects. |
|
The Companies' reply |
227. |
The Companies argued that the Respondents
dramatically understated the deleterious effects of the winback rule
while exaggerating its purported benefits. The Companies argued that the
evidence on the record of harm to customers was clear and
uncontradicted. The Companies submitted that the Respondents had also
failed to account for the harm that the winback rule inflicted upon the
intensity of competition. The Companies argued that in particular, there
was no justification for extending the winback rule to VoIP, which the
Commission had recognized was a separate class of local service by
allowing for the filing of VoIP under separate tariffs. The Companies
further argued that the infringements resulting from the winback rule
applied in respect of services previously found sufficiently competitive
to warrant forbearance by the Commission. In the Companies' view, the
significant and far-reaching harm to consumers and to fair and robust
competition occasioned by the winback rule far outweighed the benefits,
if any, resulting from the rule. |
|
Commission determinations
|
228. |
Under the third and final branch of the
proportionality inquiry, "there must be a proportionality between the
deleterious effects of the measures which are responsible for limiting
the rights or freedoms in question and the objective, and there must be
a proportionality between the deleterious and the salutary effects of
the measures."50 |
229. |
For the reasons discussed below, the
Commission concludes that the deleterious effects of the winback rule
are outweighed by the importance of the winback rule's objective, and
are also outweighed by its salutary effects. |
|
The deleterious effects of the winback rule |
230. |
As discussed above, the winback rule does
not limit the ILECs' ability to advertise any of their services and
products on their websites, through their retail outlets, in the general
media or by means of other marketing activities that do not involve
direct communications with former local exchange service customers in an
attempt to win them back. |
231. |
The Companies argued that general
advertising was increasingly ineffective in inducing customers to switch
back. The Commission finds, however, that the confidential evidence
submitted by the Companies in support of this position is not
persuasive. However, even if there had existed persuasive evidence on
the record that established that general advertising was an increasingly
less effective means for inducing former customers to switch back, the
Commission considers that this factor alone would not be sufficient to
change its conclusion that the deleterious effects of the winback rule
are outweighed by the importance of its objective and its salutary
effects. |
232. |
The Companies also submitted that
Bell Canada had ceased outbound marketing activity for all services to
SMB customers who had switched local service to a competitor because of
the costs of targeted telemarketing and the expectation of most SMB
customers that they would be offered bundles that included local
exchange service. MTS Allstream/Call-Net submitted that the Commission
should view this as irrelevant. |
233. |
The Commission finds, based on the record
of the proceeding, that Bell Canada's decision not to market to SMB
customers only applies with respect to that subset of SMB customers who
have switched all their local lines to a competitor, as Bell Canada
submitted that it continued to telemarket to SMB customers who had
retained at least one local line with Bell Canada. The Commission notes
that Bell Canada did not submit that its decision to cease marketing
activity in respect of services to SMB customers who had switched local
exchange service to a competitor was solely attributable to the winback
rule. The Commission further notes that other ILECs do engage in
outbound marketing of non-local exchange services to SMB customers. In
any event, even assuming that Bell Canada's decision to cease such
outbound marketing was primarily because of the winback rule, the
Commission finds that this factor alone would not be sufficient to
change its conclusion that the deleterious effects of the winback rule
are outweighed by the importance of its objective and its salutary
effects. |
234. |
To the extent that the winback rule
prevents ILECs from being able to target former local exchange service
customers for winback attempts in direct communications with those
customers, the Commission finds that this constitutes both a deleterious
effect on the ILECs and a salutary effect of the winback rule, since it
prevents the ILECs from conferring upon themselves an undue or unfair
advantage, or benefiting from an unfair opportunity, to win back
customers, and thereby provides competitors with a fair opportunity to
retain their customers. Further, the Commission notes that the
deleterious effects on ILECs relate to a relatively small proportion of
their customers: those who have switched local exchange services to a
competitor. By contrast, the salutary effect on CLECs relates to a
large percentage of their customers. |
235. |
With respect to the deleterious effects on
consumers' freedom of expression, as discussed above, the Commission
finds that the winback rule has minimal deleterious effects on the
ability of former ILEC local exchange consumers to make informed
economic choices concerning the ILECs' telecommunications services and
products. |
236. |
The Commission notes the argument made by
TCI that the winback rule ultimately harmed CLECs, because it forced
ILECs to offer artificially low prices in order to induce customers back
after the expiry of the no-winback period. The Commission notes that the
CLECs have not raised this as a concern. The Commission further notes
that during the period when the winback rule will continue to be in
force, ILECs will be required to obtain Commission approval of their
rates for local exchange services, as well as for bundles that include
local exchange services. Accordingly, the Commission cannot conclude
that there is any substantial concern regarding the potential of ILECs'
offering artificially low prices. |
237. |
The ILECs argued that, as a result of the
winback rule, customers were vulnerable to being misinformed about the
ILECs, or were induced into making false and negative assumptions about
the ILECs' interest in retaining their business. For example, SaskTel
related its experience regarding long distance campaigns by competitors
who, SaskTel alleged, misinformed consumers about SaskTel's long
distance services and made false statements about, among other things,
the company's business practices and ownership structure. SaskTel argued
that winback campaigns allowed ILECs to correct these false impressions.
As the Commission has stated previously in this Decision, the winback
rule would not prevent the ILECs from correcting any false impressions
through general advertising or through direct communications that do not
amount to a winback attempt. |
238. |
TCI provided anecdotal feedback from residential
sales channels suggesting that former local exchange service customers
contacted after the 12-month period did not understand why TCI had
not called them during that time, and assumed that TCI did not care
about their business. The Commission notes that in accordance with
Decision 2006-15 issued today, the winback
rule does not preclude ILECs from, for example, sending a card to
former local exchange service customers to express the company's appreciation
of their business, so long as the circumstances do not amount to an
attempt to win back the former local exchange service customer. |
239. |
Finally, with regard to the Companies'
argument that many consumers would avoid switching their services to
CLECs if they knew that this would disqualify them from eligibility for
other promotions, the Commission notes that the winback rule has no
impact on the eligibility of consumers to receive any promotional
offerings approved by the Commission. |
|
The benefits of the winback rule |
240. |
The Commission finds that the most
important and direct benefit of the winback rule, as demonstrated by
common sense, and by the evidence in this proceeding, is that it
eliminates the undue or unfair competitive advantage, or the unfair
opportunity, arising from the ILECs' enhanced ability to directly
communicate with competitors' customers for winback purposes. In turn,
CLECs are permitted a fair opportunity to attempt to retain their
customers. |
241. |
Preventing the ILECs from availing
themselves of this unfair opportunity furthers the overall objective of
facilitating sustainable facilities-based competition in the provision
of local exchange services, consistent with the telecommunications
objectives of section 7 of the Act. As discussed above, the Commission
has established a regulatory framework to allow for facilities-based
local competition in order to promote greater consumer choice in terms
of services and service providers. The Commission has found that
competition in the provision of local exchange services is in the public
interest and will lead to benefits, such as productivity improvements,
service innovation, and enhanced choice for consumers. |
|
Conclusions regarding
proportional effects |
242. |
In light of all the foregoing, the
Commission concludes that preventing the ILECs from deriving an undue or
unfair competitive advantage, or benefiting from an unfair opportunity,
arising from their enhanced ability to directly communicate with
competitors' customers for winback purposes, and the associated benefits
for competitors and consumers, outweigh the deleterious effects of the
winback rule on the ILECs and on their former local exchange service
customers. |
|
Disposition of the Application
|
243. |
The Commission concludes that the winback
rule in question in this proceeding has a pressing and substantial
objective and satisfies all three branches of the proportionality test,
and therefore is a reasonable limit prescribed by law and demonstrably
justified in a free and democratic society, consistent with section 1 of
the Charter. Accordingly, the Commission denies the Companies'
application. |
|
Stay application
|
244. |
On 22 November 2005, Bell Canada filed a
separate Part VII application (the stay application) requesting that the
Commission issue an interlocutory order staying the application of the
winback rule in-territory to Bell Canada until the Commission issues its
final decision in respect of the Application. |
245. |
In response, QMI filed comments on 5
December 2005, Aliant Telecom filed comments on 20 December 2005, and
MTS Allstream, the CCTA and Primus Telecommunications Canada Inc. each
filed comments on 22 December 2005. Bell Canada filed reply comments on
3 January 2006. |
246. |
Given its determinations in this
proceeding, the Commission concludes that the Companies' request for a
stay is moot and that there would be no utility in examining the merits
of the stay application. |
|
Secretary General |
|
This document 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
|
|
______________________
Footnotes:
1
Section 2(b) of the Charter provides that everyone has the
fundamental freedoms of "thought, belief, opinion and expression,
including freedom of the press and other media of communication[.]"
2
Section 1 of the Charter provides that the rights and freedoms set out
in the Charter are guaranteed "subject only to such reasonable limits
prescribed by law as can be demonstrably justified in a free and
democratic society."
3 Now Rogers Telecom
Holdings Inc.
4
Now ARCH Disability Law Centre.
5
As that term was defined in Decision 2005‑28.
6
The Commission notes that Decision 2006‑15
also lays out the conditions under which the winback rule would
be lifted entirely, in relevant markets, prior to forbearance.
7
Decision 94-19 at pg. 15.
8
Ibid., pg. 13.
9
As appended to Call for Comments Concerning
Order in Council P.C. 1994‑1689, Public Notice CRTC 1994‑130,
20 October 1994.
10
Ibid.
11
See for example, Co‑location, Telecom
Decision CRTC 97‑15,
16 June 1997.
12
See for example, Final Rates for Unbundled
Local Network Components, Telecom Decision CRTC 98‑22,
30 November 1998, and Local competition: Sunset clause for
near‑essential facilities, Order CRTC 2001‑184,
1 March 2001.
13
See for example, Rates set for access to
telephone companies' support structures, Order CRTC 2000‑13,
18 January 2000.
14
See for example, Ledcor/Vancouver ‑
Construction, operation and maintenance of transmission lines in
Vancouver, Decision CRTC 2001‑23,
25 January 2001.
15
See for example, Provision of telecommunications
services to customers in multi‑dwelling units, Telecom
Decision CRTC 2003‑45,
30 June 2003.
16
Decision 2002‑1
at paras. 16‑17.
17
Decision 2002‑73
at paras. 25‑27.
18
Decision 2004-4
at paras. 119‑121.
19
Decision 2005‑28
at paras. 254‑255.
20 The Commission notes
that no party in this proceeding submitted arguments with respect to the
requirement that the winback rule be prescribed by law.
21 As
modified in Dagenais v. Canadian Broadcasting Corp., [1994] 3
S.C.R. 835 at paras. 93‑95 (Dagenais).
22 Oakes at para.
67; RJR‑MacDonald Inc. v. Canada (Attorney General), [1995] 3
S.C.R. 199 at para. 137 (RJR‑MacDonald).
23 Rocket at
para. 29.
24 Decision
2005‑28 at para. 258.
25 Ibid., at
para. 259.
26 Rocket at
para. 40.
27 The Winback Letter
describes the exception as follows: "ILECs should be allowed to win back
customers who call to advise them that they intend to change local
service provider."
28 R. v. Wholesale
Travel Group Inc., [1991] 3 S.C.R. 154 at para. 149.
29 Report to the
Governor in Council: Status of Competition in Canadian
Telecommunications Markets, September 2001, at pg. 25.
30 Report to the
Governor in Council: Status of Competition in Canadian
Telecommunications Markets, October 2005, at pgs. 49‑50.
31 See for example,
Rocket at paras. 14 and 29.
32 R. v. Butler,
[1992] 1 S.C.R. 452 (Butler).
33 R. v. Sharpe,
[2001] 1 S.C.R. 45 (Sharpe).
34 Hill v. Church of
Scientology of Toronto,
[1995] 2 S.C.R. 1130.
35 MTS Allstream/Call‑Net
cited their source as the following: CRTC Report to the Governor
in Council, Status of Competition in Canadian Telecommunications
Markets, 2001‑2004.
36 Thomson Newspapers
at paras. 100‑102.
37 Vriend v. Alberta,
[1998] 1 S.C.R. 493 at para. 116.
38 Thomson Newspapers
at para. 98; R. v. Big M Drug Mart Ltd., [1985] 1 S.C.R. 295 at
para. 91; Sauvé v. Canada (Chief Electoral Officer), [2002] 3
S.C.R. 519 at paras. 23‑24.
39 Ipsos‑Reid Report
at pg.10.
40 RJR‑MacDonald
at para. 153.
41 RJR‑MacDonald
at para. 163.
42 Order
FCC 99‑223, Order on Reconsideration and Petitions for
Forbearance, CC Docket No. 96‑115, 3 September 1999.
43 RJR‑Macdonald
at para. 160.
44 Sharpe
at para. 96.
45 MTS Allstream
also objected to the submission of this evidence on procedural grounds,
which is discussed in para. 29 above.
46 Sharpe
at para. 96.
47 Decision
2002‑1 at para 17.
48 RJR‑MacDonald
at para. 160.
49 Ibid., at
para. 163.
50 Dagenais at
para. 92. |