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Telecom Decision CRTC 2006-17
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Ottawa, 6 April 2006 |
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Quebecor Media Inc. Part VII application – Alleged violations of
winback rule by Bell Canada
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Reference: 8622-Q15-200510710
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In this Decision, the Commission
finds that Bell Canada attempted to win back former local service
customers, in violation of the local exchange service winback restrictions
(the winback rule), when it sent a customer appreciation card to former
customers followed by an automated survey regarding the cards, each
of which included a direct invitation to contact Bell Canada
and a telephone number to do so. Accordingly, the Commission directs
Bell Canada to bring itself into compliance with the winback
rule, as revised in Forbearance from the regulation of retail
local exchange services, Telecom Decision CRTC 2006-15,
6 April 2006, within seven days of this Decision. |
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The application
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1. |
On 12 September 2005, Quebecor
Media Inc. (QMI), on behalf of its subsidiaries Vidéotron ltée and
Videotron Telecom Ltd. (collectively, VTL), filed an application
pursuant to Part VII of the CRTC Telecommunications Rules of
Procedure, requesting that the Commission direct Bell Canada to put
an immediate stop to the following alleged local residential
winback violations: |
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a) sending customer appreciation cards to residential local
exchange customers who had ported their telephone numbers from
Bell Canada to VTL, inviting them to contact Bell Canada;
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b) making survey calls to residential local exchange customers who
had ported their telephone numbers from Bell Canada to VTL; and
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c) making automated calls to residential local exchange customers
in the process of porting their telephone numbers from Bell Canada to
VTL, in the days prior to the scheduled number port, confirming with
the customers the dates of their upcoming disconnection from
Bell Canada.
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2. |
QMI submitted that the local
exchange service winback restrictions were a core element of the
Commission's framework for ensuring sustainable local telephone
competition, and that any violation of the Commission's winback regime
must therefore be regarded as a serious matter. |
3. |
QMI was of the view that the
customer appreciation cards constituted a blatant and personalized
invitation to contact Bell Canada. As evidence, QMI filed an example of
the card sent by Bell Canada to lost residential local exchange
customers. The card reads as follows (translation from French): |
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I'm writing to say that we are sorry to see you go. Even though you
are no longer using Bell for your local phone service, we haven't
forgotten about you. You were a valued member of our Bell Family and
we truly appreciate having been of service.
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If there is anything we can assist you with in the future or
anything you would like to discuss, please don't hesitate to call my
team directly at 1 888 603-8402.
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4. |
QMI submitted that several
migrated customers reported having received a call from Bell Canada
requesting that they respond to a survey regarding their reasons for
leaving Bell Canada and the factors that could incite them to return to
Bell Canada. QMI argued that the purpose of these calls was to encourage
customers to compare the services of Bell Canada and VTL, with a view to
soliciting their return to Bell Canada. |
5. |
QMI also submitted that number
porting was a seamless service that did not require any communication
between the former telecommunications service provider (TSP) and the
customer. QMI argued that the automated calls by Bell Canada were
unnecessary and could easily be interpreted by porting customers as an
invitation to contact Bell Canada to verify the circumstances of their
disconnection. |
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The local exchange winback restrictions
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6. |
The Commission initially
established the local exchange service winback restrictions in a letter
entitled Commission Decision Regarding CRTC Interconnection Steering
Committee Dispute on Competitive Winback Guidelines, dated 16 April
1998 (the Winback Letter). Pursuant to the Winback Letter, an incumbent
local exchange carrier (ILEC) was not to attempt to win back a customer
with respect to primary exchange service (PES), for a period of three
months after that customer's service had been completely transferred to
another TSP. |
7. |
The local exchange service
winback restrictions were subsequently interpreted and expanded in a
number of decisions to address specific issues and circumstances.
The version of the restrictions in force at the time of QMI's application,
as set out in Regulatory framework for voice communication services
using Internet Protocol, Telecom Decision CRTC 2005-28,
12 May 2005, and amended by Telecom Decision CRTC 2005-28-1,
30 June 2005, stated as follows: |
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…an ILEC is not to attempt to win back a business customer with
respect to primary exchange service or local [voice over Internet
Protocol (VoIP)] service, 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.
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The above statement will be
referred to in this decision as "the winback rule". |
8. |
In Forbearance from the
regulation of retail local exchange services, Telecom Decision
CRTC 2006-15, 6 April 2006 (Decision
2006-15), 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 from 12 to three months, effective immediately. |
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Process
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9. |
The Commission received
Bell Canada's answer on 16 September 2005 and QMI's reply comments on 20
September 2005. |
10. |
Comments were filed by the
Canadian Cable Telecommunications Association (CCTA) on 21 September
2005 and by TELUS Communications Inc. (TCI) on 12 October 2005. QMI
filed further comments in reply to TCI's submission on 19 October 2005. |
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Positions of parties
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Bell Canada
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11. |
Bell Canada denied that it had
violated either the letter or the spirit of the winback rule. |
12. |
Bell Canada acknowledged that
it had sent customer appreciation cards to all its residential customers
who had moved their local services to a competing TSP. Bell Canada
argued that the nature of these cards, as should be clear from the text
within the card, was one of acknowledging that the customers had chosen
to take their business elsewhere and letting customers know that their
patronage was important to and appreciated by Bell Canada. Bell Canada
submitted that in a normal business context, the failure to communicate
with a customer that had moved its business to a competitor would leave
an impression that the previous supplier did not care about the lost
business nor value the former customer's business. |
13. |
Bell Canada was of the view
that the text in the customer appreciation card did not violate the
winback rule as it did not include any offer, implied or otherwise, nor
any other inducement that attempted to win back the former customer's
business. |
14. |
Bell Canada submitted that this
type of communication was not prohibited by the winback rule, as it was
not for the purpose of winning back the customer. Bell Canada further
submitted that not only was there no offer, but also there was no call
to action. |
15. |
Bell Canada claimed that the
provision of a contact number was done simply as a courtesy in the event
that the customer decided to contact Bell Canada in the future.
Bell Canada argued that the winback rule did not prohibit
customer-initiated contact with the ILEC and that, therefore, the
customer appreciation card did not offend the winback rule. |
16. |
Bell Canada submitted that an
independent market research firm conducted a market survey of a sample
of Bell Canada's former local service customers. Bell Canada also
submitted that this survey was intended to obtain market intelligence
regarding the attitudes and behaviours of individual customers.
Bell Canada further submitted that this type of activity was a normal
feature of a vigorously competitive market, as only through the
gathering of such market intelligence could service providers understand
the needs of their customers so as to design products and provide
services to better meet those needs. |
17. |
Bell Canada noted that the firm
conducting the market research on its behalf made no winback offers to
customers, nor did it attempt to induce customers to contact Bell Canada
to initiate winback discussions. |
18. |
With regard to QMI's
allegations that its customers had received survey calls from
Bell Canada via an automated system, Bell Canada noted that such calls
were placed during August 2005 to all customers who were sent the card.
Bell Canada claimed that, similar to the market survey discussed
directly above, the purpose of these calls was to learn more about the
attitudes and potential behaviours of customers, as well as to
specifically gauge reaction to the customer appreciation card. For the
same reasons as noted above, Bell Canada argued that this type of
customer contact did not violate the winback rule. |
19. |
Bell Canada submitted that it
used an automated customer service messaging process to remind customers
of imminent service order-related activity. Bell Canada indicated that
in the normal course of business, when the Carrier Services Group (CSG)
staff input local service request (LSR) orders involving the migration
of a Bell Canada customer's local service to a competitor, the system
suppressed automated notification to that customer. |
20. |
Bell Canada submitted that
investigation of QMI's application revealed that Bell Canada had
received an unexpected additional volume of LSRs and that, in order to
cope with the volume, it had moved additional staff to the CSG. |
21. |
Bell Canada indicated that
because of the methods and procedures for newly assigned employees to
the CSG, these new employees were not given the appropriate profile for
the system to suppress the automated message for LSR order processes. |
22. |
Bell Canada submitted that it
had updated its methods and procedures and that therefore, on a going
forward basis, all automated messages in respect of LSRs would be
suppressed. |
23. |
Bell Canada argued that the
automated messages were unnecessary and unintended by Bell Canada and
could not be construed as a violation of the winback rule because no
offer was made, nor was the purpose of the message to induce the
customer to switch back to Bell Canada. |
24. |
Bell Canada argued that the
key point that emerged consistently throughout the evolution of the
winback rule was that it had always been targeted at the marketing of
services. That is, the winback rule prohibited contact for the purposes
of marketing ILEC services. Bell Canada was of the view that if the
Commission agrees with QMI's application and adopts the interpretation
of the winback rule advocated by QMI, the winback rule would effectively
preclude all forms of contact between an ILEC and its former customers,
even forms of contact such as those at issue in this proceeding, which,
according to Bell Canada, had nothing to do with the marketing of
services. |
25. |
Bell Canada argued that the
three activities that QMI took issue with, namely, the customer
appreciation card followed up with an automated survey call, the market
survey call, and the automated call to confirm pending disconnection,
did not fall within the scope of the winback rule. Bell Canada was of
the view that in the alternative, the winback rule, as it existed at the
time of the activities that QMI complained about, was unconstitutional
and of no force and effect for the reasons set out in the application
dated 25 April 2005 filed by Bell Canada and Saskatchewan
Telecommunications (collectively, the Companies). That application
challenged the constitutionality of the winback rule under section 2(b)
of the Canadian Charter of Rights and Freedoms (the Charter)
(referred to below as the Companies' Part VII application). Bell Canada
also argued that in the further alternative, if the winback rule were
expanded to prohibit the activities that QMI complained about, then this
expanded winback rule would also violate section 2(b) of the Charter and
would not be justifiable under section 1 of the Charter. In light of the
foregoing, Bell Canada was of the view that QMI's application should be
denied. |
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QMI's reply
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26. |
QMI submitted that a card that
told former customers how much they were missed, invited them to call
Bell Canada to discuss whether there was anything Bell Canada could do
for them and provided a telephone number for the customers to use to
make that call was an obvious attempt to win back the customers'
business. |
27. |
QMI argued that if the
Commission were to tolerate this type of contact, it would establish a
loophole in the winback rule that all the ILECs would quickly take
advantage of. QMI submitted that this would result in every customer who
chose to leave an ILEC for a competitive local exchange carrier (CLEC)
receiving such customer appreciation cards, most likely with an
invitation to visit the ILEC's website for a complete listing of the
ILEC's new service offerings and promotions, as well as the ILEC's
contact information. QMI claimed that the effectiveness of the winback
rule would then be substantially undermined and the development of local
competition impaired. |
28. |
QMI submitted that market
surveys targeting former local service customers necessarily involved
asking former customers to identify the reasons for switching service
and, hence, to compare the services of Bell Canada and VTL. QMI claimed
that the market survey was a winback activity, as it invited the
customer to reassess whether the decision to switch was appropriate and
hence, whether it might be appropriate to switch back. |
29. |
QMI also submitted that the
exclusion of survey calls from the scope of the winback rule would
create a major loophole in the rule and invite the ILECs to take maximum
advantage of that loophole. QMI argued that it would be virtually
impossible for the Commission to police all market surveys to determine
when a survey call ceased to be an information gathering exercise and
began to involve an attempt to convince a former customer to return to
the ILEC. |
30. |
QMI claimed that it was clear
that the automated pending disconnection calls were unnecessary from an
operational perspective. QMI submitted that if Bell Canada were to
continue to make these calls, the sole reason for doing so would be to
take advantage of their winback potential. QMI argued that, in the
context of customers switching their local service from an ILEC to a
CLEC, automated pending disconnection calls were an attempt to win back
customers, and, as such, were prohibited by the winback rule. |
31. |
QMI submitted that
Bell Canada's argument regarding the winback rule being in violation of
the Charter was the subject of a separate proceeding and need not be
addressed in the context of the current application. QMI claimed that
unless and until the winback rule was judged unconstitutional, it should
be enforced vigorously by the Commission. |
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CCTA
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32. |
The CCTA submitted that QMI had
established a strong prima facie case of non-compliance. |
33. |
The CCTA also submitted that
Bell Canada, through its non-compliant actions, had effectively granted
itself interim relief from the winback rule. The CCTA argued that there
was a risk of irreparable harm to the public interest, as Bell Canada's
winback activity could result in a reduction of residential local
competition, and that the balance of convenience favoured making an
order enjoining Bell Canada's actions vis-à-vis its lost customers. |
34. |
The CCTA argued that there was
no indication that customers, either those lost or the general body of
subscribers, would suffer any harm were Bell Canada to discontinue each
of the activities identified by QMI. |
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TCI
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35. |
TCI submitted that the actions
taken by Bell Canada did not violate the Commission's winback rule. TCI
further submitted that all the alleged violations cited by QMI were
normal business practices intended to ensure an orderly transition of
Bell Canada customers to new suppliers, to improve the customer
experience for remaining Bell Canada customers and to ensure that the
departing customers leave with a favourable impression of Bell Canada. |
36. |
TCI argued that as long as
these activities did not include offering inducements to the customer
not to switch TSPs, or to revert back to the original TSP, or attempt to
otherwise market the ILEC's services, they were not winback activities. |
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QMI's final reply
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37. |
QMI submitted that TCI had
taken an unjustifiably narrow reading of the Commission's winback
decisions and an unjustifiably narrow view of the scope of possible
inducements. QMI was of the view that none of the Commission's winback
rulings had made illicit winback activity expressly conditional on the
offering of specific inducements to customers. QMI noted that the
Commission had repeatedly employed language that stopped short of
requiring specific inducements to be offered in order for certain
communications to be considered winback activities. |
38. |
QMI submitted that at its core,
the winback rule was a "no contact" rule. QMI further submitted that the
value and legitimacy of this "no contact" rule stood, regardless of
whether the prohibited contact would lead to the offering of a specific
inducement. QMI noted that the Commission was most explicit in this
regard in the Winback Letter: |
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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.
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39. |
QMI further submitted that
there was nothing in the winback rule requiring that the marketing of
services be immediate or simultaneous with the offending customer
communications in order for the communication to be considered a
violation of the rule. |
40. |
QMI contended that it was
surely not the Commission's intention, by including an exception to the
winback rule for situations where customers called to advise the ILEC
that they intended to change TSPs, to open the door to communication
strategies, such as the communication strategies used by Bell Canada,
that then led to a wholesale undermining of the winback rule itself. |
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Commission's analysis and determinations
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41. |
The Commission notes that
Bell Canada argued that the winback rule prohibited contact of former
customers for the purpose of marketing ILEC services and that the three
activities, namely, the customer appreciation card followed up with an
automated survey call, the market survey call, and the automated call to
confirm pending disconnection, were not undertaken for the purposes of
marketing ILEC services and were thus outside the scope of, and did not
violate, the winback rule. |
42. |
In support of its position,
Bell Canada referred to the Commission's letter, issued on 1 April 1999
in relation to a dispute filed by the CRTC Interconnection Steering
Committee (CISC) Cable Wiring Working Group, entitled CISC Dispute –
Rules Regarding Communication Between the Customer and the Broadcasting
Distribution Undertaking, where it is indicated that winback
activities are generally referred to as: |
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…the offering to customers of discounts, free services or other
inducements in order to convince those customers not to change service
providers or to revert back to their original service provider.
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43. |
Bell Canada claimed that the
key point that emerged consistently throughout the evolution of the
winback regime in various Commission decisions is that the winback
regime has always targeted the marketing of services. |
44. |
While the Commission has, in a
number of decisions, made references to the inducements that might be
offered as part of winback attempts, these were not intended to provide
an exhaustive list of activities that are prohibited under the winback
rule. |
45. |
According to the winback rule,
ILECs are not to attempt to win back former PES and local VoIP customers
in certain circumstances. The Commission notes that the winback rule
does not prohibit all contact with former customers. Conversely, the
mere fact that an activity does not include an express discount offer or
other inducement is not determinative of whether or not the activity
falls within the scope of the prohibition under the winback rule.
The Commission is of the view that the facts and circumstances of the
particular activity in question must be examined in each case to
determine whether the activity constitutes an attempt by the ILEC to win
back former local exchange service customers in violation of the winback
rule. |
46. |
The Commission notes that
while the text of the customer appreciation card complained of by QMI in
this proceeding did not include explicit offers or inducements, the
card, which was sent to all former customers and was personally
addressed to each customer, invited the customer to contact Bell Canada
and provided a toll-free telephone number for doing so. In addition, the
card was followed up in each case by an automated survey call, in which
the customer was again invited to call Bell Canada and a telephone
number was provided in the following statement: "Thank you for taking
the time to complete this survey. Should you have any questions, please
call 310-BELL." |
47. |
Bell Canada argued that
the provision of a contact number was done simply as a courtesy in
the event that the customer decided to contact Bell Canada in
the future. The Commission is of the view, however, that the invitation
to contact Bell Canada and the provision of a telephone number
were part of a winback attempt by Bell Canada, particularly since,
as noted in 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, Telecom Decision CRTC 2006-16,
6 April 2006 (Decision 2006-16), if customers
who transfer to an ILEC competitor call the ILEC to request information
on its local exchange services, it is not a violation of the winback
rule for the ILEC sales representative to provide them with such information
and to transfer their service back to the ILEC, if they so request. |
48. |
As for the automated survey,
the Commission further notes that a survey is normally sent to a sample
of customers, as Bell Canada has indicated was done with its market
survey. The fact that the follow-up survey by way of automated calls was
made to all former customers provides further indication, in the
Commission's view, that the follow-up survey was part of a strategy on
Bell Canada's part to attempt to win back former customers. |
49. |
In light of the particular
facts and circumstances discussed above, the Commission finds that the
combination of the customer appreciation card and the follow-up survey,
where both the card and the survey included a direct invitation to all
former customers to contact Bell Canada and provided a contact telephone
number, constituted an attempt by Bell Canada to win back former local
exchange service customers in violation of the winback rule. |
50. |
The Commission notes that, in
contrast to the follow-up automated survey, the market survey canvassed
a sample of former customers and neither invited the former customer to
contact Bell Canada nor provided a telephone number or other contact
information. The Commission further notes that the market survey also
did not contain any offer or inducement to switch TSPs. In the
Commission's view, the market survey was, as Bell Canada claimed, merely
an attempt to conduct market research regarding customers' needs and
preferences. The Commission therefore finds that the market survey in
question did not constitute an attempt to win back former local exchange
customers. |
51. |
With respect to the automated
calls to confirm pending disconnection, the Commission notes that in its
answer, Bell Canada recognized that this activity was unnecessary and
unintended, and advised that, upon its investigation of QMI's
application, it discontinued the automated calls to confirm pending
disconnection. Accordingly, the Commission considers that no further
action is required. |
52. |
The Commission notes that
Bell Canada argued that if the activities identified by QMI are
found to fall within the scope of the winback rule (i.e., as it existed
at the time of QMI's application), then the rule is unenforceable,
as it violates the Charter. The Commission notes that a complete record
on whether the winback rule violates section 2(b) of the Charter
was developed in the context of the Companies' Part VII application.
Based on that record, in Decision 2006-16,
the Commission has determined that the winback rule is not inconsistent
with the Charter. The Commission notes that, in this proceeding,
Bell Canada relied on the arguments it made in the Companies'
Part VII application as supplemented by its submissions on the
record of this proceeding. Based on the record and the Commission's
determinations herein as to whether the impugned activities fall within
the scope of the winback rule, the Commission finds that its determinations
in Decision 2006-16 apply equally in this
proceeding. Accordingly, the Commission finds that the winback rule
at issue in this proceeding is not inconsistent with the Charter for
the same reasons as set out in Decision 2006-16. |
53. |
In light of the foregoing, the
Commission directs Bell Canada to bring itself into compliance
with the winback rule, as revised in Decision 2006-15,
within seven days of the date of this Decision. |
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Secretary General |
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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
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