ARCHIVED -  Letter

By EMAIL

Ann Mainville-Neeson
Director, Broadcasting Regulatory Affairs
TELUS Communications Company
215 Salter Street
Ottawa, Ontario
K1P 0A6
ann.mainville-neeson@telus.com

Brad Danks
Chief Operating Officer
OUTtv Network Inc.
315 West 5th Avenue
Vancouver, British Columbia
V5Y 1J6
brad@outtv.ca

Re: Follow up to Broadcasting Decision CRTC 2012-672 and the Commission letter dated 30 May 2013 concerning TELUS Communications Company’s plans to remedy an undue disadvantage it caused OUTtv Network Inc.

In Decision 2012-672, the Commission found that TELUS Communications Company (TELUS) subjected OUTtv Network Inc. (OUTtv Network) to an undue disadvantage and had given operators of services in the “Lifestyle” package an undue preference, contrary to section 9 of the Broadcasting Distribution Regulations (the Regulations), with respect to the marketing and promotion of OUTtv Network’s programming service OUTtv. In that decision, the Commission concluded that TELUS had not provided OUTtv with marketing support comparable to that provided to other similar services on its Optik TV distribution service in a manner consistent with clause 6 of the Code of conduct for commercial arrangements and interactions[1](the Code of Conduct).

As a result, TELUS was required to file with the Commission a plan demonstrating how it would remedy this undue disadvantage and preference. TELUS filed this plan on 8 February 2013.

In a letter dated 30 May 2013, the Commission found that the plan filed by TELUS on 8 February 2013 failed to adequately remedy the disadvantage and preference with respect to the marketing and promotion of the “Lifestyle Extra” package and OUTtv. The Commission required TELUS to provide OUTtv Network with an updated and more detailed plan and to undertake discussions with OUTtv Network with a view to developing a mutually acceptable plan. TELUS was to file a revised plan with the Commission by 12 July 2013.

The Commission received and has considered the revised plan submitted by TELUS on 12 July 2013; OUTtv Network’s comments on this revised plan dated 24 July 2013; and TELUS’s final rebuttal comments submitted on 6 August 2013.

In its 12 July 2013 submission, TELUS noted that its representatives met with OUTtv Network’s representatives on two separate occasions in order to discuss and develop mutually acceptable initiatives to remedy the undue disadvantage it caused to OUTtv Network. As part of its revised plan, TELUS included details for several marketing measures and initiatives that it considered would provide OUTtv and the “Lifestyle Extra” theme pack with advantageous promotional opportunities that would continue until a target number of subscribers was reached. According to TELUS, this plan would adequately remedy the harm caused to OUTtv Network by TELUS’s former marketing practices.

OUTtv Network considered that to adequately remedy the harm caused, the marketing measures and initiatives taken by TELUS should be expected to place OUTtv Network in the financial position it would have been in had TELUS marketed OUTtv and/or the package it was carried in (i.e. the “Lifestyle Extra” theme pack), comparably. OUTtv Network submitted that all but one of TELUS’s marketing proposals are ones that TELUS should normally undertake in the ordinary course of business and that the marketing initiatives proposed by TELUS were mostly focused on the “Lifestyle Extra” theme pack, and not specifically on OUTtv. OUTtv Network was therefore of the view that TELUS’s revised proposal would fail to adequately remedy the harm caused to it.

The Commission notes that TELUS’s revised plan includes significantly more detail than its initial plan and includes measures that were mutually agreed to by both parties. The Commission considers that TELUS has eliminated any preference that was given to the “Lifestyle” theme pack over the “Lifestyle Extra” theme pack by virtue of its online selection tool and printed promotional materials. The Commission considers, moreover, that TELUS’s plan includes several marketing measures and initiatives that will provide the “Lifestyle Extra” theme pack, and OUTtv, with more visibility and the potential for higher subscribership.

With respect to the different proposals by the parties to evaluate when the additional marketing and promotional efforts taken by TELUS have successfully remedied the harm caused to OUTtv Network, the Commission notes that in Broadcasting Decision 2012-672, it determined that the fact that OUTtv was placed in a lower penetrated theme pack is insufficient in and of itself to support a finding that a preference and/or disadvantage is undue. The Commission added that requiring TELUS to place OUTtv in the higher penetrated “Lifestyle” theme pack would unreasonably undermine TELUS’s overall packaging flexibility and lead to less choice for consumers. The Commission was of the view that this outcome would be contrary to the achievement of sections 3(1)(t)(ii) and 3(1)(t)(iii) of the Broadcasting Act.

The Commission notes that OUTtv Network’s proposal would require TELUS to continue providing OUTtv with marketing advantages until such time as OUTtv recovered a targeted level of subscribership or revenue, comparable to what OUTtv would have received had it been placed in the “Lifestyle” theme pack. The Commission considers that this approach would not be appropriate in light of the Commission’s determinations in the above-noted decision.

The Commission considers that TELUS’s approach, on the other hand, is consistent with Broadcasting Decision 2012-672. TELUS’s plan will expand the marketing and promotion for the “Lifestyle Extra” theme pack and OUTtv until a target number of subscribers is reached. The Commission considers that this approach, whereby subscribership to OUTtv will depend on consumer choice, is consistent with the Commission’s statements in Broadcasting Decision 2012-672. In particular, the Commission considers that TELUS’s plan will provide OUTtv with a reasonable opportunity to be exposed to subscribers and to compete and succeed in an ever changing broadcasting environment.

Accordingly, the Commission finds that TELUS’s revised plan regarding the marketing and promotion of the “Lifestyle Extra” package and OUTtv will remedy the undue disadvantage and preference experienced by OUTtv Network, as set out in Broadcasting Decision 2012-672, in a satisfactory manner. The Commission requires that TELUS notify the Commission and OUTtv Network by letter when its additional efforts have reached the targeted number of subscribers. After attaining that target, the Commission expects that TELUS will ensure that it provides comparable marketing support to all the services and theme packages distributed by Optik TV in accordance with the Regulations and consistent with the Code of Conduct.

Sincerely,

Original signed by

John Traversy
Secretary General

[1] As set out in Appendix 1 to Broadcasting Regulatory Policy 2011-601, as amended by Broadcasting Regulatory Policy 2011-601-1.

Date modified:

2013-09-19