Vertical integration: Cogeco Cable urges CRTC to uphold competition and protect Canadian consumers
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PRESS RELEASE
For immediate release
Vertical integration: Cogeco Cable urges CRTC to uphold competition
and protect Canadian consumers
Montréal, Canada — June 23, 2011 — Cogeco Cable (TSX: CCA) appeared today before the
Canadian Radio-television and Telecommunications Commission (CRTC) with regard to the
regulatory framework relating to vertical integration. In its presentation, Cogeco Cable stated
that the Canadian broadcasting and telecommunications industries are more concentrated and
vertically integrated than ever before, and more so than in the United States. This situation
provides incentives and the opportunity for four very large Canadian vertically integrated
conglomerates to engage in a variety of anticompetitive practices to the detriment of competition
and Canadian consumers. Cogeco Cable explained that the regulatory framework must be
updated to deal with this new situation and it proposed several measures to preserve
competition, and protect the interests of Canadian consumers. These measures are supported
by several other independent broadcasters, distributors and telecommunications service
providers,
The Canadian broadcasting market has evolved over the past year into one that is dominated
by four very large vertically integrated conglomerates that combine production, program
acquisition, broadcasting and distribution activities with telecommunications services and
multiple delivery platforms. Together, BCE Inc., Shaw Communications Inc., Rogers
Communications Inc. and Quebecor Media Inc. control more than three quarters of all Canadian
television programming and distribution revenues, and well over two thirds of all wireline and
mobile platform subscribers. They control 63% of the English-language television viewing and
39% of the French-language television viewing. They also serve 80% of the broadcasting
distribution market, 76% of the Internet access market, 69% of the mobile telecommunications
market and 68% of the telephony market.
The current regulatory framework was designed before the recent wave of mergers and
acquisitions in the Canadian broadcasting and telecommunications sector. The framework must
now be reinforced to effectively preclude anticompetitive practices by the four big
conglomerates, such as discrimination, undue preferences, refusal to deal, tied selling and
margin squeezing, which are all highly prejudicial to independent non-vertically-integrated
competitors and are a serious threat to upholding a competitive marketplace in this sector.
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There is also a need to ensure that the four big conglomerates will not settle into an inflationary
spiral of inflated costs and unreasonable price increases for popular television programming
fare that they control, such as sports, major events, movies and entertainment shows, at the
expense of Canadian consumers.
Cogeco Cable asks the CRTC to adopt the following safeguards:
1) Vertically integrated groups should continue to be required not to conclude exclusive
program rights agreements that preclude or hamper their distribution by non-related
distributors;
2) Access to programs controlled by vertically integrated groups should be made available
by them to non-related distributors on fair and reasonable terms in order to preclude
competitor margin squeezing;
3) Vertically integrated groups should be precluded from granting their own distribution arm
a head start on the distribution of new programming services;
4) Vertically integrated groups should be required to make their programming services
available on a standalone basis, particularly for non-replicable marquee services such as
sports and major events;
5) The reverse onus provision in case of discrimination or preference raised in a dispute
submitted to the CRTC should apply to all programming services controlled by the
vertically integrated groups;
6) The standstill provision, which precludes denial of signal, should apply to all
programming services controlled by the vertically integrated groups;
7) The timelines should be tightened and transparency improved for the dispute resolution
process on program supply agreements, and enforcement should be swift in case of
violation;
8) Vertically integrated groups should be precluded from sharing competitive information
from their competitors as between their programming and distribution arms; and
9) The CRTC should subject vertically integrated groups to reporting requirements that will
enable effective oversight and enforcement in case of anti-competitive practices on their
part.
“We believe that these new safeguards will help ensure that the Canadian broadcasting and
telecommunications market remains competitive, much to the benefit of Canadian consumers,”
said Louis Audet, President and CEO of Cogeco Cable. “Indeed, healthy competition helps
maintain fair prices, fosters creativity and ensures that consumers can continue to choose
between alternative programming, distribution, and telecommunications services and platforms.
The adoption by the CRTC of these additional safeguards should prevent a small club of
vertically integrated conglomerates from taking undue advantage of its dominant position in the
Canadian market at the expense of competition and the end users.”
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ABOUT COGECO CABLE
Cogeco Cable (www.cogeco.ca) is the second largest cable operator in Ontario, Québec and
Portugal, in terms of the number of Basic Cable service customers served. Through its two-way
broadband cable networks, Cogeco Cable provides its residential customers with Audio,
Analogue and Digital Television, as well as HSI and Telephony services. Cogeco Cable also
provides its business customers with data networking, e-business applications, video
conferencing, web hosting, Ethernet, private line, VoIP, HSI, data storage and security, and co-
location services and other advanced communication solutions. Cogeco Cable’s subordinate
voting shares are listed on the Toronto Stock Exchange (TSX: CCA).
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Information: Catherine Pleau
Advisor, Corporate Communications
Tel.: (514) 764-4762