Cogeco Câble inc.
TSX : CCA

December 11, 2006 23:59 ET

The Mere Existence of Competitive Facilities is not Sufficient to Ensure Sustainable Competition in the Local Telephony Market

MONTREAL, Dec. 11 - Cogeco Cable disapproves of the new
competitive facilities test proposed by the Honourable Maxime Bernier,
Industry Minister.

The measure announced today by the government is contrary to sound public
interest policy and practice for deregulating the telecommunications sector,
and it ignores the relevant recommendations of the Telecommunications Policy
Review Panel issued earlier this year. Indeed, the government has yet to issue
a comprehensive position on the recommendations made by its own expert panel
in this report nine months ago.

"We are witnessing another piecemeal announcement essentially designed to
please the incumbent telephone companies rather than to ensure real
sustainable competition in the best interest of Canadian consumers" indicated
Mr. Louis Audet, President and CEO of Cogeco Cable.

Today's announcement may have lasting adverse consequences for Canadian
consumers of local telecommunications services. The government is clearly
sidestepping the existing independent process for deregulating local telephone
services established by the CRTC, on the mistaken assumption that consumers
are adequately protected by the mere existence of competitive facilities even
where the incumbent telephone company retains a dominant position in the
market.

The government's announcement also suggests that Bill C-41 tabled in the
House of Commons last week will give ample protection to consumers against
anti-competitive conduct by incumbent telephone companies by providing for
administrative monetary penalties under the Competition Act. First, the
government is proposing to end existing CRTC regulatory safeguards
prematurely, without prior evaluation of significant market power, and
regardless of the actual passing of Bill C-41 or its coming into force.
Second, the announcement squarely contradicts the government's own expert
panel which specifically stated the following in its report last March:



... (W)hile the Competition Bureau has a higher level of expertise in
defining markets and assessing market power than does the CRTC, the
Panel is not satisfied that the Competition Act provides an appropriate
framework for the resolution of competitive disputes in the
telecommunications sector where SMP still exists or where markets are in
transition from SMP. Nor does it provide an appropriate framework in
situations where the development, ongoing monitoring and supervision of
sector-specific competitive safeguards may be required. As a body with
responsibility for administering Canada's competition laws in all
sectors of the Canadian economy, the Competition Bureau clearly lacks
the degree of sector-specific knowledge possessed by the CRTC.

In addition, the Competition Bureau is constituted as an enforcement
agency rather than as a quasi-judicial body. Its process does not allow
for the timely resolution of disputes that routinely arise in the
dynamic and rapidly changing telecommunications sector. The Competition
Act has constituted the Competition Bureau as an investigative body that
investigates and reviews complaints of anti-competitive conduct. It then
decides whether there is sufficient evidence to pursue either civil or
criminal proceedings before the Competition Tribunal or the courts. This
two-stage process involves significant time lags, sometimes measured in
years, between the lodging of complaints and the resolution of issues.
This lengthy process is not well suited to an environment in which
competitive disputes arise on a fairly frequent basis and require prompt
resolution. In addition, the Competition Tribunal does not view itself
as a regulator that monitors behavioural remedies on an ongoing basis.

(Telecommunications Policy Review Panel - Final Report 2006, Chap. 4,
page 4-14)


"Consumers as well as new competitors in the local telephone market
should rightly feel concerned when the government not only sets aside but
actually rewrites a key decision of the independent administrative agency
concerned and ignores the recommendations of its own experts on
telecommunications policy reform," concluded Mr. Audet.

ABOUT COGECO CABLE

Cogeco Cable (www.cogeco.ca), a telecommunications company offering a
diverse range of services to its customers in Canada and in Portugal, is the
second largest cable operator in Ontario, Québec and Portugal, in terms of the
number of basic cable service customers served. The Corporation invests in
state-of-the-art broadband network facilities, delivers a wide range of
services over these facilities with great speed and reliability at attractive
prices, and strives to provide both superior customer care and growing
profitability to satisfy its customers' varied electronic communication needs.
Through its two-way broadband cable networks, Cogeco Cable provides its
residential and commercial customers with analog and digital video and audio
services, high speed Internet access as well as telephony services. The
Corporation provides about 1,556,000 revenue-generating units (RGUs) to
approximately 1,477,000 homes passed in its Canadian service territory and
629,000 RGUs to approximately 826,000 homes passed in its Portuguese service
territory. Cogeco Cable's subordinate voting shares are listed on the Toronto
Stock Exchange (CCA).

Contact Information

  • Marie Carrier, Director, Corporate
    Communications, (514) 874-2600