Cogeco Cable Inc.
TSX : CCA

Cogeco Cable Inc.

June 23, 2011 09:08 ET

Vertical Integration: Cogeco Cable Urges CRTC to Uphold Competition and Protect Canadian Consumers

MONTRÉAL, CANADA--(Marketwire - 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.

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;
  1. 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;
  1. Vertically integrated groups should be precluded from granting their own distribution arm a head start on the distribution of new programming services;
  1. 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;
  1. 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;
  1. The standstill provision, which precludes denial of signal, should apply to all programming services controlled by the vertically integrated groups;
  1. 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;
  1. Vertically integrated groups should be precluded from sharing competitive information from their competitors as between their programming and distribution arms; and
  1. 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."

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).

Contact Information

  • Catherine Pleau
    Advisor, Corporate Communications
    (514) 764-4762