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Quebecor Media Inc., Videotron Ltd. and Videotron G.P.

Part 1 Decision 2017-105
ABRIDGED VERSION

BEFORE THE CANADIAN RADIO-TELEVISION

AND TELECOMMUNICATIONS COMMISSION

IN THE MATTER OF AN APPLICATION BY

QUEBECOR MEDIA INC., VIDEOTRON LTD.
AND VIDEOTRON G.P.

PURSUANT TO PART 1 OF THE

CRTC TELECOMMUNICATIONS RULES OF PRACTICE
AND PROCEDURE AND
SECTION 62 OF THE TELECOMMUNICATIONS ACT

APPLICATION TO REVIEW, VARY AND STAY

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Part 1 Decision 2017-105
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TELECOM DECISION CRTC 2017-105 Complaints against Quebecor

Media Inc., Videotron Ltd. and Videotron G.P. alleging undue and
unreasonable preference and disadvantage regarding the
Unlimited Music program

MAY 25, 2017

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TABLE OF CONTENTS

1.0 INTRODUCTION AND EXECUTIVE SUMMARY...........................................................................3

2.0 THE COMMISSIONS CRITERIA FOR REVIEW AND VARY........................................................7

3.0 KEY FACTS.................................................................................................................................... 7

4.0 WHY THE COMMISSIONS DECISION SHOULD BE REVIEWED.............................................12

A. Impact of Decision12

B. Interplay of Framework and Decision.14

5.0 REQUEST FOR STAY.................................................................................................................. 18

A. There is a serious issue to be tried18

B. Videotron would suffer irreparable harm if the stay is not granted

19

C. The balance of convenience favours granting the stay.

20

6.0 CONCLUSION.............................................................................................................................. 21
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1.0 INTRODUCTION AND EXECUTIVE SUMMARY

1. Quebecor Media Inc., Videotron Ltd. and Videotron G.P. (collectively, Videotron) seek a review

and variance of Telecom Decision CRTC 2017-105 (the Unlimited Music Decision or the

Decision), and a stay of the Decision pending completion of the review.

2. Videotrons Unlimited Music program gives Videotrons mobile wireless customers access to

music streaming services without incurring data transmission charges, if they subscribe to

certain plans and have a smartphone that uses Videotrons LTE network.

3. In the Unlimited Music Decision, the Commission concluded that Videotrons practice of zero-

rating these subscribers access to its Unlimited Music streaming program violates the

prohibitions in Subsection 27(2) of the Telecommunications Act (the Act). More specifically,

the Commission found that Videotron is giving an undue preference to subscribers who access

the Unlimited Music program and to the providers whose services are included in that program,

and subjecting providers and consumers of other content and services to a corresponding

undue disadvantage.

4. The Unlimited Music Decision was issued concurrently with Telecom Regulatory Policy CRTC

2017-104 (the DPP Framework). In the DPP Framework, the Commission set out a new

analytical framework for assessing the differential pricing practices of internet service providers.

The Framework establishes four evaluation criteria for use in the traditional two-step test under

section 27(2), and introduces a third step which requires the Commission to consider whether

there are exceptional circumstances demonstrating clear benefits to the public interest of a DPP,

or the minimal harm associated with it.

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5. In the Decision, the Commission directed Videotron to bring itself into compliance with

subsection 27(2) of the Act with respect to data charges for the Unlimited Music program by no

later than July 19, 2017. This suggests that Videotron would have to terminate the Unlimited

Music program by July 19, 2017 for over ### subscribers (the Affected Subscribers).

6. Videotron does not take issue with the Commissions conclusion that the Unlimited Music

program violates section 27(2) of the Act. Videotron accordingly ceased to offer the Unlimited

Music program to new subscribers, or to existing subscribers renewing or renegotiating new

contracts for mobile wireless services, as of May 10, 2017. However, due to technological,

administrative, and privacy-based constraints, and assuming it should respect its contractual

and legal obligations to Affected Subscribers, Videotron will not be able to terminate the

program within the deadline set in the Decision. As a result, Videotron respectfully submits that

there is reason to doubt the correctness of the Decision such that it ought to be reviewed and

varied.

7. Through this application, Videotron seeks a review of the Decision so that the Commission can

consider :

a. Factors that impact Videotrons ability to comply with the Decision within the

current deadline; and

b. Clarification of the appropriate test to use when assessing differential pricing

practices under section 27(2) of the Act, given the interplay of the Decision and

the DPP Framework.

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8. In order to comply with the Decision while maintaining equivalent services to Affected

Subscribers, Videotron would have to establish alternative services or benefits to replace the

Unlimited Music program. This is a massive undertaking as it requires the calculation of the

amount of data used by Affected Subscribers to listen to music through the program; the

identification, development, programming and testing of alternative services and benefits; and

communication with Videotrons customers with respect to changes to their contracts.

9. Due to its contractual and statutory obligations, Videotron must provide 30 days notice of any

amendment to services provided under customers plans. Almost half of Affected Subscribers

have not consented to receive such notices by email, and others have provided email

addresses that are inaccurate or out-of-service. This further compresses the time within which

Videotron must act.

10. Termination of the program would be considered a unilateral change of contract terms by

Videotron. On receipt of a notice of such a change, Affected Subscribers would have to

consider whether to continue to obtain mobile wireless services from Videotron. Since most

Affected Subscribers subscribe to a package of Videotron services, this decision would affect

their subscription for television, internet and home telephone services.

11. Compliance with the current deadline, even assuming it were technically possible, would

therefore result in huge disruption to Affected Subscribers and to Videotrons operations

generally, which in turn would have a serious impact on all Videotron subscribers, Videotron and

its employees.
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12. Considering the impacts of abrupt termination of the Unlimited Music program, Videotron seeks

relief from the Commission to enable it to set proper terms for the cessation of the program for

Affected Subscribers. Videotron specifically asks the Commission to grandfather contracts

currently in place with Affected Subscribers, until such time as each Affected Subscriber has

reached the end of his/her handset subsidy amortization period or has otherwise renewed or

renegotiated his/her contract for mobile wireless services. In the alternative, we ask the

Commission to set a deadline for compliance that is fair and reasonable to the Affected

Subscribers, Videotrons other subscribers and to Videotron itself, and that takes into account

technological, administrative and privacy-based factors.

13. Videotron also seeks a stay of the Unlimited Music Decision pending the Commissions decision

on this application. There is a serious issue at stake in the application. If a stay is not granted,

Videotron will suffer irreparable harm. The balance of convenience favours the granting of a

stay.

14. If Videotron does not obtain a stay, in order to comply with its contractual and statutory

obligations, it will have to take steps by no later than June 9, 2017 to notify Affected Subscribers

of the termination of the Unlimited Music program. Videotron therefore respectfully requests

that the Commission render a decision on its request for a stay on or before June 9, 2017. To

ensure an informed decision by this date, we further request the Commission to establish an

expedited process for the stay component of this application. Specifically, we request that

interested parties be required to file comments by May 31, 2017 on our request for stay.

Videotron would then commit to filing its reply comments on this component of the application

by June 2, 2017.
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2.0 THE COMMISSIONS CRITERIA FOR REVIEW AND VARY

15. Further to section 62 of the Act and Telecom Information Bulletin CRTC 2011-214, an applicant

may seek a review and variance of a decision by the Commission where there is a substantial

doubt as to its correctness.

3.0 KEY FACTS

16. The Unlimited Music program was launched on August 27, 2015. It enables Videotrons mobile

wireless customers to access certain music streaming services without incurring data

transmission charges, if such customers have a smartphone using Videotrons LTE network and

they subscribe to certain plans, such as a plan with a data cap of 2 gigabytes or more. Data

consumed by these music streaming services does not count towards the data caps included in

these customers mobile wireless plans.1

17. The first complaint about the program was filed with the Commission 5 days after it was

launched.2 A second complaint was filed on September 4, 2015.

18. After receiving submissions on the complaints from some parties who expressed general

concerns regarding zero-rating practices, the Commission decided that it needed to undertake a

thorough analysis of the issues surrounding differential pricing practices and issued Telecom

Notice of Consultation CRTC 2016-192 on May 18, 2016. 3 The resulting DPP Framework, as

well as the Unlimited Music Decision, were released together on April 20, 2017.

1 Unlimited Music Decision, at para. 3.

2 Complaints were filed on September 1 and 4, 2015; see Unlimited Music Decision, at para. 1.

3 Unlimited Music Decision, at paras. 7 and 8.

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19. Videotron understands why the Commission sought to assess the broader implications of

differential pricing practices, and that this broader consultation inevitably took many months.

However, the consequence of this development was that many Videotron customers signed

contracts entitling them to the Unlimited Music program in the 19 months between the date the

complaints were filed and the issuance of the Decision.

20. As of May 5, 2017, there were ### Affected Subscribers, that is, Videotron mobile wireless

customers who have access to the Unlimited Music program. 4 This includes ###

residential customers. The number of total lines having access to the program is higher (###)

than the number of subscribers since Affected Subscribers that are businesses typically have

multiple employees who each have their own wireless mobility device.

21. Videotron ceased to offer the Unlimited Music program to new subscribers on May 10, 2017. It

also ceased to offer the service to current Affected Subscribers who renew or renegotiate their

contracts with Videotron, either because they buy a new mobility device or seek to modify their

contracts for other reasons. As a result, over time, the number of Affected Subscribers will

decrease steadily even if Videotron takes no other steps to eliminate the program.

22. Over ###% of Affected Subscribers are located in the Province of Quebec.5

23. The majority of Affected Subscribers have purchased packages of television, internet, telephone

or wireless services, as shown in the chart below:6

4 Affidavit of Bertrand Hbert affirmed May 24, 2017 [Hbert Affidavit] at para. 4.

5 Hbert Affidavit, at para. 5.

6 Hbert Affidavit, at para. 6.

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With 1 other With 2 other With 3 other Total

service services services

Affected Subscribers ### ### ### ###

24. Most Affected Subscribers have also, through their agreement with Videotron for mobile wireless

services, obtained the use of a mobile device at no cost or a reduced cost. This offer is

conditional on the subscriber maintaining a monthly mobile wireless plan with Videotron for at

least 24 months. If the subscriber terminates their contract with Videotron before 24 months

have passed, they must pay an indemnity representing the unamortized amount of the

economic inducement.7 If however Videotron changes the terms of the contract, the subscriber

may seek to terminate it without penalty, leaving Videotron to absorb the unamortized cost of

the device. As matters stand, the total financial impact on Videotron could amount to ###.

25. Most Affected Subscribers who have obtained a mobile device from Videotron at low or no cost

have had a contract with Videotron for less than 24 months. As of May 7, 2017, the average

amount of time remaining before an Affected Subscribers 24 month anniversary as a Videotron

mobile wireless subscriber is ### months, as illustrated in this chart.8

26. Further to the terms and conditions in Videotrons contracts for residential services, Videotron

must provide at least 30 days notice of any unilateral change in the nature of the services

7 See paragraph 8 of Videotrons Terms and Conditions for Residential Services attached to Hbert
Affidavit as Exhibit A.

8 Hbert Affidavit at para. 9 and Exhibit B thereto.

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provided to the customer. The customer then has 30 days to accept the amendment or

terminate the contract, without paying a cancellation indemnity.9

27. The notice by Videotron must also comply with anti-spam legislation. About ###% of Affected

Subscribers have not authorized Videotron to communicate changes to contractual terms

electronically. Other Affected Subscribers have provided inaccurate or out-of-service email

addresses which result in bounce-back messages when used. As a result, Videotron will have

to deliver notice to most Affected Subscribers by mail, which obviously takes longer than

delivery by e-mail.10

28. Based on Videotrons preliminary analyses, it estimates that, due to technical

requirements, it will require ## weeks to terminate the Unlimited Music program to

Affected Subscribers and to identify, create, develop, test and implement alternative

services.11 Videotron will require additional time to communicate with the Affected

Subscribers in order to advise them of the change to the services, and to make

consequential changes to customers service packages and billing arrangements.12 In

all, taking into account the moratorium on changes to systems during the holiday period,

Videotron estimates that the shutdown of access to the program is not achievable until

January 31, 2018.

9 See paragraph 9 of Videotrons Terms and Conditions for Residential Services, attached to Hbert
Affidavit as Exhibit A.

10 Hbert Affidavit, at para. 11.

11 Hbert Affidavit, at paras. 12 to 21.

12 Hbert Affidavit, at paras. 22 to 24.

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29. Due to the timing of the Unlimited Music Decision, the time actually required to develop, test and

implement alternative services would be longer because:

a. During the weeks prior to and immediately following July 1 st, there is an

extremely high volume of service requests to Videotron, because many

subscribers in Quebec change residences on this date.

b. In June, July and August, Videotron has reduced staffing because, under

collective agreements with its unionized staff, many employees are entitled to

take holiday and do so.13

c. Videotrons IT teams are currently finalizing the modifications required for the

new CRTC Television Service Provider Code, which involves many important

changes to service agreements with subscribers, by the deadline of August 31st.

30. Due to all of these factors, the resources required to comply with the Decision will already be

over-taxed in the months of June, July and August.

31. Videotron could attempt to comply with the Unlimited Music Decision by simply terminating all

access to the Unlimited Music program as of July 19, 2017. The technological, administrative

changes and communication required even for this abrupt and limited response is not

achievable within the Commissions deadline. But assuming it were possible, Videotron would

have to advise Affected Subscribers of the change in their plans on or before June 19, 2017. In

order to meet this deadline, Videotron would have to begin taking steps to communicate with the

subscribers by no later than June 9, 2017.

13 Hbert Affidavit, at para. 24b.

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32. If Affected Subscribers elect to terminate their agreements as a result of the abrupt elimination

of the Unlimited Music Program, Videotron will suffer important financial losses, loss of market

share and reputational damage.14

4.0WHY THE DECISION SHOULD BE REVIEWED

A. Impact of decision

33. In its submissions to the Commission in response to complaints about the Unlimited Music

program, Videotron did not provide evidence on the impacts of a decision imposing a short

deadline to terminate the program. The Commission similarly did not seek evidence on the

feasibility of an immediate termination of the program prior to issuing the Decision. There was

no evidence before the Commission on grandfathering the contracts of Affected Subscribers, or

how much time would be required to terminate the Unlimited Music program taking into account

technological and administrative constraints, privacy-based considerations and other factors.

34. A decision-maker commits an error of fact if it fails to make relevant inquiries allowing it to obtain

relevant evidence, or makes a decision in the absence of evidence.15

35. The July 19, 2017 deadline in the Decision is not achievable, assuming Videotron respects its

contractual and statutory obligations to Affected Subscribers. As noted above in the Key Facts

section, from a purely technical perspective Videotron would require at least 27 weeks to

withdraw access to the Unlimited Music program and identify, create, develop, test and

14 See below at paragraphs 49 to 52.

15 Utility Transport International Inc. v. Kingsley, 2009 FC 270 at paras. 46 to 51; R. v. Fuller [1975] 2
S.C.R. 121 at para. 4.
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implement alternative services or benefits. It would require an additional period of time to

communicate with Affected Subscribers.

36. The timeline to terminate the Unlimited Music program would be even longer due to other legal

and privacy-based factors. Further to the terms of its contracts with subscribers, if Videotron

were to make a change to its Unlimited Music program on July 19, 2017, it would have to notify

Affected Subscribers in Quebec at least 30 days prior to the cut-off date. Given anti-spam rules,

a notice would have to be mailed to most subscribers, requiring more time.

37. Even if Videotron were capable of offering alternative services by mid-June, this would put

Affected Subscribers in a difficult position, since most subscribe to multiple services with

Videotron. If they terminate their agreement with Videotron, they would not only have to find a

new provider for mobile wireless services, but either re-negotiate a different package of services

with Videotron or find new providers for all other services they previously received from

Videotron. Affected Subscribers would have to make a decision on these issues on short notice,

at a time of year when all providers face an extremely high volume of service requests.

38. Other Videotron subscribers and Videotron itself would face a significant impact, because the

effort required to terminate the Unlimited Music program and meet the service requirements of

Affected Subscribers would inevitably prevent Videotron from providing their usual service levels

to customers. Videotron employees would also be affected.

39. These facts justify a review of the Decision, so that the Commission can make an informed

ruling on how Videotron can comply with section 27(2).

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B.Interplay of Framework and Decision

40. After receiving submissions of various stakeholders in response to the Videotron complaints, the

Commission recognized that it needed to undertake a thorough analysis of the issues

surrounding differential pricing practices rather than making decisions on a case-by-case basis.

Its goal in initiating the wider consultation which led to the DPP Framework was to provide a

clear framework for the industry on how it generally intends to address differential pricing

practices to create more certainty in the market and to ensure that ISPs and consumers

benefit from a clear, transparent framework regarding differential pricing practices.16

41. In the DPP Framework developed as a result of this wider consultation, the Commission

established a specific evaluation process for differential pricing practices that could violate

section 27(2) of the Act. First, the Commission must consider whether a differential pricing

practice involves an undue or unreasonable preference or disadvantage, having regard to four

evaluation criteria (agnostic treatment of data, exclusiveness of the offering, impact on internet

openness and innovation, and whether there is financial compensation involved). Second, the

Commission must consider the benefit and harms associated with the practice:

[T]he Commission will consider whether there are exceptional

circumstances that demonstrate clear benefits to the public interest
and/or minimal harm associated with a differential pricing practice. For
example, the Commission may consider whether there are privacy-
related, technological, administrative or other factors that would impact its
analysis under subsection 27(2) such that the benefits of allowing a
specific differential pricing practice would clearly outweigh any harms.17

16 Unlimited Music Decision, at para. 8.

17 DPP Framework, at para. 129.

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42. The analytic approach in the DPP Framework introduces a third stage to the traditional two-step

section 27(2) analysis. Under the broader section 27(2) test, the Commissions analysis is

limited to two factors: first, whether a complainant can demonstrate that a practice confers a

preference or disadvantage and, second, whether the respondent can show that the preference

or disadvantage is not undue or unreasonable. The more tailored DPP Framework adds a third

step, whereby the Commission must consider whether there are exceptional circumstances

relevant to a differential pricing practice.

43. Unfortunately, because the Unlimited Music Decision was issued on the same day as the DPP

Framework and assessed the program under both tests, it is unclear whether, going forward, the

analysis of differential pricing practices will proceed under the traditional section 27(2) test or

the new test in the Framework, or what evidence may be relevant to a complaint inquiry. The

Commission furthermore did not have any information allowing it to weigh the feasibility,

disadvantages and benefits of the termination of the program for existing Affected Subscribers.

44. As noted above, in the new third stage of the test under section 27(2) as it related to differential

pricing practices, the Commission must consider whether there are exceptional circumstances,

such as privacy-related, technological, administrative or other factors that would impact its

analysis under subsection 27(2) such that the benefits of allowing a specific differential pricing

practice would clearly outweigh any harms.

45. Since the Unlimited Music Decision and the DPP Framework were released the same day,

Videotron was not aware of this new analytic framework. It did not know that evidence

regarding the feasibility and impacts of terminating the Unlimited Music program would be
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relevant to the Commissions analysis, or that it could argue that the Commission would

consider the impact of privacy-related, technological, administrative or other factors.

46. In the Decision, the Commission concluded that [B]ased on the record of the proceeding

there are no other mitigating factors or extenuating circumstances associated with the Unlimited

Music Program that would impact its analysis and conclusions in this case. 18 But given that

Videotron had no notice of the DPP Frameworks new analytic approach, there was no reason

that evidence would have been adduced by Videotron.

47. The particular circumstances in this case militate for a careful review of the factors set out in the

third stage of the DPP Framework. Despite the best efforts of the Commission to complete the

inquiry into the complaints, due to the concurrent broader consultation into differential pricing

practices, nineteen months elapsed before a decision on the complaints against Videotron was

rendered. During this time, tens of thousands of new customers entered into contracts with

Videotron, entitling them to receive a certain package of services. The reasonable expectations

and contractual rights of these Affected Subscribers, as well as impacts to Videotrons other

subscribers, its employees, and the company itself of an abrupt termination of the program,

should be weighed in the Commissions decision on the outcome of the complaints.

48. In these circumstances, there is reason to doubt the correctness of the Decision. In our

respectful submission, given the introduction of the change in approach to section 27(2) for

differential pricing practices, the Commission should consider the impacts of the immediate

termination of the Unlimited Music program for Affected Subscribers.

18 Unlimited Music Decision, at para. 59.

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5.0REQUEST FOR STAY

49. In its Practice Note dated February 28, 1997, the Commission announced that it would consider

stay applications by applying the test set out by the Supreme Court of Canada in Manitoba

(Attorney General) v. Metropolitan Stores (MTS) Ltd., [1987] 1 SCR 110 and RJR-MacDonald

Inc. v. Canada (Attorney General), [1994] 1 SCR 31119. This test requires the applicant to show

that:

(i) there is a serious issue to be determined;

(ii) the applicant will suffer irreparable harm if the relief is not granted; and

(iii) the balance of convenience lies with the party requesting the stay.

A.There is a serious issue to be tried

50. In the context of appeals from CRTC decisions, the first factor, whether there is a serious issue

to be determined, will be met if the matter on appeal is neither frivolous nor vexatious.20

51. The issues on this application namely, the need to obtain evidence on how Videotron can

comply with section 27(2), and the interplay of the Decision and the Framework are serious.

19 Assoc. des compagnies de tlphone du Qubec Inc. v. Canada (Attorney General), 2012 FCA 203, at
para. 12.

20 North American Gateway Inc. v. Canadian Radio-Television & Telecommunications Commission,

[1997] F.C.J. No. 628 [North American Gateway] at paras 10-11.
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B.Videotron would suffer irreparable harm if the stay is not granted

52. In North American Gateway Inc. v. Canadian Radio-Television & Telecommunications

Commission, the applicant established irreparable harm by showing it could not be

compensated by a damages award at some later date and there was no entity that could be

held liable to compensate for damages.21

53. If a stay is not granted of the Unlimited Music Decision, Videotron and its subscribers will suffer

irreparable harm.22

54. Since it cannot establish alternative services for Affected Subscribers within the deadline set out

in the Decision, Videotron will effectively have no choice but to advise over ### Affected

Subscribers that it is unilaterally amending their mobile wireless contracts by reducing the

services offered for the price paid. This will undoubtedly lead many customers to terminate their

contracts not only for mobile wireless services from Videotron but other services obtained as

part of a package.

55. Such terminations, or even inquiries by Affected Subscribers about the change in services, will

take place at a time when Videotrons systems are already overtaxed, leading to delays in

service and customer frustration. This will thus not only reduce Videotrons share of the market

in the immediate term but inflict significant and long-term reputational damage on its brand.

56. Videotrons attempt to comply with the deadline in the Unlimited Music Decision will also have a

harmful impact on all of its subscribers, whether or not they are Affected Subscribers. Given the

21 North American Gateway, supra at paras. 13-16.

22 Hbert Affidavit, para. 25.

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demands on Videotrons personnel to meet the deadline and to respond to service calls after the

termination of the Unlimited Music program, Videotron will not be able to maintain service levels

across the board.

C.The balance of convenience favours granting the stay

57. Videotron ceased offering the Unlimited Music program to new customers or customers

renewing or renegotiating contracts as of May 10, 2017. As a result, the number of Affected

Subscribers will not increase but in fact decline over time.

58. Any harm flowing from the existence of the Unlimited Music program has already accrued.

Staying the Unlimited Music Decision to permit the requested review will not create any

additional harm.

59. As noted above, failure to stay the Unlimited Music Decision will result in irreparable harm to

Videotron.

60. The balance of convenience therefore favours granting a stay.

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6.0 CONCLUSION

61. For all of these reasons, Videotron respectfully asks the Commission to accept this application

to review the Unlimited Music Decision, and to stay the Commissions direction to Videotron in

the Decision pending completion of the review.

62. Videotron seeks a decision on the request for stay by no later than June 9, 2017, so that

it can take steps to notify Affected Subscribers of the termination of the Unlimited Music

program in conformity with Videotrons contractual and statutory obligations. To ensure

an informed decision by this date, we further request the Commission to establish an

expedited process for the stay component of this application. Specifically, we request

that interested parties be required to file comments by May 31, 2017 on our request for

stay. Videotron would then commit to filing its reply comments on this component of the

application by June 2, 2017.

63. If the request for review is accepted, Videotron seeks a variance of the Decision that takes into

account the feasibility of immediate termination of the Unlimited Music program for Affected

Subscribers. Videotron specifically asks the Commission to grandfather contracts currently in

place with Affected Subscribers, until such time as each Affected Subscriber has reached the

end of his/her handset subsidy amortization period or has otherwise renewed or renegotiated

his/her contract for mobile wireless services. In the alternative, we ask the Commission to set a

deadline for compliance that is fair and reasonable to Affected Subscribers, Videotrons other

subscribers and to Videotron itself, and that takes into account technological, administrative and

privacy-based factors.

*** End of Document ***