In a letter sent today to Mr. Charles Dalfen, Chairman of the Canadian Radio-television and Telecommunications Commission (CRTC), Mr. Pierre Karl Péladeau, President and Chief Executive Officer of Quebecor Media, alleges that BCE is practicing “a blatant form of cross-subsidization” by allowing Bell ExpressVu to use substantial cash flow generated by a regulated enterprise, Bell Canada, to buy market share in Canada’s TV distribution market. Bell ExpressVu is a limited partnership in which BCE is the sole partner.
Mr. Péladeau’s letter states: “At the present time, Bell ExpressVu is spending colossal amounts of money to buy TV distribution market share. We estimate that Bell ExpressVu, and therefore BCE, has invested $1.2 billion since its launch and will invest an additional $500 million over the next two years to support the continued buying of market share at the pace to which we have grown accustomed in recent years. In five years, Bell ExpressVu has become the fourth largest TV distribution company in Canada, and if its current practices continue to be authorized it will dominate a market which the CRTC intended to be fully competitive. In other words, the dominant player in local telephone service will also become the dominant player in TV distribution.”
Mr. Péladeau recalled that in April 1997, when the CRTC approved the transfer of effective control over Bell ExpressVu to BCE, concerns were raised about cross-subsidization by Bell Canada, prompting the CRTC to observe: “In this regard, the Commission considers that, in the context of its jurisdiction under the Telecommunications Act, appropriate mechanisms already exist to prevent cross-subsidization of ExpressVu’s operations by Bell Canada.” Mr. Péladeau concluded by asking the Chairman of the CRTC whether he intends “to activate these mechanisms in order to end a situation which we believe clearly contradicts the public interest.”
At Quebecor Inc.’s annual shareholders’ meeting, held today in Montreal, Mr. Péladeau also decried some of Bell ExpressVu’s practices, such as allowing customers to buy two decoders for two different addresses and pay for programming service only once, depriving the specialty channels of their rightful revenues, and offering specialty channels that belong to the BCE family, such as RDS, at lower rates than what Vidéotron must pay for the same channels, bearing in mind that, as an analog cable television operator, Vidéotron is required by the CRTC to carry RDS. Mr. Péladeau declared: “We intend to file complaints against Bell in order to end these practices.”
Mr. Péladeau stated that “Vidéotron is operating in a particularly fierce and aggressive competitive environment, so much so that we consider it to be unfair competition.” He added: “It is therefore unthinkable that Canada’s largest corporation should compete with us by means of practices that place the other players in the industry in a financially untenable position.”
Quebecor Media Inc., a subsidiary of Quebecor Inc. (TSE: QBR.A, QBR.B), has operations in Canada, the United States, Chile, France, Spain, Italy and the UK. It is engaged in newspaper publishing (Sun Media Corporation), cable television (Vidéotron ltée), broadcasting (TVA Group Inc.), Web technology and integration (Nurun Inc. and Mindready Solutions Inc.), Internet portals (Netgraphe Inc.), books and magazines (Publicor and TVA Publishing Inc.), retailing of cultural products (Archambault Group Inc. and Le SuperClub Vidéotron ltée) and business telecommunications (Vidéotron Télécom ltée).