December 12, 2011 5 years 2 months ago

CRTC says Bell's mobile content sports deals are out-of-bounds

OTTAWA-GATINEAU - Bell Mobility gave itself a “significant competitive advantage” by entering into exclusive agreements for the mobile rights to popular National Hockey League (NHL) and National Football League (NFL) content, the CRTC ruled Monday.

The decision comes as a result of a complaint filed by Telus last January after it attempted to negotiate with Bell and the two leagues, without success, for the rights to the content. Telus said that “to the extent that bundling of services plays an important role in delivering value to consumers, the effect of ‘carriage of content’ (Bell’s content) exclusives on mobile platforms may affect Telus’ nascent entry into the broadcasting distribution market” which will in turn negatively impact its ability to compete in the wireless market as consumers increasingly consider video applications in making their decision regarding a wireless carrier.

The NHL content in question includes games and video highlights, while the NFL content includes prime-time games, all playoff games (including the Super Bowl) and access to NFL Network programming.  Telus maintained that sports will be a primary driver of demand in the mobile video market, and the NFL and NHL are the most attractive sports properties.

The Commission agreed with Telus' arguments, citing its 2009 new media exemption order which prohibits undue preference, a notion that it elaborated upon in its vertical integration policy released in September.

“Canadians shouldn’t be forced to subscribe to a wireless service from a specific company to access their favourite content,” said CRTC chair Konrad von Finckenstein, in a statement.  “Healthy and fair competition between service providers will promote greater choice for Canadians.”

The Commission also directed Bell Mobility to file a report within 30 days explaining how it will ensure that Telus has access to its NHL and NFL content at "reasonable terms".

When contacted by Cartt.ca, Bell senior vice-president of regulatory and governmental affairs, Mirko Bibic, said the company was still studying the decision and could not yet comment specifically on how it will move forward. However, Bibic did confirm that its deal with the two leagues was done prior to both its purchase of CTV and the CRTC’s vertical integration decision, and that it has since made all content that it is allowed to offer available to its competitors. “Bell does not control how the major leagues sell their rights in Canada. We do not have the right to sub-licence or re-sell this content”, reads his emailed response. “The CRTC is imposing itself directly in how independent, and in this case, international content owners sell their content rights in Canada. We don’t have the ability to act on the CRTC’s behalf in the way they’re demanding.

"The leagues sold the rights to Bell in exclusive deals," he continued. "Every Canadian wireless carrier had the opportunity to secure these rights, and at the time there were no rules prohibiting such exclusive arrangements. The reality is that we’ve made all content available to our competitors that we’re allowed to offer. For example, when we launched CTV services on Bell Mobile TV, we made the same packages available on commercial terms to our competitors. In the case of this NFL/NHL content, we simply do not have the rights to resell."

We contacted the NHL for a response but had not heard back by the end of the day Monday.

Michael Hennessy, senior VP of regulatory and government affairs at Telus, said in an interview that Monday's decision “reaffirms that the CRTC is very serious about their commitment to competition and consumer choice... The Commission has made clear it doesn’t really matter whether it’s your content or whether you’re sourcing that content from a third party provider, it’s still subject to the same exclusivity and undue preference rules”, he said in an interview. “The only logical reason why you would try to exercise exclusivity when it comes to distribution is to prefer some arm of your business that’s outside of the scope of the Broadcasting Act.”

Hennessy added that for the Canadian broadcasting system to compete in an over-the-top world, Canadian viewers must be able to receive the content they want from Canadian broadcasters on any platform. “Broadcasting, right now, is a protected market. We’re not operating in an open market and I suspect that to the extent we make it more difficult for Canadian consumers to access the content they want from Canadian providers, then we make over-the-top more attractive”, he continued. “If you’re going to squeeze the broadcasting system to give a competitive advantage in the wireless business, you’re damaging the health of the broadcasting system.”

- Lesley Hunter with files from Greg O’Brien