When it launched its Chatr discount cellphone service in 2010, Rogers Communications Inc. violated Canada’s false-advertising rules by pledging “fewer dropped calls” than its upstart wireless rivals, a lawyer for the federal Competition Bureau argued in a Toronto trial on Monday.
In his closing arguments, bureau lawyer Tom Curry described some of the ads, which depicted competitors’ customers frustrated as their conversations got cut off by their phones alongside images of happy Chatr customers continuing their calls. The ads suggested a “meaningful” difference in dropped calls, he said, that consumers would notice.
“None of that is actually true,” Mr. Curry said, arguing that even in places where data suggest Chatr did have fewer dropped calls, the difference is tiny – as little as one dropped call in 500 calls.
“The differences are not significant in many, or most cases,” he told court. “Those images are significant. They create a general impression of a strong and meaningful difference in the level of service.”
It’s a case that raises questions about aggressive advertising campaigns and sheds light on the battle that emerged between established cellphone companies and the new wireless carriers that entered the Canadian market after 2008.
The federal regulator charges that Rogers produced “false and misleading” ads, and failed to back up its claims about dropped calls with “adequate and proper tests.” The bureau is seeking a $10-million fine. The trial began last summer.
Rogers counters that the ads, which it withdrew when the Competition Bureau raised objections, are “unquestionably true and correct.” In addition to claiming that its established network is inherently more reliable, it conducted industry-standard “drive tests,” common in the United States and Europe, that involve making calls on competitors’ networks from specially equipped trucks.
The Competition Bureau disagrees with Rogers’s interpretation of those tests. And it has highlighted network data, gleaned from cellphone companies’ computers, which it claims is more accurate and contradicts Rogers’s conclusions. Rogers has argued that this data can’t be used for comparisons.
In written closing arguments submitted to the court by lawyers for Rogers, the company blames the Competition Bureau investigation on its smaller rivals, Mobilicity, Public Mobile and Wind Mobile, which were “determined to undermine Chatr” and made “multiple co-ordinated complaints to federal regulators within days or weeks of the launch of Chatr.”
Rogers – which points out that its rivals had faced “highly publicized” problems with their own networks – claims its competitors “seriously misled” the Competition Bureau about the use of network data and drive tests: “Rather than conduct a proper, thorough and balanced investigation, the Bureau engaged in a rush to judgment, and did so in a manner that can only be viewed as regrettable.”
The company says it was “blindsided” when then-commissioner of competition Melanie Aitken went public with the bureau’s false-advertising allegations in November, 2010. Rogers says it was labelled “a cheat” despite “co-operating fully” and pulling the ads when concerns were raised.
The allegations left it facing a “firestorm of criticism,” Rogers says, while its smaller cellphone rivals were “celebrating.” In what Rogers called a “media stunt,” Mobilicity sent a dance troupe to the company’s head office.
Rogers claims that the Competition Bureau is wrong to question the drive-test data and that the regulator has taken “a series of positions in this case that no regulator in the world has ever taken.”