Quebecor asks industry minister to intervene in dispute with Rogers over MVNO rates

Open this photo in gallery:

Quebecor Inc. QBR-B-T is urging the federal Industry Minister to intervene in its dispute with Rogers Communications Inc. RCI-B-T, after learning that Rogers intends to appeal a recent wireless rate-setting decision by Canada’s telecom regulator.

Rogers and Quebecor entered into final-offer arbitration earlier this year after failing to reach an agreement regarding the rates for Quebecor’s Videotron Ltd. subsidiary to access Rogers’s wireless network under the Canadian Radio-television and Telecommunications Commission’s new mobile virtual network operator, or MVNO, regime.

The process resulted in the CRTC siding with Quebecor by choosing its offer, noting that “just and reasonable” rates don’t necessarily have to result in an immediate return for the major carriers – Rogers, BCE Inc. BCE-T, Telus Corp. T-T and SaskTel – which are mandated to provide access to smaller competitors under the regime.

Rogers has notified Quebecor that it plans to appeal the decision in court, according to a letter sent Friday to federal Industry Minister François-Philippe Champagne and obtained by The Globe and Mail.

The MVNO rates are crucial to the Montreal telecom’s planned national expansion after its $2.85-billion acquisition of wireless carrier Freedom Mobile, which was divested as part of Rogers’s $20-billion takeover of Shaw Communications Inc.

Rogers and Quebecor were united in their effort to close the two-part deal, appearing together in front of the Competition Tribunal during a month-long hearing triggered by the Competition Bureau’s unsuccessful attempt to block the takeover.

Less than five months after the deal closed, the two telecoms appear to be at loggerheads, with Quebecor accusing Rogers of acting in “bad faith.”

Quebecor is asking Mr. Champagne to wade into the spat, arguing that Rogers’s planned appeal goes against the Toronto-based telecom’s commitments to the minister’s department, as well as to other regulatory bodies, including the CRTC and the Competition Bureau.

Rogers spokesperson Zac Carreiro said Rogers believes the CRTC decision “contains a number of legal errors and was the product of a flawed process.”

“After careful consideration, given the potential impact of this decision, we will be seeking leave to appeal,” Mr. Carreiro said in a statement.

According to Quebecor, Rogers had assured the department of Innovation, Science and Economic Development Canada at a Feb. 10 meeting that the arbitration would be binding and that it would apply the rates as soon as the CRTC published its decision.

Quebecor says it was Rogers who requested the arbitration, and that Quebecor agreed “as a compromise” so that Rogers could secure the minister’s approval for its takeover of Shaw.

Rogers is “patently acting in bad faith” by now renouncing the arbitration process and refusing to accept its outcome, Quebecor alleges.

“Rogers’ duplicity with you and with us should not be without consequence and should be considered a flagrant breach of its commitments to the Department. The government should take the necessary steps to remedy the misrepresentations made to ISED and ultimately to Canadians,” the letter reads.

A spokesperson for Mr. Champagne said the minister “has been clear that he would pay close attention to matters relating to the merger.”

“We imposed unprecedented, far-reaching and legally binding commitments to ensure cheaper prices and more competition in the telecom industry,” Audrey Champoux said in a statement.

“While this is a commercial matter, Minister Champagne will always ensure that commitments made to the Government of Canada, and especially, to all Canadians, are met.”

Under the MVNO regime, regional competitors can access larger carriers’ networks for seven years in areas where they own licences to spectrum, the airwaves used to transmit wireless signals. The rates are to be commercially negotiated, with final-offer arbitration available as a backstop.

The seven-year period is intended to allow the regional carriers to generate revenue by selling services in new markets while they build out their own networks in those areas.

Editor’s note: The date of Rogers' meeting with the department of Innovation, Science and Economic Development Canada has been corrected in the online version of this story.