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Consumer Groups comments on telco “winback” activities – Initial comments

Link to CRTC proceeding

 

Philippa Lawson
Senior Counsel
(613) 562-4002 x.24
plawson@piac.ca

Ms. Diane Rheaume
Secretary-General
Canadian Radio-Television and
Telecommunications Commission
Ottawa, ON
K1A 0N2
BY FAX AND EMAIL

Dear Ms. Rheaume:

Re: Public Notice CRTC 2003-1: Review of Winback Promotions

1. The following preliminary comments are provided by the Consumers’ Association of Canada and l’Union des Consommateurs (“The Consumer Groups”), in response to the above-noted Public Notice. The Consumer Groups wish to consider all points raised by ILECs and CLECs before finalizing their position. Hence, the preliminary nature of these comments.

Appropriateness of ILEC Winback Promotions

2. Based on the record to date, the Consumer Groups support a prohibition of ILEC “winback” promotions in the local residential wireline market, whether or not such promotions meet the imputation test, until competitor market share reaches a level that is reflective of a sustainably competitive market.

3. In the current environment, ILECs continue to hold a virtual monopoly in the local residential wireline market. Competition is only just beginning to emerge. In this context, allowing incumbent providers to offer special deals to “win back” those customers who have decided to switch, even after a 90-day period, could amount to allowing a re-monopolization of this market.

4. Particularly in light of the high cost to CLECs of acquiring new customers, targeted winback promotions by ILECs could serve to ensure that new entrants are never able to turn a profit, such that effective local competition never gets off the ground.

5. If ILECs want to compete with CLECs by offering special deals to customers, such deals should be available to all customers, not just those who have switched to alternative providers. In particular, loyal ILEC customers should not be forced to subsidize disloyal ILEC customers. Even where winback promotions meet the imputation test, they can be fundamentally unfair to loyal customers. Such price discrimination should not be permitted in markets that are not fully competitive.

6. Once the local residential telephony market has attained a level of competition more indicative of a truly competitive market, winback restrictions can be lessened or eliminated.

Definition of “Promotion of limited duration”

7. The Consumer Groups consider that a “promotion of limited duration”, in the context of telecommunications services, ceases to be a “promotion of limited duration” after three to six months. Based on general marketplace practices and expectations, six months would appear to constitute the outside limit of any reasonable definition of this concept; three months may be more appropriate. A promotional offer lasting a full year cannot reasonably be considered a promotion “of limited duration”; it is more in the nature of a standard offer.

All of which is respectfully submitted,

Philippa Lawson
Counsel for the Consumer Groups
cc:PN 2003-1 Interested Parties

 

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