Media Advisory: Bell plays hardball with Canadians, asks Cabinet to change broadcasting rules after public interest decision
WHO:
Steve Anderson, Executive Director, OpenMedia.ca
Lindsey Pinto, Communications Manager, OpenMedia.ca
Janet Lo, Legal Counsel, Public Interest Advocacy Centre (PIAC)
John Lawford, Executive Director and General Counsel, Public Interest Advocacy Centre
WHAT:
Telecom giant Bell is trying to unilaterally change Canada’s broadcasting rules so it can take over Astral Media, one of Canada’s largest media companies. Bell has officiallycalled on Cabinet to put forward a Broadcast Policy Direction that could force the CRTC to reconsider its recent, widely popular decision to block Bell’s takeover.
OpenMedia.ca is encouraging Canadians to call for their MPs and members of Cabinet to oppose this expansion of Bell’s power at http://StopTheTakeover.ca
WHY:
Canadians have been speaking out against Bell’s takeover, and the CRTC blocked the deal because it was not in the public interest – but now, Bell is trying to get the government to intervene. Bell is rewriting the rules, and asking the government to rubber-stamp it.
“Citizens, not industry lobbyists should guide future of our communications system,” says OpenMedia.ca Executive Director Steve Anderson. “Bell’s move to change our country’s media rules is a slap in the face to Canadians.”
WHEN / WHERE:
Spokespeople from OpenMedia.ca and PIAC are available to comment at any time.
BACKGROUND:
OpenMedia.ca is a grassroots organization that safeguards the possibilities of the open and affordable Internet. The group works towards informed and participatory digital policy.
OpenMedia.ca and PIAC are members of the Stop the Takeover Coalition. The Coalition comprises public interest groups and industry players who are coming together, based on a set of common principles, to oppose the proposed takeover of Astral Media by Bell and to promote public engagement through the Stop the Takeover campaign.
For more information, please contact:
John Lawford – (613) 562-4002×25 lawford@piac.ca
Lindsey Pinto – 778.238.7710 – lindsey@openmedia.ca
Details can also be found at http://StopTheTakeover.ca
BCE-Astral, Consumers ready for the CRTC decision today
For Immediate release
October 18, 2012
(OTTAWA) At 4:00 PM EST this afternoon the Canadian Radio-Television and Telecommunications Commission will release its decision on Bell’s $3.4 takeover of Astral Media. The Public Interest Advocacy Centre will be on-site analyzing the decision and available for comment at 4pm.
PIAC acted as counsel for the Consumers’ Association of Canada (CAC), Canada Without Poverty (CWP), and the Council for Senior Citizens’ Organizations of British Columbia (COSCO) arguing that the transaction would not benefit Canadian consumers. PIAC is also a member of the Stop the Takeover Coalition, a broad-based coalition of public interest groups opposing the transaction.
For more information:
Janet Lo
Counsel
Public Interest Advocacy Centre
613-562-4002 ×24
Mobile 613-816-5688
jlo@piac.ca
CONSUMERS APPLAUD CRTC DENIAL OF BELL’S BID FOR ASTRAL
OTTAWA – The Public Interest Advocacy Centre (PIAC) today welcomed and applauded the decision by the Canadian Radio-television and Telecommunications Commission (CRTC) to deny the acquisition of Astral Media inc. by Bell Canada Enterprises.
“In today’s clear and unequivocal decision, the CRTC listened to concerns voiced by Canadians and public interest groups about the proposed Bell bid to acquire Astral,” said Janet Lo, Counsel for PIAC. “Bell did not prove that this deal would benefit consumers through increased choices, improved service, or price reductions.”
The Commission found that Bell’s proposal to acquire Astral was not in the public interest. The Commission’s decision recognized that a combined Bell/Astral would control an unprecedented amount of total revenues and viewing share. The Commission also noted that Bell already holds a significant position in the Canadian broadcasting system. The Commission detailed the public interest test for ownership transactions and found substantial concerns related to competition, concentration of ownership in the broadcasting industry, vertical integration, and anti-competitive behaviour in the broadcasting market.
“The Commission drew a bright line that Bell’s proposed bid for Astral would result in too much control in the hands of Bell and reduce competition to the detriment of Canadian consumers,” said Lo. “The Commission is sending a strong message to the broadcasting industry that any future media consolidation transactions must be proven to serve the public interest, reinforcing the importance of a healthy diversity of voices in the Canadian broadcasting system.”
PIAC, which acted as counsel for the Consumers’ Association of Canada (CAC), Canada Without Poverty (CWP), and Council of Senior Citizens’ Organization of British Columbia (COSCO), appeared before the Commission in September arguing that the transaction would create an unprecedented level of media concentration and vertical integration in Canada and weaken competition in broadcasting services, resulting in higher prices for television programming to consumers. At the hearing, PIAC presented survey results showing that 82% of consumers felt the cost of television service was too high and 71% of consumers feel there is no real choice between television service providers.
Download File: bell_astral_sept12_environics.pdf [size: 0.04 mb]
PIAC is a member of the Stop the Takeover Coalition , a broad-based coalition of public interest groups who opposed the transaction.
CRTC Wireless Code Hearing Good News for Consumers
FOR IMMEDIATE RELEASE
OTTAWA – The Public Interest Advocacy Centre (PIAC) today welcomed the decision by the Canadian Radio-television and Telecommunications Commission (CRTC) to hold a public hearing to create a “Wireless Code of Conduct”.
The CRTC proceeding is good news for all Canadian consumers of wireless services, from prepaid accounts, to voice and texting services, to mobile Internet and video access via smartphones.
“Customer service and contracting problems in wireless are legion – and they affect all wireless users,” said John Lawford, Counsel for PIAC who argued before the CRTC for a public proceeding to set wireless rules. “Nearly all Canadians agree that wireless providers should have clearer contracts, increased pricing transparency and eliminate “bill shock” for unexpected charges,” he added.
The CRTC announcement invites the general public to express their concerns with wireless service in Canada and to tell the CRTC what rules wireless carriers should follow. Consumers can write the CRTC and are welcome to attend the public hearing. More information about the hearing and other CRTC process is found below.
PIAC encourages all Canadians to participate. “This is a historic chance for Canadians finally to get the service they deserve from their wireless provider, no matter which one they choose,” said Lawford.
Read the CRTC decision: Telecom Decision CRTC 2012-556
Link to the Notice of Consultation and Public Hearing process for Wireless Code
For more information:
John Lawford
Counsel
Public Interest Advocacy Centre
ONE Nicholas Street, Suite 1204
Ottawa, Ontario
K1N 7B7
(613) 562-4002×25
(613) 562-0007 (Fax)
jlawford@piac.ca
The public demands the CRTC stop Bell’s takeover of Astral Media
MEDIA ADVISORY
September 12, 2012
For immediate release
http://StopTheTakeover.ca
The public demands the CRTC stop Bell’s takeover
OpenMedia.ca and Public Interest Advocacy Centre Available for Comment about Bell/Astral Hearing
WHO:
Steve Anderson, Executive Director, OpenMedia.ca
Lindsey Pinto, Communications Manager, OpenMedia.ca
Janet Lo, Legal Counsel, Public Interest Advocacy Centre (PIAC)
WHAT:
The Canadian Radio-television and Telecommunications Commission (CRTC) is examining Bell Canada’s $3.4 billion takeover of Astral Media at hearings in Montreal the week.
The Public Interest Advocacy Centre, an Ottawa-based consumer group is scheduled to appear before the Commission on Wednesday, September 12. PIAC is a member of the Stop the Takeover Coalition, which opposes the acquisition based on the principles at http://openmedia.ca/takeover/principles.
WHY:
“This deal will give Bell more market power because they will control a remarkable share of television services,” says Public Interest Advocacy Centre counsel Janet Lo, “If the deal goes through, consumers will be offered even less flexibility in packaging and choices to pick and pay only for the television services they want to watch, and consumers will pay higher prices to access broadcasting services.”
OpenMedia.ca, a grassroots organization that safeguards the possibilities of the open and affordable Internet, has further concerns about big telecom companies that own both content and the methods of distributing it.
Steve Anderson, Executive Director at OpenMedia.ca, says: “If you watch TV, use the Internet, or own a cell phone, you’ll feel the effects of Bell’s takeover. This deal threatens the choice and flexibility, fair prices, and dynamic innovation that Canadians deserve, and it will ultimately act as dead weight on our digital economy. It’s no wonder that experts from the public interest community are up in arms about the Bell/Astral takeover, and that citizens are continuing to make their voices heard via the petition at StopTheTakeover.ca. If the CRTC is really working for Canadians we all know they will simply stop this merger”
WHEN / WHERE:
The CRTC hearing on Bell’s takeover of Astral is taking place from Monday, September 10, 2012, through Friday, September 14 in Montreal, PQ.
Janet Lo of PIAC and Sophy Lambert-Racine of Union des consommateurs are scheduled to appear before the Commission on Wednesday, September 12. Spokespeople from OpenMedia or PIAC will be available to comment at any time.
BACKGROUND:
OpenMedia.ca is a grassroots organization that safeguards the possibilities of the open and affordable Internet. The group works towards informed and participatory digital policy.
The Public Interest Advocacy Centre (PIAC) is a non-profit organization that provides legal and research services on behalf of consumer interests, and, in particular, vulnerable consumer interests, concerning the provision of important public services.
OpenMedia.ca and PIAC are both members of the Stop the Takeover Coalition. The Coalition comprises public interest groups and industry players who are coming together, based on a set of common principles, to oppose the proposed takeover of Astral Media by Bell and to promote public engagement through the Stop the Takeover campaign.
The CRTC hearing has been called to examine the merits of Bell’s application for transfer of effective control for Astral Media’s licences. The CRTC hearing will canvass a number of issues, such as media concentration in radio and television services, vertical integration, and diversity of voices.
As CRTC Chairman Jean-Pierre Blais remarked in his opening statement, “I would remind everyone that it is the responsibility of a seller or their representative to prove that a transaction is in the public interest.” The Chairman also noted that the Commission would consider “the impact the transaction could have on subscriber rates and other relevant markets.”
Studies show that Bell’s takeover of Astral would lead to the former controlling an unprecedented amount of Canada’s content which would cement its dominance across the significant sectors of the media industry. Given this, the Stop the Takeover Coalition holds that the proposed Bell power grab will mean “fewer media and telecom choices, higher prices, and less opportunity for free speech” in Canada.
For more information, please contact:
Lindsey Pinto – 778.238.7710 – lindsey@openmedia.ca
Jim Goss – 416.534.4008 – pres@jgoss.com
Details can also be found at http://StopTheTakeover.ca.
Diverse Coalition forms in response to Bell’s proposed acquisition of Astral Media
Canadians to CRTC: Bell Takeover of Astral is Bad for Canada
August 28, 2012 – Bell’s proposed takeover of Astral Media is bad for Canada. That’s the message being sent by the new, broad-based coalition of groups known as the Stop the Takeover Coalition.
The Coalition consists of a diverse mix of organizations—public interest groups, consumer groups, and cultural industry stakeholders—that have joined forces, based on a set of principles, to draw public attention to the risks of Bell’s expansion. The coalition is encouraging Canadians to join the campaign by sending a messaging to decision makers at http://StopTheTakeover.ca.
Some of the groups leading the coalition include grassroots citizen-engagment group OpenMedia.ca (the group behind the largest online campaign in Canadian history) and the Public Interest Advocacy Centre (PIAC). They are joined by the Canadian Internet Policy and Public Interest Clinic (CIPPIC), Canada Without Poverty and the CWP Advocacy Network, the Canadian Media Guild (which represents over 6,000 media workers, including those from CBC, Reuters, the Canadian Press, and Shaw Media), the Consumers’ Association of Canada, the Council of Canadians (Canada’s largest citizens’ group), the Council of Senior Citizens’ Organizations of British Columbia (COSCO), and Québec-based consumer groups Option consommateurs and Union des consommateurs.
OpenMedia.ca Executive Director Steve Anderson explains the Coalition’s aim: “The CRTC now has no excuse. It’s abundantly clear that Bell’s proposed monopolistic takeover is bad for Canada, and Canadians know it.”
In March, Bell announced that it would seek to acquire Astral Media, and thus control a share of the broadcasting market in Canada that would be more than twice that of its largest competitor. This would create an unprecedented level of media concentration in this country, and lower Canada’s status from having one of the least competitive media systems in the industrialized world, to having the least competitive one (details below).
This could spell trouble for independent businesses seeking to compete, but more importantly, it could be the beginning of the end of real choice for Canadians.
Owning more media content creates an incentive for Bell to maximize profits by pushing content that it owns or restricting access to other content it can’t monetize – and it gives Bell control over the media content citizens consume, and delivery of daily communications.
“If Bell is allowed to control Astral’s content, Bell will to force higher prices and less choice on their customers and their competitor’s customers,“ says Janet Lo, PIAC Counsel. “If this takeover is allowed, prices and content will be offered only on Bell’s terms, and suppressing competition harms consumers.”
“With that type of size and concentration, consumers will face higher prices, less choices, less diversity of voices, and less quality,” said Robert Cazelais, Executive Director of Option consommateurs.
Anderson adds. “Canadians learning more and getting engaged are the strongest chance we have at pushing back against Bell’s takeover. We strongly encourage Canadians to make their voices heard at StopTheTakeover.ca.”
About the Stop the Takeover Coalition
The Stop the Takeover Coalition comprises public interest groups and industry players who are coming together, based on a set of common principles, to oppose the proposed takeover of Astral Media by Bell and to promote public engagement through the Stop the Takeover campaign. Learn more about the Coalition and its members at http://openmedia.ca/takeover/coalition.
PIAC is representing consumers in the process. On Aug. 9 the Public Interest Advocacy Centre filed these comments with the CRTC on Bell’s proposed acquisition of Astral Media.
Contact
Lindsey Pinto
Communications Manager, OpenMedia.ca
1-778-238-7710
lindsey@openmedia.ca
Janet Lo
Legal Counsel, Public Interest Advocacy Centre
1-613-562-4002×24
jlo@piac.ca
Statistics and Background
Four large companies—Bell, Shaw, Rogers, and QMI—control 86 per cent of cable and satellite distribution, 70 per cent of wireless revenues, and 54 per cent of Internet Service Provider revenues.
A report from Boston-based Analysis Group reports that 81.4 per cent of the value of Canada’s TV distribution (cable and satellite) market is controlled by companies that also create content, such as broadcasters and production companies.
Canada currently has the second-highest level of cross-media ownership and vertical integration among 32 countries studied by researchers in the International Media Concentration Research Project (Columbia University). It will be the highest amongst these countries if the CRTC does not pull the plug on the Bell/Astral deal.
While concentration is slowly declining elsewhere, in Canada it is rising sharply; the Bell/Astral deal will compound the trend.
Astral products currently represent Bell’s largest single content cost. Astral owns 22 television services and 84 radio stations, many of which currently compete with Bell’s 30 specialty channels and 35 radio stations. This includes Super Écran, The Movie Network and HBO Canada, and top specialty brands such as Canal Vie, Canal D, VRAK TV, MusiquePlus, Teletoon, Family and Disney Junior.
The Bell/Astral deal is valued at $3.38-billion.
Consumer and Public Interest Groups Oppose Bell-Astral Merger
Media Release
Consumer and Public Interest Groups Oppose Bell-Astral Deal
FOR IMMEDIATE RELEASE
August 9, 2012
OTTAWA – Four Canadian consumer and public interest groups today filed comments opposing the proposed acquisition of Astral Media Inc. by Bell Canada, a division of BCE Inc., with the Canadian Radio-television and Telecommunications Commission (CRTC).
The Public Interest Advocacy Centre (PIAC), who also acts as counsel for Consumers’ Association of Canada (CAC), Canada Without Poverty (CWP), and Council of Senior Citizens’ Organization of British Columbia (COSCO), stated the groups do not believe that the proposed transaction will benefit consumers. The groups outlined several concerns, including: the impact of the proposed transaction on the diversity of voices in the Canadian broadcasting system; increasing levels of media concentration in conventional television and pay and specialty television services; increasing costs for “basic service” television programming; and increased vertical integration, leading to weakened competition in broadcasting services.
“If this transaction is approved, consumers will be offered even less flexibility in packaging and fewer choices to pick and pay only for the television services they want to watch,” said Janet Lo, PIAC Counsel. “Our primary concern is the trend of rising prices for subscriptions to television services which are increasing at a significantly higher rate than other communications services,” added Lo.
PIAC/CAC/CWP/COSCO also expressed serious concern about Bell’s proposed tangible benefits package for this transaction. The groups particularly target the proposal to direct $40M to BCE Inc.’s subsidiary Northwestel in order to modernize broadband infrastructure in the North. While all four groups strongly support more broadband service in the North, this plan would only benefit Northerners if they subscribed to Northwestel’s internet services, and does not truly benefit the Canadian broadcasting system.
The groups’ submission contains commissioned evidence from respected academic Dr. Dwayne Winseck, Professor at the School of Journalism and Communications with a cross appointment at the Institute of Political Economy, Carleton University. Dr. Winseck has been the lead Canadian researcher in the International Media Concentration Research Projectsince 2009.
Full Comments [pdf file: 0.48mb]
Appendix A – Evidence of Dr. Dwayne Winseck [revised 13 Aug 2012] [pdf file: 1.25mb]
Appendix B – History of Bell’s Retail TV Prices and Packaging [pdf file: 1.49mb]
Appendix C – Comparison of Basic Service Prices in Six Local Markets [pdf file: 0.06mb]
For more information:
Janet Lo
Counsel
Public Interest Advocacy Centre
ONE Nicholas Street, Suite 1204
Ottawa, Ontario
K1N 7B7
(613) 562-4002×24
jlo@piac.ca
John Lawford
Counsel
Public Interest Advocacy Centre
ONE Nicholas Street, Suite 1204
Ottawa, Ontario
K1N 7B7
(613) 562-4002×25
(613) 447-8125 (cell)
jlawford@piac.ca
Public Interest Advocacy Centre News
In this issue:
• Cellphone rates in Canada
• Bell stung by $1.00 payphone backlash
• Airline fees, services, advertising and on-time performance
• Bell veut augmenter ses tarifs
PIAC supports wireless consumer code
In a May 4 CRTC submission the Public Interest Advocacy Centre supported a national code to protect wireless consumers. PIAC wants a code that at least meets the provincial consumer protection standards now in place or before legislatures.
Finance Minister chooses banks over bank customers
On May 1 the Minister of Finance announced plans to effectively allow Canadian banks to choose their own judge in disputes with customers. PIAC’s John Lawford said, “The Minister had to pick between consumers and banks. He chose the banks.” PIAC will continue to fight for the independent Ombudsman for Banking Services and Investments (OBSI).
Consumer transactions, 60 per cent of Ontario’s economy
PIAC’s Michael Janigan told the Windsor Star Ontario consumers have substantial legal protection but often lack information and resources to exercise their rights. What’s missing is adequate funding to enforce the rules and make consumers more aware. Janigan said: “You can’t have a province where you have 60 per cent of the economy based on consumer transactions and have a department with a $45-million budget that deals with consumer services.” Ellen Van Wageningen wrote for the Windsor Star on Apr. 23.
Avoiding smartphone ‘bill shock’, You can’t give all of the responsibility to the consumer
“PIAC’s John Lawford thinks a possible solution would be to institute a system where cell providers notify customers when there is suspicious activity with their account, including a sudden increase in expensive international text messages or a sudden spike in data usage. He said, “I just think at a certain level, you can’t give all of the responsibility to the consumer,” CBC News reported on Apr 17, 2012.
Ontario promises legislation to make wireless contracts for cellphones clearer
“PIAC welcomed the Ontario legislation to control what it called “unfriendly practices” in the cellphone industry, noting that Quebec and Manitoba are also taking action. PIAC’s Michael Janigan said: “We want a thriving rivalry in the wireless market, not one where customers are locked into plans and contracts that no longer serve their needs and are one-sided in favour of the provider,” Keith Leslie reported for the Canadian Press on April 12.
Bell’s $2.80 touch-tone fee, Roll it into the basic rate
“Why does Bell charge $2.80 a month for touch tone service on customers’ home phone bills? … Push button dialing became commercially available 40 years ago and is now the standard. Without a touch-tone phone, you can’t carry on business with the world. … Bell should roll the touch-tone fees into its basic rate, says John Lawford, a lawyer with the Public Interest Advocacy Centre in Ottawa. He believes that only charges required by government should be broken out on clients’ bills,” Ellen Roseman wrote for the Toronto Star on Apr. 10.
Adding wireless competition, A hell of a job
The Calgary Herald “favour(s) more competition over regulation, but recognize the difficulties of opening the market in a country as large as Canada, but with a relatively small population. Ottawa-based consumer group Public Interest Advocacy Centre … points to the European Union model of regulation. … Roaming charges will be cut to 90 euro-cents per megabyte starting in July. (PIAC’s John) Lawford believes competition, in theory, would bring down the prices in the long run, but points out the reality: “Getting even one new player into the market, in Canada, is a hell of a job,” the Calgary Herald reported on Apr. 7.
Airline fees, services, advertising and on-time performance
In testimony to the Senate Public Interest Advocacy Centre outlined basic problems with the way Canadian airlines do business. Michael Janigan said the industry is constantly changing the terms and conditions of fares, advertised prices are misleading and smaller cities are not well-served. He said there is no financial monitoring of the airlines. When an airline goes bankrupt there is no guarantee that pre-paid ticket holders will be reimbursed. Janigan called for “an Airline Users Council to fight for consumers in his Apr. 3 testimony to the Senate Standing Committee on Transport and Communications.
Bell veut augmenter ses tarifs dans les téléphones payants
Bell a demandé au Conseil de la radiodiffusion et des télécommunications canadiennes (CRTC) d’approuver l’augmentation du tarif de ses téléphones de 100 %. Le prix à payer pour un appel local passerait de 50 cents à 1 dollar. Un appel local, fait avec une carte (et non pas de la monnaie), coûterait maintenant 2 dollars, au lieu de 1 dollar. Les associations de protection de consommateurs, comme le Centre pour la défense de l’intérêt public et le Canada sans pauvreté, dénoncent cette mesure. Elles croient que cela va nuire grandement à l’utilisation des téléphones publics, tout en empêchant les entreprises de télécommunications d’offrir ce service à un prix raisonnable» Branchez-vous a rapporté le 2 avril 2012.
Bell payphone rate hike proposal under fire
On April 1 the Globe and Mail reported “Bell Canada and Bell Aliant Inc. are jointly asking the (CRTC) to approve payphone price increases of up to 100 per cent. …. Consumer groups, including the Public Interest Advocacy Centre, and Canada Without Poverty, say the price increases would “destroy” payphone use and enable the companies to wriggle out of their obligations to provide the service,” Rita Trichur reported for the Globe and Mail on Apr. 1.
New fund supports presenters at CRTC broadcasting hearings
“When BCE purchased CTVglobemedia in 2011, it committed $3 million to create the Canadian Broadcasting Participation Fund. The company subsequently presented a proposal to the CRTC. … CRTC approval for the Fund is subject to the requirement that BCE Inc. and the Public Interest Advocacy Centre (jointly, BCE and PIAC) file signed and dated executed copies of the requested documents as well as the agreements amended according to Commission’s directions set out in the appendix to this document within 30 days of this regulatory policy,” Mediacaster reported on March 27.
Airline fees, services, advertising and on-time performance
Senate Standing Committee on Transport and Communications
April 3, 2012
Speaking notes
Michael Janigan
Executive Director and General Counsel
Public Interest Advocacy Centre (PIAC)
Ottawa, ON
Introduction
The Public Interest Advocacy Centre, (PIAC) is a national non-profit organization based in Ottawa that attempts to provide representation, research and support for the position of the ordinary and vulnerable consumer in the marketplace, particularly with respect to important public services. At the time of the transfer of control of Canadian Airlines to Air Canada, PIAC became engaged in the policy debate associated with the restructuring of the industry through its participation in a coalition of organizations under the title the Canadian Association of Airline Passengers (CAIP).
PIAC later was part of a coalition of consumer groups and the travel industry formed in 2005, and styled as the Travel Protection Initiative (TPI). TPI was dedicated to a number of consumer protection goals including all-in pricing for airline advertising, improved financial monitoring of airlines, and maintenance of publicly available performance statistics.
We have recently made some progress on that agenda, as the government has initiated a long overdue process to put in place all-in pricing for airline advertising that will result in airline advertising rules similar to those in existence in the United States and Europe. It will also level the playing field by imposing the same responsibilities on airlines that have been in existence for travel agencies for most of the decade.
The mandate of this Committee’s study is a large one, and our resources and expertise cannot address all of the components. We will try and concentrate on the subset of issues that fall under Part C of the mandate – the business relationship of the airline industry with its passengers. There are a number of timely issues to be addressed under this general heading.
What is basic service?
The last decade has seen a winnowing of those elements of the passenger experience that formerly were provided with the purchase of a ticket at the economy or lowest fare.
From withdrawal of ancillary items such as complimentary food service, blankets and pillows, to the imposition of baggage fees, seat selection fees as well as curtailing of responsibility of passengers in transit, it is difficult to set out exactly what is the package of rights and privileges a passenger is purchasing when boarding an aircraft.
This makes comparability of fare pricing a difficult exercise for passengers, and leaves open the possibility that the pared down level of service obtained is not what the customer expects. Transport Canada’s (TC) Flight Rights Canada 2008 document is not much more than a recitation of airline policy with minimal rights or remedies for passengers.
A definition of basic service is urgently needed that addresses minimal passenger expectations, and provides a floor that protects consumers from airlines cutting corners.
Pricing
A study published in the January 2002 Report of the Federal Reserve Bank of San Francisco showed that unlike the United States, where air fares dropped 40% during the restructuring of the airline industry, Canadian air fares had not been reduced by the restructuring exercise and the Canadian market showed about 1/3 the percentage growth of their American counterparts.
Today, Canada’s average domestic fare, as of quarter 1 of 2011 was $188.30, while the average domestic fare in the first quarter of 1983 was $119.80. The figure based on CPI measured inflation would be $249.20, showing that price performance across the Board has been sufficient to halve the expected rate of inflation.
However, as noted above, average domestic fares in the first quarter of 2011 cover a reduced package of services compared to what existed in 1983, and there is the likelihood that any price benefits have flowed largely to more travelled city pairs.
Indeed, some of the pricing for less competitive city pairs, such as Charlottetown to St. Johns, seems based on Ramsey pricing principles intent on capturing revenue for discounts made elsewhere. There seems to be official ambivalence to this phenomenon, not matched by customers. The fact is, saving for some possibility of competitive entry and occasional resort to other forms of travel, there is little price discipline for air travel between city pairs where insufficient competition exists.
Finally, given the country’s geography, where there are vital routes that are uneconomic to serve at reasonable fares, a system derived subsidy, similar to local service telecommunications, should be used to achieve the transportation objective. It should be available to a potential provider on a competitive bid basis.
Loyalty Programs
The time should be long past when these programs are regarded as some kind of frill bestowed upon customers at the sole discretion of suppliers. The accumulation of points redeemable for air fares or other products has become a driver for purchase decisions. While such points are part of the consideration flowing to the customer, they have been characterized by the merchant as inherently valueless for the purpose of monetization.
The increasing use of accumulated points and credits to tie consumers to particular buying practices has a large potential impact on the range of choice that might be available to consumers and the ability of new entrants to penetrate existing markets with better prices and products. As well, the unilateral right to change aspects of such programs, gives rise to the suspicion that customer’s loyalty has been given in exchange for hollow promises.
The retreat from regulation in many industries has meant that consumers are reliant on competition in the market to provide value and choice. If their choice has been induced by a perception of value that is not there, the program is both subversive of healthy competition based on efficient delivery and a bad bargain for consumers. These are not idle concerns. We note that Aeroplan was frequently cited as the reason that Canadian Airlines failed to penetrate Eastern markets in the 1990s.
We suggest that basic rules be put in place that disclose the number of reward seats available on potential travel involving loyalty points, providing minimum notice period for changes, and measures to ensure that any changes do not diminish the value of existing points.
Financial monitoring and Compensation Fund
One alarming aspect of Canada’s regulatory framework is the non-existent financial monitoring of airlines after the initial approval period. If a major carrier fails, the advance payments of customers will not be protected by any TC governance model. In fact, TC does not have access to the basic tools of assessment such as the P & L and balance sheet, to assess the prepaid liability versus cash on hand.
While the industry relies on fewer advance payments, with sector fares and little lead time requirements for advance booking, the government’s failure to put in place a program of financial monitoring or insist that airlines participate in a national passenger compensation scheme will again be called into question in the event of a large failure.
Can we rely on the credit card processors to pick up the tab for charge backs in this case?
Provincial travel agency regulators such as TICO do protect the failure of an end supplier air carrier, up to $5 million per event notwithstanding the fact that the airlines do not contribute to the TICO Fund. However the losses may be greater than the limit and only passengers using agencies in Ontario, B.C. and Quebec will be eligible to be reimbursed.
Performance Statistics
There is little point in relying on competition to discipline the airline travel market, and then fail to collect and publish information that would enable a carrier’s superior performance to reward with higher market share. The U.S. Department of Transportation and the Federal Aviation Authority publish extensive information concerning on-time arrivals, lost baggage, tarmac delays, and cancelled flights.
The U.S. Department of Transportation provides financial disincentives for carriers exhibiting poor practices in the form of fines and other formal penalties. Canadian customers need this information to make the best choices in the market and the regulatory framework needs enforcement of service quality to ensure that reasonable expectations of passengers are met.
Complaints Commissioner
The incorporation of the complaints resolution process inside the Canadian Transportation Agency has not been successful. Despite the promises made by TC officials when the office of the Complaints Commissioner was discontinued in 2007, there has been scant publicity concerning this function of the agency, most of it directed to discouraging its use. The window on airline customer practices, opened when Commissioner Bruce Hood and his successor were in office, has closed.
Airline passengers, and the industry itself, need a complaints commissioner with the power to handle customer disputes, and to impose solutions when agreement is impossible. Similar to the situation in telecommunications (where more robust competition exists), there is a need for an independent ombudsman to mediate and resolve customer disputes.
As well, a commissioner can call attention to generic service problems and suggest possible solutions. The CTA’s formal procedures are not attuned to passenger needs and are designed to establish formal rules based on existing regulations in a quasi-judicial fashion. Most passenger difficulties do not need or reach that level of adjudication.
Passenger Involvement
Airlines were an early experiment in deregulation and their governance is reflective of the prevailing ideology that all that was necessary was to stand back and let the market work. The government lacks the information and the means to appropriately assess the state of customer satisfaction and consumer protection, and TC has been distressingly disinterested in devising any metrics of airline performance and the monitoring and enforcement of the same. Outside of some academic studies mostly geared to airline financial performance, there is a dearth of empirical studies designed to shed light on what is actually working.
The position of the airline passenger in the market is mainly defended by a scream threshold triggered when airlines design some cost-cutting measure that is injurious of the passenger experience.
There is a need, at a minimum for an Airline Users Council to provide push back on behalf of consumers and to make inroads on what appears to be a state of bureaucratic lethargy or regulatory capture. And while the finances of some airlines are less than robust, the record appears to indicate that customer dissatisfaction is hardly the recipe for financial success in the long term.
PIAC welcomes Ontario cellphone consumer protection bill
The Public Interest Advocacy Centre (PIAC) welcomes the introduction of legislation to control consumer unfriendly practices in the cellphone industry.
PIAC notes that this step mirrors efforts in other provinces such as Manitoba and Quebec to prevent wireless providers from enforcing contractual terms that are unreasonable and anti-competitive.
“We want a thriving rivalry in the wireless market, said Michael Janigan, Executive Director and General Counsel of PIAC, not one where customers are locked into plans and contracts that no longer serve their needs and are one-sided in favour of the provider. PIAC noted that the Bill had been modeled after Bill 5, a private members bill introduced last year in the Provincial Parliament. Janigan said that the provincial initiatives clearly respond to the public sentiment that the terms of customer arrangements for mobile service have been skewed against the consumer.
Source:
Michael Janigan
General Counsel
Public Interest Advocacy Centre
(613) 562-4002 ext 26
mjanigan@piac.ca
Background
No more cell shock!
NEWS RELEASE
DAVID ORAZIETTI, MPP
GOVERNMENT OF ONTARIO
