OTTAWA - The national telecommunications regulator is putting Bell Mobility in the penalty box for securing exclusive rights to hockey and football content for mobile devices.
The wireless phone company gave itself a significant competitive advantage by signing deals with the National Hockey League and National Football League, the CRTC ruled Monday.
"Canadians shouldn't be forced to subscribe to a wireless service from a specific company to access their favourite content,” Konrad von Finckenstein, chairman of the CRTC, said in a statement.
“Healthy and fair competition between service providers will promote greater choice for Canadians.”
The decision followed a complaint from Telus Communications (TSX:T) last January after it failed to secure the rights, first from the two sports leagues and later from Bell (TSX: BCE).
The NHL content includes games and video highlights, while the NFL content includes prime-time games and playoff games, including the Superbowl.
Telus argued that the exclusivity of Bell's deal had a negative impact on Telus's ability to compete in both the broadcasting distribution and wireless markets.
Bell's position was that Telus could still broadcast content not covered by those deals and had presented no evidence that without the content, it couldn't compete.
But in its ruling, the regulator said Bell's exclusive deal put Telus at an undue disadvantage.
"Although the Canadian mobile content distribution market is an emerging market, it is likely that sports will be a primary driver in the mobile video market and there will continue to be an increase in consumers’ desire to have access to popular premium sports programming over mobile devices in Canada," the ruling said.
"This serves to increase the likelihood that the arrangements between Bell and the NFL and NHL would have a significant adverse impact on Telus’s ability to attract mobile subscribers for its broadcasting content."
The CRTC ruled Bell Mobility must file a report within 30 days explaining how it will ensure Telus has access to the NHL and NFL content at reasonable terms.
The company can ask the CRTC to reconsider or it can appeal the ruling to the Federal Court of Canada.
A spokeswoman for Bell said the company is reviewing the decision.
"Bell does not control how the major leagues sell their rights in Canada," Jacqueline Michelis said in an e-mail. "We do not have the right to sub-license or re-sell this content," said
"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."
There is a risk in the CRTC's decision, said telecom analyst Mark Goldberg.
"If the CRTC says to Bell it is illegal for you to enter into an exclusive arrangement and the content provider makes a determination that the only way that they will sell content in Canada is under an exclusive arrangement, then the only possible outcome of that is that the content won't be available in Canada," he said.
Telus welcomed the ruling, saying all it wanted was the same distribution access as Bell.
"What (the CRTC) is trying to do here is to ensure from a consumer perspective they have ease of use, more attractive and flexible packaging across all platforms and more affordable rates," said Michael Hennessy, senior vice president of government and regulatory affairs for Telus.
"That's really their goal and the only way you can do that is to ensure all distributors of context get access to the broadcaster."
But Goldberg suggested there's no proof it's actually in the best interests of consumers.
"What would happen if Bell kept that exclusive? Well, for Telus or Rogers, they would either have to find some other really compelling content or they might have to drop prices," he said.
"Isn't that more of a consumer benefit than all of the carriers having all of the same content?
The CRTC decision comes days after Bell and Rogers (TSX:RCI) teamed up for a $1.07-billion bid for a majority stake in the Maple Leaf Sports & Entertainment, giving them ownership of the NHL's Maple Leafs, the NBA's Raptors and the Toronto FC soccer club.
While the two companies are fierce rivals in the mobile communications business, the deal was built on consumers' growing hunger for sports content broadcast on mobile devices.
Anything the two companies choose to do with mobile content as part of that deal will fall under the CRTC's new vertical integration policy, announced this fall.
It says that programs designed primarily for television cannot be offered on an exclusive basis for mobile or Internet services.
Telus filed its complaint about the NHL and NFL deal prior to the new policy announcement, but Monday's decision by the CRTC does provide guidance, Goldberg said.
"It provides some clarity about what the CRTC will do in cases where it finds there was discrimination," Goldberg said.