A 20-year partnership signed in 2013 by Videotron and Rogers to jointly develop a 4G LTE wireless network in Quebec and the Ottawa region is turning into a fierce commercial dispute.
In a lawsuit filed Friday by Videotron in the Superior Court of Quebec, the main subsidiary of Quebecor is claiming 850.3 million from Rogers Communications.
The request indicates that the troubles date back to 2018 when Rogers “artificially caused an impasse in the operation and development of this common network, putting Videotron in front of a fait accompli: Rogers was developing its own parallel network”.
According to Videotron, while the two parties were having difficulty agreeing on cost sharing for a network update, the situation escalated shortly after changes in Rogers management.
The new CTO, Jorges Fernandes, is said to have said in particular that he “had never seen such a bad partnership agreement. […], which, according to him, favored Videotron to the detriment of Rogers “and that” whoever had negotiated […] for Rogers and still working there was to be fired ”. He would have asked Videotron to make him a proposal to modify or renegotiate the agreement so as to give the reins to Rogers.
Still according to the request, Rogers then wished to increase the costs associated with the access tariffs (use of the spectrum belonging to Rogers) to the common network. The consequences for Videotron of this request “would prove to be catastrophic, amounting to spending exceeding several hundred million dollars” what had been previously agreed, can we read in the court document.
Rogers would then have revealed to Videotron that it was starting to set up a parallel network, anticipating an impasse in the discussions, which would have forced Videotron to do the same thing, it is indicated in the lawsuit.
Videotron claims that Rogers conducted the negotiations in bad faith with ever-increasing proposals and including new components to the point of causing an impasse with the objective of fabricating a pretext to cause the premature dismantling of the common network hampering the passage of Videotron subscribers. and allowing for the unjustified establishment of a parallel network.
Videotron thus had to set up a separate infrastructure which forced it to spend sums that it would not have had to commit, had it not been for the deadlock caused by Rogers, the document underlines.
Videotron accuses Rogers of wanting to distort the agreement “in front of the market shares lost to the benefit of Videotron in Quebec and in the region of Ottawa, historically dominated by Rogers”, it is argued.
Not in the best interests of customers, says Rogers
A partnership between Videotron and Samsung for the deployment of a 5G network was announced in December 2019, when the network jointly developed by Rogers and Videotron uses Ericsson technology.
“Unfortunately, Videotron has decided not to join us in investing in network improvements in Quebec. This decision is not in the best interests of our customers and is inconsistent with our goals of providing our customers with superior connectivity, ”Rogers management said in an official statement sent to Press by email Friday.
Regarding the Videotron lawsuit, we will respond to it in more detail before the courts.
Rogers, in an official statement sent to Press by email
Rogers also argues in its email that the company is investing billions of dollars in infrastructure to provide the “best possible service experience.” “These investments continue to grow as we improve connectivity for Quebec families and businesses and accelerate the deployment of 5G technology to connect more communities across Quebec. ”
This commercial dispute between Rogers and Videotron comes as a power struggle unfolds at Rogers between members of the founding family of the company and while Rogers awaits the approval of regulatory authorities to complete the acquisition of Shaw Communications.
Rogers had tried to acquire Videotron at the turn of the 2000s. Quebecor had then teamed up with the Caisse de depot et placement du Québec to buy Videotron and thus outsmart Rogers.