A court in British Columbia has ruled that Rogers Communications Inc.(TSX:RCI.B) cannot continue to claim it has “Canada’s Most Reliable” wireless network without qualification, a move that comes as competition in the cellphone market becomes even fiercer with the advent of the holiday season.
Tuesday’s ruling is largely a victory for Telus Corp. (TSX:T), which asked the court to prevent Rogers from continuing to make the long-standing claim, arguing that Telus and Bell Canada (TSX:BCE) network upgrades earlier this month made it impossible for Rogers to claim superiority.
B.C. Supreme Court Justice Christopher Grauer said in his ruling that he agreed with Telus’ argument that Rogers couldn’t make the claim based on information that has become outdated.
“Rogers must, on the evidence, be taken to know that its representation that it has Canada’s most reliable network is based on a comparison that is no longer valid,” Grauer said.
“Given the proximity of these proceedings to the pre-Christmas buying season, and the fierce nature of the competition in this highly profitable market, the commercial importance of this application is not inconsiderable.”
But the interim injunction will not have immediate effect as the court works out the precise terms.
Grauer questioned whether Telus’ request went beyond what is necessary and wanted to make the scope of the limitation on Rogers as narrow as possible.
Grauer also said Rogers should have a reasonable amount of time to bring its advertising into compliance. He ordered the parties to work on the wording for a court order and reappear Friday.
Telus spokesman Shawn Hall said the company suffers damages each day the ads circulate.
“This is a hotly competitive industry,” he said. “And this is the biggest time of the year for us coming into Christmas, so it is critical that Rogers remove false, misleading and harmful claims from their advertising immediately.”
Rogers argued Bell and Telus would gain a competitive advantage if it has to change its advertising strategy now. It will appeal the decision.
“We are perplexed by the decision. We continue to believe that our network reliability claim is valid,” it said.
Telus also sought an injunction against Rogers claim to Canada’s fastest network, but Grauer adjourned the application, noting that beginning Nov. 2, Rogers abandoned the claim and has made efforts to ensure the phrase is no longer used.
Carmi Levy, a telecom analyst at AR Communications Inc. said the timing of the lawsuit, as well as the appeal to delay the injunction, are not coincidental.
“All the wireless carriers are approaching the all critical holiday season and so what they’re doing is positioning themselves for the biggest possible marketing push in advance of the most important buying period of the year.”
Levy said the Rogers appeal is about getting out of the suit with the least amount of embarrassment possible, adding he finds it hard to believe they don’t have a contingency campaign lined up for the holiday season.
“Reliability and speed are only two aspects of the wireless ownership experience. It serves all parties best to put this rather trivial dispute behind them, so they can focus on the things that matter most to Canadian consumers.”
Ultimately, he added, the dispute is a good indicator that competition is healthy between Canada’s cellphone players.
“Even if it seems trivial in some ways it’s a good sign for Canadian consumers because it means the status quo is a thing of the past,” he said.
Rogers shares were down seven cents at $32.03, while Telus shares were down 19 cents at $34.61 Tuesday on the Toronto Stock Exchange.