IN (THURSDAY’S) ARTICLE about Shaw’s proposal to eliminate many of the VOD rules, you incorrectly give credit to their argument that the 5% contribution obligation for VOD services somehow represents an inequitable “double counting” [“Shaw’s submission, rightly, it seems, notes… “].
Shaw, (and other BDUs affiliated with VOD services), made this same ‘double counting’ argument in their responses to BNOC 2010-702, when the CRTC proposed standard requirements for VOD. However, their argument at that point was against the CRTC’s apparent proposal that VOD services pay their 5% on 100% of the related retail revenue received by their affiliated BDU rather than on 50% of that amount, as had been the long-standing approach.
Based on that proposal, (which the CRTC subsequently “clarified” in BRP 2011-59 as not being what it had meant), there would have arguably been inequitable double-counting, because the BDU would pay its 5% on 100% of its VOD retail revenues and its affiliated VOD services would also have to pay its 5% on that 100%. Shaw rightly pointed out at the time that specialty and pay services calculate their CPEs on the affiliation payments they receive from BDUs, not on the full retail revenues the BDUs collect in respect of such services. In BRP 2011-59, the CRTC decided to stick with its historical approach, so BDUs continue to pay their 5% on 100% of their VOD retail revenues and their affiliated VOD services pay their 5% on 50% of that amount (deemed to represent the affiliation/wholesale payment they receive).
Notably, in its response to 2010-702, Shaw did not argue that the ‘5% on 50%’ rule was double counting: it simply argued that eliminating the VOD contribution obligation in its entirety would make VOD services more competitive (an argument in itself which deserves challenging).
As noted, specialty and pay services (even BDU-affiliated ones) pay their CPE on their “wholesale” revenues notwithstanding BDUs pay their contribution based on associated retail revenues. To my knowledge, no one – not even Shaw – has called that long-standing system inequitable double counting (indeed Shaw acknowledged the system in is 2010-702 comments). Accordingly, there is no credibility to Shaw now trying to argue that the same system applied to VOD services is somehow inequitable double counting.
Jay Thomson, LL.B, LL.M
Vice President, Broadcasting Policy & Regulatory Affairs
Canadian Media Production Association
