By Denis Carmel
GATINEAU – Until now the CRTC regime in place to compensate owners of conventional TV signals distributed by cable companies outside of their markets seem to work fairly well.
Terrestrial BDUs offer distant signals for ‘time shifting’ purposes. It allows subscribers to watch popular shows at a different time by watching a station in a different time zone. Since local stations are losing advertising money (advertisers only pay for local viewership) a compensation regime was put in place.
To distribute such signal, the cable company needs consent from and provide compensation to the owners of conventional television stations. Before that, payments were made to the Canadian Association of Broadcasters (CAB), which redistributed the money. The new regime got introduced with decision 2008-100, became a part of BDU regulations in 2011 and came into force in 2018 at Telus BDU licence renewal that allowed Telus to pull out of the CAB agreement.
Once Telus terminated the CAB agreement, Rogers Media stopped receiving compensation for its signals distributed by Telus in its Alberta (Citytv—Toronto and Vancouver) B.C. (Citytv-Toronto, Edmonton and Calgary) and Quebec systems. (Citytv—Toronto) Rogers tried to resolve the issue, but Telus is arguing that the regime is null and void because of the 2012 Supreme Court decision, initiated by the CRTC, to validate the legality of the BDUs having to pay for carrying local over the air signals. The infamous “value for signal” case (still called fee-for-carriage by many).
The Supreme Court ruled the CRTC did not have the jurisdiction to impose a compensation scheme since that was under the Copyright Act jurisdiction.
However, “market-based negotiations will allow broadcasters to recover the ‘full value’ of their signals and the programming rights they have acquired. A free negotiation between the parties, taking into account any damage to the broadcasters as well as the value of the signals to the BDU, should result in a fair price,” is what CRTC 2008-100 reads.
“(S)hould the parties be unable to do so, the Commission is prepared to offer its dispute resolution services on a final offer basis (FOA),” the decision goes on.
This is why Rogers applied to the CRTC for an FOA process on June 26, 2019.
This resulted in a flurry of correspondence. Rogers and Telus accused each other of not discussing in good faith and eventually, CRTC staff sent requests for information to both parties to get to the bottom of this rabbit hole.
In the RFI to Telus, Commission staff, in the background discussion, expressed the view that the distant signals regime “still applies today—i.e. BDUs are currently required under section 21 of the Regulations to obtain consent from distant Canadian television station owners before making the signals available to subscribers.”
So, the preliminary view of the Commission is Telus is offside. Telus has suggested to the Commission it should run a public process to deal with this issue.
This type of regulation is a slice of the arcane rules governing the industry. It makes one wonder, too, why Rogers Cable is not following the Telus lead to stop payments since, as the biggest cable company in the country, it could stand to benefit the most.
The rules also say if a BDU carries one distant signal, they have to carry the others in the same time zone. A Corus spokesperson told Cartt.ca the company has “also been impacted by Telus’ change to longstanding practice and we share Rogers’ concerns.” Bell Media has not responded to our inquiry.
Let’s go way back to former CRTC chair Jean-Pierre Blais’ Ker-Plunk comment during the Let’s Talk TV hearings, where he said:
“It has taken years to build this regulatory system… decades, frankly. I am not suggesting that we take as long to dismantle it, to adapt to a new environment, but there is a management of change that needs to occur, and how much change the system can absorb within a short period of time,” said Blais during his questioning of Bell Canada.
“I often think of … the old Kerplunk game … all the marbles at the top, and you took turns pulling out a little stick, and the crashing of the marbles at the end. I often think of that when I think about deregulation, and adapting to the system, and going at the right pace, or not.”
Parties have until March 23rd to intervene.
