OTTAWA-GATINEAU – TV distribution newcomer Manitoba Telecom Services had its complaint over Shaw Cablesystems distribution of certain channels denied today by the CRTC.
But that doesn’t mean the rules aren’t about to change, again.
In August 2004 MTS, which operates a DSL-delivered digital television product in Winnipeg, asked the Commission for an expedited mandatory order, under section 12(2) of the Broadcasting Act, saying Shaw was violating the distribution and linkage (D&L) rules.
MTS complained that in and around Winnipeg, Shaw has been offering certain discretionary services (Family Channel and the U.S. superstations KTLA Los Angeles, WGN-TV Chicago, WPIX New York City, and WSBK-TV Boston) as part of a "digital basic" package.
The Manitoba telco contended that offering the channels this way is against the D&L rules that apply to Class 1 and 2 BDUs, “in particular, paragraph 12 of the D&L rules pertaining to services distributed on a digital basis requires that, where a licensee distributes any of the services in question, ‘the licensee is required to distribute that service exclusively as a discretionary service,’” recounts the decision. “MTS argued that, since the services identified by MTS are received by all subscribers to Shaw’s digital basic package without a specific fee therefor, they are not distributed on a ‘discretionary’ basis.”
Shaw, on the other hand, said the packaging was a consumer-friendly way to boost the penetration of digital. Since customers have to upgrade their service from analog to digital to get the pay channels, and the costs for providing those channels is built into the digital box, that makes them discretionary, even if the company calls it digital basic. “In Shaw’s view, the services identified by MTS are actually distributed as discretionary services since they are not part of its basic service but are offered to subscribers, at their option, for an additional fee,” says the decision.
Commissioners, maybe a little reluctantly, agreed with Shaw, saying, “this (set top box) fee does distinguish these services from those offered as part of the basic service and is separate from and in addition to the fee charged for the basic service… Accordingly, the Commission considers that, in this case, the services in question generally meet the definition of a ‘discretionary service’ contained in the Regulations.”
It’s “ a marketing rather than a regulatory matter,” said the Commission.
However, the decision did say that the D&L rules are too vague in cases like this because when they were constructed, such a possibility was not pondered. Basically, Shaw found a loophole.
The rules, which were made to ensure customers weren’t made to pay for services they didn’t ask for in analog, requires that certain programming services be distributed exclusively as discretionary services, including pay television services and satellite services authorized for digital distribution.
Specifically, it states, “Except as otherwise provided under a condition of its licence, where a Class 1 licensee distributes any of the following programming services, the licensee is required to distribute that service exclusively as a discretionary service:
a) any pay television service or any television pay-per-view service offered by a pay television undertaking;
b) any satellite service as set out in the list of Part 2, Part 3 and DTH Eligible Satellite Services for digital distribution as well as any non-Canadian religious satellite services.”
“The arguments raised by MTS indicate that the clarity of the rule, as currently drafted, could be improved to better reflect its intended purpose,” says today’s decision and the Commission has opened a call for public comments on the matter.
So, it wants to add the following paragraph to the above rules:
“For the purposes of this rule, the term "a fee separate from and in addition to the fee charged for the basic service" in the definition of "discretionary service" in section 1 of the Broadcasting Distribution Regulations shall be deemed to include the amount charged for the rental or purchase of equipment in addition to that necessary for the reception of the basic service.”
Which, if adopted, means Shaw would have to break out, or add a fee, onto its digital basic customers for the above pay services under the plan MTS complained about.
The deadline for comments is June 6, 2005.
– Greg O’Brien
