GATINEAU – Cable and satellite distributors took it on the chin again Friday at the CRTC’s hearings on broadcasting, this time from Astral Media, the country’s biggest French and English specialty and pay television network.
However this time, it wasn’t over the question of carriage fees to conventional networks but over access for new entrants.
Astral pressed the Commission to consider a new model that would ensure that any new specialty service, which had already won CRTC license approval, would have guaranteed access to a distributor’s lineup of channels.
“Access is fundamental,” said Astral Board Chair André Bureau. He called it a “travesty” that BDUs are able to deny access to new services when those services have demonstrated their value and been licensed by the CRTC.
In its presentation, Astral also outlined a proposal for a dispute settlement mechanism, which would include final offer arbitration, as well as a new twist on the basic cable packages available to consumers, by offering one that would include all the available French-language channels.
Bureau, a former chair of the CRTC from 1983-89, welcomed the CRTC’s review, saying it’s an opportune moment to review regulations and get rid of those which are no longer necessary.
Unlike intervenors on the conventional TV side, such as CTV and Canwest Global, who warned the CRTC about “cracks in the foundation”, Bureau said this is the proper time for a review, because there is “neither crisis nor emergency” and the industry is in generally good financial health.
In responding to the CRTC’s request for comments on the look of basic service packaging to consumers, Astral proposed a model which Leonard Katz, the CRTC’s vice-chair of telecommunications, called the most comprehensive heard so far.
It includes this proposal to guarantee a place for new licensed specialty services, and when prodded by the commissioners, Astral executives took aim at distributors.
John Riley, President of Astral Television Networks, pointed out the CRTC has acknowledged that the goal of promoting diversity among Category 2 services has not been achieved.
“There are some 200 applications per year and most of them don’t see the light of day. So in terms of generating innovation, it doesn’t seem to be very productive,” Riley said. “In our view, the best way to do that would be for the Commission, on a periodic basis, to review applications, and those that provide incremental diversity would be authorized. In no way does that stifle innovation, it just better ensures, coupled with the access right, that the ‘hit’ rate of applications becoming services increases.”
“When you see that, of the 390 licenses that have been given for Category 2, only 5% of them are carried by major distributors, we have to look at that and say, what have we accomplished?” asked Bureau. “Considering that we want to continue having fantastic diversity, why not try and focus on that, and make sure that those which are licensed will get access and will be carried by the distributors, with a guaranteed access like the one that exists for Category 1 in analog.
“Then we can measure the real improvement of the system, instead of spending all the time that you and your colleagues have had to spend to license these 390 that go nowhere. We believe it’s unfortunately a waste and does not translate into having a real diversity,” Bureau said.
When commissioner Katz wondered if this is a problem with the applicants or an access bottleneck, Bureau recounted Astral’s experience with its channel, Ciné-Pop, which required two years of negotiation to get distribution.
“But even when we got there, with a written contract, we were told a few weeks before the launch, they didn’t have the capacity to take us on. So we had to threaten them that we would come to the Commission, and finally we got what we had agreed upon,” Bureau said.
“Recall that we’re advocating that tiering and linkage rules disappear,” added Riley. “So if you look at the tools that a BDU has today or will have, especially with the move to digital, and with the absence of tiering and linkage rules, the tools available to a BDU to address consumer demands are ample – complete freedom.”
Ultimately, he said, “if the service is not popular, it can be shifted to a different package. If the service is frankly that bad, nature will take care of it. So our experience is, the lack of access has nothing to do with responding to consumers, but more so with respect to having absolute and complete leverage in negotiations between the service provider and the BDU.”
That prompted this comment from Leonard Katz: “After hearing what you said, a corporation with the brand and experience of an Astral having two years of difficulty to get on with a Cat 2, one can only imagine what other players are going through.”
CRTC Chair Konrad von Finckenstein wanted to know how the Commission could implement the proposal and define the criteria for diversity, if it were to be accepted.
Bureau offered to work out detailed criteria, but noted applicants already must prove their case before the CRTC to get a license. This does not mean the CRTC would become the “gatekeeper of taste”, but simply that it would allow, “at the end of the day, for the consumer to decide,” he said.
“If you say Canada doesn’t need an archery channel, then so be it,” said Riley. “But the real factor for success is marketing, packaging, and price. You have a higher chance of allowing the seed to flower by getting it to market.”
Astral also proposed a multi-level dispute settlement mechanism, which would include a fast-track approach, open to both sides, for cases where there are strict timetables, and a final offer arbitration process.
On carriage fees, Bureau urged caution. He noted Quebecor’s suggestion that it supported carriage fees if it were tied to local service investment. But he expressed concern the fee would simply come out of carriage money currently paid to specialty channels, and “that would be unfair”.
In supporting measures to reinforce Canadian programming, Astral endorsed the idea of double preponderance while urging the CRTC to “go slow” on accepting additional foreign services.
On the packaging of services, Astral proposed an additional one comprising all 20 of the French-language services. It would not alter existing offerings, all of which should have 50% plus one Canadian channels, he said.
