SOME FILED REAMS of digital paper with the Commission (Rogers Communications’ submission was 132 pdf pages and a few appendices), while others were more concise (Shaw’s was just nine pages, plus a couple of research reports)
Anyway, we’ve read more than a few thousand words and identified what appear to be the primary issues facing the CRTC with its review of the policies governing broadcast distribution undertakings (all licensed video providers) and specialty services. The hearing is set for February 4 in Gatineau.
Below is a bit of a synopsis of what the BDUs are asking for and what the broadcasters are thinking, because the general consensus seems that the Commission is poised to make significant changes to the regulations surrounding cable, satellite and IPTV companies, and the specialty services they carry.
ACCESS TO CARRIAGE/DISTRIBUTION AND LINKAGE
BDUs: A “simple preponderance rule” where as long as 51% of the channels being offered to Canadians by their cable, satellite and licensed IPTV providers, that’s all that should be required (this part of the Lawrence-Dunbar report is mentioned repeatedly by the BDUs). So, for example, the 5:1 rule saying that for every single BDU-affiliated digital specialty service carried there must also be five non-affiliated ones offered, too, would disappear.
Differences: Bell Canada’s submission says that a majority of video services subscribed to by customers must be Canadian (Cogeco says the same). However, Rogers, for example, says in its submission it “considers that the preponderance requirement should be based on the number of services available to the subscriber, as opposed to the number of services received.”
Broadcasters: Any preponderance rule must say that 51% of specialty services (not just channels in general) received by Canadians are Canadian channels, says the submission from the Canadian Association of Broadcasters. Also, 51% of channels in any packages must be Canadian and in French markets, 51% of the discretionary channels must be in French.
NEGOTIATING LEVERAGE/UNDUE PREFERENCE
BDUs: It’s a competitive market and market forces should rule what essentially are business negotiations, but the BDU submissions don’t address this issue as directly as the broadcasters do in theirs. As for undue preference, Shaw says it supports section 9 of the regs which addresses disadvantage and undue preference, as long as “the onus of proof continue(s) to rest with the complainant.”
Broadcasters: As for market power, “we are concerned that some basic facts regarding the economics of the BDU sector may have been lost in the shuffle,” reads the CanWest Global executive summary, whose submission notes how large and diversified – and powerful – the top six BDUs have become and the negotiating leverage they have. “(W)e are seeing changed behaviour right now merely as a result of the Notice of Public hearing,” added CanWest.
So, the broadcaster wants to shift the burden of proof when it comes to undue preference so that it’s “reverse onus” meaning the BDUs have to prove they aren’t doing what an accuser says they are.
“In an environment where increasingly powerful and integrated BDUs have amassed considerable portfolios of specialty and conventional television services, BDUs have every incentive and ability to leverage their platforms to their own advantage, and to provide preferential treatment to their own services,” adds the CTV submission.
ELIGIBLE FOREIGN SERVICES
BDUs: This market should have a far more open door so that it’s easier for foreign services to reach Canadians. Shaw Communications, not surprisingly, has asked for the most liberal deregulation, saying the current process of getting foreign services on the satellite list “should be replaced with an open-entry approach governed entirely by market forces and negotiations between services and distributors.”
Shaw cited the recent denial of USA Network’s request for addition to the ESL. “These kinds of denials, which are made at the expense of customer choice, only serve to drive customers to new technologies and the black market.”
Differences: Bell Canada’s submission says it’s fine retaining the regulation to ensure no non-Canadian competitors in genres already taken by Canuck channels come to Canada. This “supports a separate Canadian rights market,” says the telco.
Rogers also requests a softer approach than Shaw, saying non-Canadian services that “would not impact the viability” of a launched Canadian channel should be approved
Broadcasters: “A moratorium should be immediately placed on the carriage of any foreign satellite services by BDUS,” is what independent broadcaster Channel Zero (Movieola, Silver Screen Classics) wrote to the Commission, “until the procedures for the addition of services to the eligible satellite list is revised.
“We believe that services on the Lists of Eligible Satellite Services have inappropriately been added by distributors. Two of these services, Turner Classic Movies and American Movie Classics have been placed at the front of the line and offer little if any benefit to the Canadian broadcasting system.”
GENRE PROTECTION
BDUs: Gone. The specialty service industry is competitive now and Canadian cable channels should be able to withstand competition within their own niche. “The Commission has achieved its objective of nurturing Canadian pay and specialty services to the point that such services stand on their own, and compete on their own,” reads the Canadian Cable Systems Alliance entry.
Broadcasters: Want to keep it, generally. CTV says it could accept more flexibility on the policy, saying there is “merit in the concept of broadly-defined genres and in the elimination of individual natures of service as well as program categories within genres.”
Pelmorex, on the other hand, owners of Météomédia and The Weather Network, sees it a bit differently: “The advent of digital technology, the popularity of the Internet and the advent of other sources of audio and video programming has not weakened the policy rationale for genre exclusivity,” it reads, before suggesting its own way to alter the genre protection regime.
CanWest suggested the existing rules be replaced with “a numerical test based on program title overlap with an associated obligation to attach mandatory simultaneous substitution rules to any new foreign services added to the Eligibility Lists (for conventional stations and specialty services).
That would mean that the shows on USA Network, if it were approved, that also air on CanWest’s Mystery channel, would have its ads sim-subbed for Canadian ads.
ADVERTISING
BDUs: Ad restrictions on them should be summarily lifted. That means BDUs should be able to sell ad time during the local avails on American cable channels (CNN, Golf Channel and others make two minutes an hour available to MSOs but in Canada the time is not allowed to be sold), as well as ads in video on demand – including dynamic ad insertion (placing new ads within older VOD content) – pay-per-view, and on community channels.
“There are… elements within the regulated system that are not being appropriately exploited because the distributors that can unleash these elements are restricted from participating in the advertising market. In effect, significant revenues are being foregone because distributors have no incentive to exploit many interactive or targeted opportunities,” says the Telus submission.
The BDUs recognize that a good chunk of any such revenue would be directed towards production of Canadian content.
Broadcasters: Want more ad revenue, too, but we don’t want to compete with U.S. cable channel local avails or with cable community channels on the local level. They also want hard and fast rules over VOD advertising. “Upon certain conditions, we support a change to the advertising rules on this platform to allow for dynamic commercial replacement – but the selling of those commercials and the associated revenues must stay with the originating Canadian programmer,” says CanWest.
“Corus strongly supports the Commission’s current policy prohibiting the insertion of commercial messages within the local availabilities of non-Canadian satellite services. The local availabilities have proven to be an effective way to promote Canadian programming services and will continue to be a valuable tool in that regard as the Canadian broadcasting system transitions to fully digital distribution. Corus urges the Commission to maintain its current approach to the use of the local availabilities,” adds the submission from Corus Entertainment.
BASIC SERVICE
BDUs: All BDUs should have the same basic service requirements. Right now satellite and cable companies have different rules. Cable companies must carry all local broadcasters in their markets. Satellite companies do not, for example and pay into a different compensation structure to compensate for the local channels they can’t or won’t carry. The BDUs would also maintain the existing basic buy-through requirement (meaning customers will have to purchase basic cable fully before adding more channels).
However, all BDUs want a smaller/simpler basic service requirement. For example, Cogeco wants it narrowed down to carrying all local and regional OTA stations; one English CBC and one French CBC channel; the provincial educational channel, if any; other services required to be carried under 9(1)(h) of the Act (must-carries like APTN, for example).
Broadcasters: The basic package has to be mostly Canadian. S-VOX (owners of VisionTV) went perhaps the farthest in saying it “proposes a basic package in which at least two-thirds of the channels are owned and operated by Canadians. To be eligible for inclusion in this basic tier, a channel must offer a minimum of 65 percent Canadian content, and invest at least 50 percent of its revenue in Canadian programming.”
VIDEO ON DEMAND
BDUs: We live in an everything-on-demand world now with a substantial number of unregulated places from which consumers can source content – and the new policies the Commission decides on through this proceeding must reflect that in new flexibility for everyone. They want no new limits or VOD rules other than the advertising changes mentioned above.
Broadcasters: Video on demand licensing needs to be seriously examined because while it’s consumer-friendly, it may undermine the industry in general. Channel Zero says VOD threatens its business in general. “VOD services should not be allowed to provide direct competition to existing operating licensees nor to distribute unauthorized foreign services,” it says.
Rogers and other cable companies have added content from foreign channels not on the eligible satellite lists to its VOD lineup.
“It is perhaps unfortunate that a topic as critical as VOD has been included in a proceeding that encompasses the broad extent of the distribution and specialty and pay frameworks,” says CanWest, which adds VOD may revolutionize overall viewing behaviour.
There are many other issues, of course (like dispute resolution; allowing small cablecos to access their signals from the best available source, regardless of who they are; establishing customer service standards; ownership and usage of inside wire; and rules around ethnic or third-language services), and coverage of those will come as we approach the hearing.
