THE WORD DIGITAL IS A conundrum to Canadian broadcasters of any stripe.
It means digital specialty channels, or digital migration of analog channels, or digital over-the-air TV (better known as high definition), or even digital audio.
Investing in digital is an expensive proposition. For an over-the-air broadcaster there is no immediate return on investment in upgrading to HD, so many here haven’t done it. Consumers are forcing that change, meaning HD Cancon should be in the offing this fall..
On the radio side, any transition to digital audio broadcasting (DAB) was halted last year once the CRTC decided to hear three applications for subscription radio – two satellite and one terrestrial. Is DAB dead in Canada? Can’t say, says Canadian Association of Broadcasters president Glenn O’Farrell. It depends on the CRTC’s decision, likely coming in June.
As for digital migration? While Rogers and some of the CAB’s members took the lead, migrating all analog specialties to digital is going to be one prickly regulatory process.
All this digital is leading us down a road to on-demand media all the time. Are broadcasters up to the challenge? How must the CAB and CRTC change to reflect this new reality?
www.cartt.ca’s editor and publisher Greg O’Brien recently chatted with O’Farrell to find out. What follows is an edited transcript.
Greg O’Brien: What’s the feeling now in Ottawa, since there looks like there could be another election coming?
Glenn O’Farrell: What we see is a situation that is very difficult to predict at best, other than there seems to be a willingness to provoke an election early from various sides of the House.
Where is it going to land? Ultimately, I’m not absolutely sure, but the pundits that are predicting an election sooner rather than later seem to be numerous so if you want to bet with the more numerous crowd, that’s where it looks like it’s going.
GOB: Well, the bet I’m going to place is with the Conservative Party candidate in my riding – since I recently ended up walking past his office (which has been closed since he lost the riding in the last election) and saw a crew furiously cleaning and painting the place to make it look good. Pull from that what you will I guess. What will an election mean to the broadcast industry?
GOF: It means, frankly, that a number of initiatives that are key to the industry will not go ahead. All developments will be closed by the nature of election timing so we’ll have to live with that and hopefully get things going when (Parliament) resumes. It does throw a significant amount of uncertainty on the variety of issues that are critical to us.
There are any number of things that we’re working on, including, for instance, piracy legislation continues to be a big concern of ours. Last week, the U.S. placed Canada on an intellectual property watch list – not exactly the best place to find one’s country name featured. And, that’s largely because we still have inadequate legislation to fight piracy, among other things.
So, we continue to feel that is a pressing issue and if it were not for the uncertain political waters of the current environment, we would be hoping to see action on it sooner rather than later but with the situation realistically, nothing much is going to happen until (an election)… it’s not business as usual.
GOB: There was one thing that went forward last week when Michel Arpin was appointed vice-char of the CRTC. What are your thoughts on that?
GOF: Michel Arpin is a 40-year-plus veteran of the broadcast industry, having seen it from a variety of perspectives so we see a very very experienced individual joining forces with the Commission to bring his particular experience and expertise to bear.
He’s served on the Commission before so he’s been on both sides of the equation, from a private broadcaster perspective but also from a regulator perspective. He’s going to bring a tremendous amount of expertise to an agency that has obviously going to be better served by better qualified candidates, so we’re very pleased.
GOB: As for some of the issues facing the industry, top of mind among people I talk to with high definition TV sets, for example, is HD programming. Where is that right now among private broadcasters?
GOF: It is sitting in the corporate business plans of each corporate group as an item on their list of initiatives that they are pursuing, depending on where they’re at, exactly. Some are moving it out faster than others are but there’s a state of general alert and a state of increased activity across the board. But not everybody is developing at the same rate or with the same intensity.
But, it is on the drawing boards and in the plans of the broadcasters across the country.
GOB: Why haven’t they taken that big step forward to say they are making a Canadian show in HD from now on?
GOF: You’re seeing this more and more now though, Greg. You’ll see yet more activity as projects go into production over the next coming months. I think that anything being ordered now is either being ordered in an HD version or is certainly being contemplated. So, four, five, six months out when things will be actually up and running on a variety of production sets, you’ll hear that there’s a lot more activity.
It’s a ramp-up. We’re in a ramp-up stage where things kind of come along, not necessarily as you would ideally want them to but they are certainly ramping up in a very significant way. I think that at the end of the day, Canadian consumers are going to find that they have more, if not much more HD programming (Canadian and non-Canadian combined) than in places in the world.
GOB: Would it be fair to say that in the fall of this year – the new TV season – we’ll see more Canadian HD content rather than just sports and the US shows?
GOF: Over the course of the next year, as new Canadian programming is launched, you will see more Canadian HD programming, in various shapes and forms.
GOB: How does the HD issue affect the Canadian drama side of the broadcasters’ equation. Because if you’re doing to make new, expensive Canadian drama, you’re obviously going to want to make it in HD, which therefore makes it even more expensive. How are the broadcasters rectifying that and bringing those together?
GOF: It’s on a company by company basis that people are developing their plans as it applies to HD generally and as it applies to dramatic programming specifically. So, I don’t think there’s anything there where I can give you a comment that would be all-encompassing for the industry.
GOB: Switching gears over to the radio side for a minute: Digital Audio Broadcasting. Where does that stand right now?
GOF: Digital Audio Broadcasting sits in part before the Commission now by way of the subscription radio applications heard a few months ago, including the application by CHUM and Astral and the satellite service applications for subscription radio. And that is – according to the latest information we have – we’re expecting a decision sometime in the month of June.
Ultimately, we will find out where the plans at least of two players – in regard to digital broadcasting and subscription digital broadcasting goes in light of how they fare with the Commission. And, from there, the industry will take its cues as to what the next steps are.
GOB: I gather that when the industry pulled DAB from the Canadian shelves – whatever was out there – and put it under your auspices, that was a time to pause it while satellite and subscription radio sorted itself out? Correct?
GOF: I think it coincided with a couple of things including the applications for digital subscription radio and terrestrial subscription radio through Astral and CHUM and yes, it also coincided with some revamping of plans that needed to be reconsidered and reviewed again. Now with these decisions pending from the Commission perspective, we’re waiting for, not for the next shoe to drop, but for things to develop from the CRTC.
GOB: Once those things happen and assuming that one or two or all three of them are approved, what do you think is going to happen with DAB. Is it a dead issue in Canada or will it continue?
GOF: I don’t know what will happen, to be candid. Depending on what happens to those applications, it could take one of any number of directions or it could go in multiple directions.
We really have to wait to see what flows from these decisions and when we know that, we’ll be able to make a better forecast and certainly the companies we represent will be in a position to put in their plans on a going-forward basis. For now, it’s a matter of waiting to see what the Commission does on the applications that are before it.
GOB: With a lot of the media moving towards an on demand world, with VOD and podcasting growing, how does the CAB adapt to this new world?
GOF: We’re looking at the whole area of programming choice whether it’s audio choices or audio-visual choices with a view to the fact that the world is becoming more and more fragmented. There are regulated sources of fragmentation and there are non-regulated sources of fragmentation – all of which are competing for audiences be they television audiences or traditional radio audiences.
What we’re trying to do is ensure that the overall framework going forward is best-suited to accommodate the realities of a growing fragmentation of audience overall, but one that is occurring both in a regulated environment and a non-regulated environment.
What that leads us to is turning our attention to better understanding our audiences and how they want to see services delivered and ultimately, to make sure the policy framework does not disadvantage anybody in the regulated universe at the expense of non-regulated service offerings that are now competing for the same audience.
GOB: And this is a huge issue that faces the Commission as well.
GOF: This is core to the Commission’s ability to continue to play a meaningful role in the sustenance of the Canadian broadcasting system.
GOB: Do you think there should be a more co-ordinated plan of attack from the government ministries that affect the industry, like Industry Canada and Canadian Heritage? So, rather than looking at film and television in one corner and cable and telecom in another, and Commission policy in another – all trying to deal with this changing media world – should there be one huge omnibus sort of thing looking at overhauling broadcasting and communications policy in Canada, where all the sides get together to hash everything out?
GOF: I don’t know that there’s any one forum that everything fits into or whether that’s a workable or practical solution. Look at radio. There’s going to be a radio review of the commercial policy sometime in the course of the fall of 2005.
GOB: That was originally put off right?
GOF: Exactly. Now we’re expecting a public notice sometime in the fall and so from a radio perspective there will be very much a large proceeding that will unfold in the course of that initiative, over whatever number of months. If the public notice comes in September-October, there will be probably a hearing in the spring.
That will be an opportunity for the CAB and others to put forward their views as to where the industry is going and from an audio or commercial radio perspective certainly to make whatever recommendations we feel are appropriate to best shape the regulatory environment going forward.
… On the television side, there have been a number of very important proceedings. For instance, on the pay and specialty side, there’s a digital migration proceeding that’s going on right now that is core to the pay and specialty business insofar as how services are going to be distributed as we move into a distribution world that is going to more and more, if not eventually exclusively digital.
It’s very critical to the way the services are packaged, the way they’re marketed, the way they’re priced and ultimately, the way the consumer can access them.
GOB: What did you think of the Rogers-broadcasters deal we reported on last week?
GOF: It was an initiative that certain of our members took part in that we thought was a useful piece of leadership. Certainly we also submitted our views that mirrored and went beyond some of the points that were discussed in the MOU between those parties because there were certain issues we felt had to be raised in the context of this.
Then, there are other filings from the CCTA that takes a diametrically opposed view (to the Rogers deal) so it’ll be an interesting debate as it goes.
GOB: It should be an interesting proceeding, that’s for sure.
GOF: There are some very interesting differing views between Rogers and the CCTA, as you noted. There’s a world of difference on some levels.
We think that looking to the future, it’s starting to look like a world where the Commission has to become extraordinarily more vigilant on an ongoing basis to ensure that it can continue to play the role that it has played successfully over the course of history in holding the system together.
The challenges are ever-growing. A few weeks ago, we saw the mobility companies – Rogers and Bell – announce that they were looking to distribute television service over cellular phones – yet a new wrinkle – and we suspect the Commission will do what it has to do in asserting its role to make sure that whatever they plan on doing is done within a framework that does not upset the equation for everyone else playing by certain rules.
GOB: Do you envision a point where all the content is on-demand, subscription-paid content so that Global’s Train 48 or Global period would be a subscription service.
GOF: I don’t think you’ll ever find a totally random access on-demand world. I think that consumers in all forms of consumption studies that I’ve seen seem to trend towards packages of some sort or another.
Time and time again, studies have proven that consumers like value packs. They seem to appreciate more choice packaged along the lines of what appear to be well-presented thematic or otherwise well-crafted packages of services and my sense is that you’re going to continue to see that into the foreseeable future as a model of distribution.
… as we look at the Commission going forward, we see some new faces on the Commission and we see two new vice-chairs, one who is in office now (Richard French) and one who will take up office in a few months (Arpin). We see some new blood and new opportunity to work with new people and to convince them of the overall importance and significance of the Canadian broadcasting system.
Not wanting to rest on the laurels of the past to suggest it was great over the course of history and therefore it’ll be great forever, I think we have to really bear down and look at the challenges that face us, primarily those flowing from technology and see how do we make this system continue to work and to produce the benefits for Canadians that they obviously want to watch.
