OTTAWA-GATINEAU – Remember 1997? Almost nobody had the Internet and even fewer had satellite TV. Digital cable barely existed. VOD was a lab engineers dream. HD was nowhere to be found and PVR still only meant player value ranking.
Tier III, with such brands as The Score, HGTV, History Television, and Teletoon, launched that fall. Titanic was the top-grossing film. Worldcom and MCI had announced their $37 billion dollar merger (which, of course, failed spectacularly and helped marked years of doom for telecom and related stocks), and we were all glued to our news channels for a time that summer when Princess Diana died in a Paris car crash.
I don’t know about you but if something as big as Princess Diana’s death happened today, I probably wouldn’t have heard about it on TV, but would have gotten if from my Blackberry (maybe thanks to a ping from globalnews.com, cbc.ca or ctv.ca) and likely would have informed myself about it more on-line, as I primarily do now.
In ’97 though, that wasn’t an option then and looking back, the rate of change in the media space from ’97 to ’07 is breathtaking compared to the period from, say ’87 to ’97. The lone constant, I think, is that The Simpsons are still on and people watch as much TV, or more, than ever.
Also in 1997, the CRTC last set its broadcast distribution undertaking (BDU) and specialty service policies. Then, if you were a Canadian specialty channel owner, cable was really the only game in town, if you had a channel license. And holding a license then was still, as they said "a license to print money."
And because cable was the lone, sometimes aggressive gatekeeper, the industry needed some rules. Cable has distribution and linkage rules to ensure that not only are the majority of channels distributed Canadian, but that Canadian channels be purchased first – or along with foreign channels.
"For example, if I want to sell you foreign language programming form China, you have to buy the Canadian services first. You have to spend $20 to $25 before you can buy the foreign services, or you could go to JumpTV today and you can buy it with no regulation because it’s over the Internet," said Rogers Communications vice-president, regulatory Ken Englehart, in an interview with Cartt.ca.
"So, one of the questions they’re asking is whether to get rid of those buy-through requirements. I think we should. I think we should let customers buy what they want."
As well, any advertising that might generate revenue for cable operators is verboten. Broadcast channels and certain other cable channels (like APTN and TVA) were mandated to appear on the basic tier of service so that all customers can access them and all want as low a position as possible on the dial.
All of this, and potentially many other rules, might be tossed aside by this time next year once the Commission reviews its policy beginning January 28th in Gatineau. Initial comments are due in October 9, with responses then due November 5th.
"The Commission is saying, ‘why don’t we just get rid of all those complicated rules? Why not give cable a simple preponderance rule like satellite has? Why not loosen up on the genre protection rules? Why not give more flexibility to video on demand? Why not lighten up on the requirements for basic service?’" asked Englehart.
"We think they’ve asked all the right questions. These are all the things that we need to harness the flexibility of the digital platform."
Of course, broadcasters are keen to protect what’s worked for them for over a decade and won’t be in a rush to knock over the policies that have helped shape successful, lucrative businesses.
The CRTC indicated it is willing to look at increasing the amount of ad time on specialty channels beyond the 12 minute limit and reversing the onus of responsibility when claiming an undue disadvantage. Right now, it’s up to the programmer to prove it. The Commission has asked if it shouldn’t be the other way around, asking cable to prove it isn’t, similar to how such disputes are adjudicated on the telecom side.
Plus, any relaxing of the VOD advertising rules may prove very beneficial to broadcasters, given the comments of another Rogers executive in an exclusive Cartt.ca story from earlier this week.
And if genre protection goes away, any broadcaster or newcomer could, in theory, launch a competitive sports channel or news channel or women’s channel or food channel without worrying whose incumbent toes they might tread upon. What the notice doesn’t ponder is allowing direct entry of U.S. genre competition such as HBO or ESPN.
Yesterday’s notice also marked a continued departure for the Commission when it asks for comments. "I think it’s great the CRTC has put a stake in the ground and said what they want to do – I think it’ll make it much easier for parties to respond but clearly the onus is on those people who want to preserver the old, archaic ways of doing things," said Englehart.
In the past, such releases spent many words twisting notices into pretzels to make sure it didn’t look like the Commission was leaning in any one direction.
No more. It’s clearly on a deregulation path.
On genre protection, the notice says (my emphases):
"Given that the pay and specialty industry is now a mature, healthy industry characterized by a diversity of popular, recognized brands, the Commission considers it may be timely to eliminate the one-per-genre policy in order to give flexibility to pay and specialty services to adapt their programming strategies to challenges resulting from a rapidly changing broadcasting industry."
On access rules:
"Given the Commission’s objectives with respect to reducing regulation to a minimum and considering the maturity of the discretionary services industry, the Commission regards it as timely to consider eliminating all or most access rules pertaining to analog and Category 1 pay and specialty services, relying instead on a preponderance requirement or requirements, such as that set out above, to ensure that Canadian programming services occupy a central place within the broadcasting system. In the Commission’s view, such an approach would contribute significantly to a simplification of the rules applicable to BDUs, perhaps facilitating a reduction in the number of licence classes and the elimination or reduction in the number of specific rules applicable to various sizes and/or types of distributors."
On signal delivery:
"The Commission has generally considered it the responsibility of pay and specialty services to deliver their signals to distributors. However, in Broadcasting Decision 2007-2, the Commission noted that HD versions of pay and specialty services offered under amendments to existing licences (rather than under new HD-transitional licences) are of a status similar to Category 2 services in that their distribution is authorized but not required. The Commission stated that, while it is a reasonable quid pro quo to expect programmers to deliver "must-carry" signals to a BDU in light of the BDU’s obligation to distribute those signals, arguments for making the programmer responsible for delivery are much less compelling when distribution of the service is totally at the discretion of the BDU.
On distribution and linkage:
"It is the Commission’s view that program packaging should be a matter left more to negotiations between programmers and distributors. Accordingly, the Commission proposes to eliminate most of the distribution and linkage rules, in respect of both analog/SD and HD services, and both analog and digital distribution. However, the Commission proposes to retain rules related to account stacking and to the distribution of adult services and single point-of-view religious services.
On new potential revenue streams (this one, to this writer anyway, might seem to reopen the door to fee for carriage which the Commission rejected earlier this year, saying there wasn’t enough data to warrant it.):
"Over the last several years, programmers and distributors have expressed interest in finding new revenue streams to offset the costs of HD conversion and other technology upgrades. In addition to opportunities related to on-demand platforms, some of the options they have put forward include engaging in traditional advertising or promoting non-programming services on the community channel, inserting local advertising into the U.S. local availabilities, and exploring more targeted advertising, i.e., aiming different advertisements at different groups of customers within a BDU’s service area (e.g., by district)
"The Commission requests that parties describe any new revenue-generating opportunities, and seeks comment on how Canadian BDUs and programmers (including over-the-air television stations) can best share the risks and rewards of those opportunities. Parties are also asked to provide specific proposals regarding any regulatory action that would be needed to permit industry players to take advantage of those opportunities."
Finally, on basic cable:
"In addition, the Commission considers that it may be possible to eliminate some specific requirements as to basic service, and to simplify other requirements. Among other things, given the transition to digital distribution, the Commission considers that it may now be appropriate to eliminate the requirement that priority signals be distributed ‘beginning with the basic band.’ The Commission requests comment on this possibility.
With the diversity of voices review, the Canadian Television Fund report, the Dunbar-Leblanc research (which will certainly be used heavily in the BDU/specialty proceeding) all ongoing, along with consideration of the Astral purchase of Standard Broadcasting and the CanWest/Goldman Sachs buyout of Alliance Atlantis (which will be Gazetted this afternoon), it’s another busy summer on the regulatory file for Canadian distributors, programmers and creators.
