OTTAWA – The CRTC said today that it will continue to license satellite relay distribution undertakings (SRDUs) because of a lack of competition in that market, but will not incorporate the transport of pay and specialty services into SRDU licensing.
In its decision the Commission maintained that its dispute resolution process “remains the best way to address concerns regarding uplink fees that the Bell direct-to-home undertaking charges Canadian pay and specialty services for the transport of their signals to cable headends in cases where they do not need to use Bell’s SRDU facilities.” Canada’s only two SRDU operators, Shaw Satellite Services Inc and Bell ExpressVu, in their submissions to CRTC last year argued they should be exempt from SRDU licensing. SRDUs transport broadcasting signals to broadcasting distribution undertakings (BDUs) that do not have access to fibre interconnections to receive their television signals, and, are often located in rural and remote parts of the country.
Both Shaw and Bell argued in their July 11, 2011 submissions for their SRDU license renewals that other technologies create sufficient competition in the signal transportation field to negate the need for licensing requirements.
“With the emergence of DTH (direct-to-home) and changes to the SRDU licensing framework to allow for competition in the late 1990s, the development of extensive terrestrial fibre networks for the relay of signals, and the lifting of restrictions on what cable operators are required to source from licensed BDUs, the need for licensing of SRDUs no longer exists,” reads Bell’s intervention. Bell offers SRDU services under the Bell ExpressVu brand.
The Commission stated that it received 15 interventions on SRDU licensing and that the comments were “generally equally divided between support and opposition on both the possible exemption of SRDUs and the incorporation of the transport of Canadian pay and specialty services into either SRDU licenses or an SRDU exemption order.” The commission added that the submissions also raised a number of other issues relating to the regulatory framework for SRDUs.
While both Shaw and Bell support the proposal to exempt SRDUs, they also contend that the conditions included in the proposed exemption order were too onerous. Bell noted that the proposed order retained several key provisions currently included in SRDUs’ licenses, including the requirement to contribute 5% of the undertaking’s gross annual revenues to programming funds. Both argued that it would be reasonable to expect that exemption criteria would be less onerous than current SRDU conditions of license and generally consistent with the TRDU conditions of exemption, which do not include requirements to file annual returns and to contribute to Canadian programming.
Submissions from other parties, such as potential competitor FreeHD (which has not yet launched service), the Canadian Cable Systems Alliance (CCSA) and MTS Allstream (MTS), opposed the proposal to exempt SRDUs. They argued that, because of the lack of competition in the signal transportation sector, exemption of SRDUs from licensing requirements could potentially hurt them.
The CCSA also stated that, for geographical reasons, TRDUs (terrestrial or wired RDUs) do not represent a feasible option in the signal transportation sector for the great majority of its members. The CCSA added that there is even limited competition between both SRDUs since the technologies used by Shaw and Bell are not compatible. This means that a switch from one SRDU to the other requires expensive equipment purchases for the BDU. Accordingly, nearly all of the smaller BDUs are rely entirely on Shaw for satellite delivery of their broadcasting signals.
The parties opposed to exemption also voiced concerns that Bell and Shaw could use their SRDU services to extract higher fees from independent BDUs, while only applying modest increases to wholesale rates for programming services.
The Commission concluded that exemption of SRDUs from licensing requirements would not benefit the Canadian broadcasting system because of the lack of effective competition in the sector. Since then, the commission has modified certain requirements in order to encourage greater competition in the sector. Several interveners recognized that these measures have helped to increase competition in the signal transport sector in urban areas.
However, because of geographical, economic and technological reasons, competition is still very limited in rural and remote areas, where TRDU services are not always offered says the commission and that the situation is not likely to change in the near future. The CRTC also found that the SRDUs’ annual financial contribution to Canadian programming was “material to the attainment of the objectives of the Act. “
FreeHD, Pelmorex Communications, the CCSA, Telus and MTS all supported the incorporation of the transport of Canadian pay and specialty services into either SRDU licences or an SRDU exemption order. The CRTC noted that most supporting parties argued that the transport of pay and specialty services by SRDUs is an essential activity for BDUs located in rural areas and should therefore be included in the licenses or in an exemption order.
Bell, Shaw and Cable Public Affairs Channel Inc. (CPAC) all opposed the incorporation of the transport of Canadian pay and specialty services into the licenses or exemption order for SRDUs. Shaw argued that the transport of pay and specialty services by SRDUs constitutes an uplinking activity, which does not require a license or exemption under the Act.
The Commission ruled that because historically it considered the transport of pay and specialty services by SRDUs was defined as the delivery by the pay and specialty services of their programming services to cable head-ends, therefore the transport of these services is not an activity that should be incorporated into SRDU licenses.
Quebecor Media Inc., Rogers Broadcasting Limited and Independent Broadcast Group submitted that the Bell TV direct-to-home (DTH) undertaking sometimes charges an uplink fee to pay and specialty services for the transport of their signals to cable head-ends, regardless of whether such programming services actually need to also use Bell SRDU facilities.
The Commission ruled that the matter had already been addressed in Public Notice 2008-100. It concluded that concerns about such fees would be best addressed through its dispute resolution process given that the fees are established through the individual affiliation agreements reached between the Bell DTH undertaking and pay and specialty services.
