The hearing is over; the waiting begins-Deliberations begin to decide winners from Canada’s largest licensing hearing

Canada’s first licensing process for digital specialty channels ended in early September, leaving broadcast distributors, production houses, specialty channel companies and television networks who filed applications for more than 400 channels with the rest of the fall to wonder whether they will be part of a new 500-channel universe. The CRTC hearings, which got underway August 14, will result in a decision that will shape the near-term future of digital specialty television in Canada. The oral proceeding ended with a few days to spare from the four weeks that the commission had set aside. The licensing decisions are expected to come out just before Christmas. Several applicants withdrew their proposals. One industry insider said many applicants felt a distinct chill when a CTV Inc executive said she expected her company to lose $6 million in the first two years if her network’s applications get the nod. Some observers believe the CRTC will license more than 10 Category 1 channels. Through the spring and summer, the commission was expected to keep the number of mandatory carriage channels down to about seven English and three French. But the high demand for Category 1 licences may sway the regulator to increase the number of Category 1 winners. CRTC commissioners pushed applicant company executives to create "interactive" channels, even though many U.S. analysts believe the concept may be something of a dead end. Virtually all of the Category 2 applications (called a "licence to beg" by a senior cable company executive) are expected to be licensed. The commission had the option of calling in licence applicants to clarify their plans, but none were asked to attend the hearings. The only stumbling block for most applications is the CRTC’s insistence that they do not directly compete with existing specialty channels. Critics of the commission said during the hearings that the market should decide, through competition, which channels will survive. However, powerful lobby groups such as the Canadian Association of Broadcasters (CAB) backed the commission’s position that none of the successful licensees will be directly competitive. Another contentious point is the marketing of the new stations. The Canadian Cable Tele-vision Association opposes mandatory packaging, saying it would, in effect, create new levels of tierage. In its submission to the CRTC, it said that digital cable is a technology that lends itself readily to a pick-and- pay system (CCR, July 19/00). Both the CAB and the Specialty and Premium Television Association want marketing packages, either alone or with pick-and-pay options. Most of the licence applicants based their plans on some sort of packaging system. "No matter what happens, if it is a pick-and-pay system, people aren’t going to be getting these services for a dollar a channel," says one industry insider. "That wouldn’t do anyone in the industry any good." As for future digital applications, the CRTC isn’t considering any more until it has had an opportunity to decide how to handle them, says commission spokesperson Denis Carmel. "Right now, if someone sent in an application, we’d send it back and say that we are waiting until this process is over before deciding what the next round will be: whether we deal with them individually or ask for proposals. But I think that Category 2s may be dealt with on a case-by-case basis, and be fairly easy to get," he says.

The hearing is over; the waiting begins-Deliberations begin to decide winners from Canada’s largest licensing hearing

Broadcast | September 14, 2000

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