CRTC confirms small cablecos can source U.S. 4+1 signals from foreign sources

The CRTC’s confirmation that small cable systems can source U.S. 4+1 signals from non-Canadian sources will have little impact in today’s market for distant signals via satellite. The launch of competitive satellite relay distribution undertakings (SRDUs) and the threat of competition from foreign signal providers in recent years have produced long-term contracts and lower rates for cablecos. Licensed Canadian SRDUs have reduced their rates "to a point where it’s not as big a crisis as it was a few years ago," notes one industry insider. "The issue has really taken care of itself, just because of the threat or possibility that the commission might approve the sourcing of the signals from the U.S. providers," the source tells CCR. In Public Notice 2001-121, released December 7, the CRTC confirmed that small cablecos could buy U.S. 4+1 signals from foreign satellite operators. It added that small cablecos shouldn’t have to acquire signals from their competitors. Both licensed SRDUs are affiliated with the country’s two satellite TV providers – Star Choice Communications Inc. and Bell ExpressVu LP – which compete with small cable operators across the country for TV subscribers. There was some confusion over whether the wording of Public Notice 2001-59, issued May 2, had indeed granted small cablecos the right to source the signals from non-Canadian suppliers (CCR, June 21/01). The Canadian Cable Television Association, Star Choice parent Canadian Satellite Communications Inc. (Cancom), and Bell ExpressVu had asked the commission for clarification on the matter. "These Canadian SRDUs or their affiliates, however, also own and operate the same DTH satellite distribution undertakings that are in direct competition with small cable operators," the CRTC states in its December 7 notice. "The commission believes that it is both timely and consistent with its broadcasting policy objectives to redress this situation and allow exempt cable undertakings to source their 4+1 U.S. network signals either from licensed SRDUs or from non-Canadian satellite service providers." The SRDU market has changed considerably in recent years as small cablecos have lobbied for greater flexibility in sourcing signals. Cancom parent Shaw Communications Inc. notes in its fiscal 2001 fourth-quarter and year-end financial report that SRDU revenues were down as a result of a new rate structure. In exchange for reduced rates, introduced Sept. 1, 2000, Cancom signed long-term contracts with its SRDU customers. "In exchange for the new rate structure, Cancom was able to secure in excess of 85 per cent of its customer base to long-term contracts averaging approximately five years. Most of the remaining 15 per cent are covered by existing contracts," Shaw states. Regional Cablesystems Inc., which owns hundreds of small cable systems across the country, notes in its 2001 Annual Report that it has renegotiated rates for the supply of signals, resulting in reduced rates of 9 cents per channel subscriber per month from 20 cents for about 690,000 channel subscribers. As a result, it points out that it saved about $3.5 million in signal and copyright costs. David Baxter, president and CEO of Westman Communications Group of Brandon MB, says that "it’s always good to have the option of using other suppliers and to have competition." He notes that Westman is also locked into a long-term contract as far as the initial 4+1 signals are concerned, but adds the company might add a second set of 4+1 signals as part of its digital service to allow time-shifting. If that happens, he says Westman would look at all the alternatives for signal provision. "There has been a lot of movement in prices since this issue was first raised a few years ago," Baxter states. "I think there has been positive movement on pricing so it isn’t as deep a concern as it was a few years ago. But again, on a long-term basis, having competitive alternatives is a positive thing for the cable industry."

CRTC confirms small cablecos can source U.S. 4+1 signals from foreign sources

Broadcast | December 19, 2001

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