Broadcasters, cablecos split on need for changes to basic cable in digital

Broadcasters and cablecos are reacting very differently to the CRTC's process to establish rules governing the distribution of specialty services by cablecos in an all-digital environment - Broadcasting Public Notice 2002-48. Even as broadcasters are not surprisingly seeking continued protection for specialty channels in the basic package in digital, cablecos are asking for the wider flexibility already accorded to their all-digital direct-to-home (DTH) satellite TV rivals. "It's like a seniority system, based on when you happened to get your initial licence (whether you're in basic). Why aren't we at a point of relative maturity in this marketplace, where the historical fact of when you happened to get your first licence doesn't determine your packaging priority?" asks Janet Yale, president and CEO of the Canadian Cable Television Association (CCTA). She tells Canadian Communications Reports that "it's harder and harder to see the justification for differentiating among those national specialties. They all have to be carried by DTH; we have to carry them all subject to more stringent rules than DTH. If they are all national specialties that are carried by every distributor - whether it's cable or DTH - it seems to me the logic for differentiating among them is disappearing." Yale suggests, however, that changes to what cable must carry on basic should not wait until the conversion to digital, particularly since the CRTC notes in the public notice that it has favoured increased regulatory flexibility in the digital environment. She points out that DTH satellite TV distributors were given flexibility in packaging because they were new entrants. But, she notes, they should no longer be considered new entrants since Bell ExpressVu LP and Star Choice Communications Inc. collectively now have about two million customers. "One of the things that we believe is that if we are in a more market-driven environment, then we have to look at whether it is time to consider these asymmetries (between cable and DTH), but not just with regard to the all-digital world but sooner than that," says Yale. "I think this is an interesting question: What should the world look like in an all-digital environment? But the fundamental question should be: When are we passed new entrants and into a world when everyone should be given the same flexibility?" But representatives of the dual status specialty channels Vision TV and The Weather Network continue to push for some protection in the multi-channel digital universe. "Being on basic, particularly for a service like ours, is critical because we've got some very significant Canadian content obligations, so any kind of measure that could significantly reduce our distribution is going to be very important," says Paul Temple, senior VP of corporate development for Pelmorex Communications Inc., the parent company of The Weather Network and Météomédia. "Clearly, if you are not part of basic, you are going to have fewer than 100 per cent of the subscribers. So either you get into negotiations in terms of different subscriber rates, but even then you are still going to be faced with the issue of people not having your service in their home." Temple suggests that if the CRTC comes up with rules that lead to some channels currently on basic being eliminated, then it should consider reducing the amount of Canadian content they must broadcast. He reasons that if the channel loses subscriber revenue because it is no longer part of the basic package, then it will not be able to afford high Canadian content levels. At one time, Pelmorex was embroiled in a dispute with Bell ExpressVu, which wasn't giving its channel prominence. But Temple says The Weather Network is now part of the DTH distributor's basic offering. "We worked that out. That's water under the bridge," he notes. Vision TV CEO Bill Roberts also believes non-profit and public service broadcasters should be given special treatment in a foundation tier. That approach was rejected by the CRTC in Broadcasting Public Notice 2002-49 because it "would be disruptive for consumers and would have major technical and operational implications for distributors and programming service providers." (CCR Update, Aug. 21/02). "It (foundation tier) was interestingly rejected for an analog environment, and what the commission is looking at here is a fully digital environment…The Standing Committee on Canadian Heritage may come forward with a recommendation for something like a foundation tier. We certainly know that the standing committee is taking it very seriously and has commissioned research on a foundation tier and green space," Roberts tells CCR. "That will probably have some bearing with regard to going forward in a digital environment." In its August 16 public notice, the CRTC poses a number of questions with regard to establishing rules to govern the distribution of specialty services on the basic service of digital cable undertakings. The questions include: Are the rules for basic in analog still appropriate in a fully digital environment? How should the CRTC determine which special services, if any, should be included in, or excluded from, the digital basic service and what should be the criteria for such determination? Should channels in the basic package in digital be required to make more significant contributions to the attainment of the objectives of the Broadcasting Act? How many specialty services should be permitted on the digital basic cable service? How can the commission limit subscriber disruption and ensure affordable basic cable service? "...The commission considers it appropriate to reassess the rules governing the distribution of specialty services on the basic service of fully digital cable undertakings…," the CRTC states in its public notice. "Such a review is particularly relevant now, given that direct-to-home (DTH) satellite distribution under-takings…are subject to less extensive carriage requirements than cable licensees." First-round comments on the public notice are due by November 15, with reply comments due by December 12.

Broadcasters, cablecos split on need for changes to basic cable in digital

Broadcast | August 29, 2002

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