Two CRTC decisions boost chances of introduction of PPV on telco TV services

Two recent CRTC decisions are turning the tide on the tough haul that the western-based telcos were having getting pay per view (PPV) for their digital TV services. Earlier this year, it looked as though the telcos had no feasible way of offering PPV as negotiations turned sour with Shaw Communications Inc. and Bell ExpressVu LP hadn’t initiated its terrestrial PPV licence. But the CRTC rulings have opened up both these options, obviously much to the approval of the telcos. "Our intention is to sit down and negotiate with both parties and may the best party win," says Shelly Smith, general manager of Digital Interactive Video, the business unit within SaskTel that oversees the telco’s TV service. "We’ll see what kind of time frame Shaw and ExpressVu can offer the service, and as soon as we can negotiate a reasonable offer to reflect our market needs (we’ll offer PPV)." The CRTC ruled on August 21 that Shaw PPV must "provide Viewer’s Choice to SaskTel and Manitoba Telecom Services Inc. (MTS) on an expedited basis, under reasonable terms and conditions" (Broadcasting Decision 2003-408). That means that SaskTel and MTS are entitled to a PPV agreement with Shaw that is "substantially similar" to the deal reached with Shaw’s own cableco, according to the CRTC decision (CCR, Aug. 22/03). SaskTel and MTS filed separate complaints to the CRTC against Shaw PPV because it wanted minimum guarantees for its PPV service and also a higher percentage of the revenue split than it gets from its cable arm (CCR, April 10/03, March 27/03). The decision should also apply to Telus Communications Inc., which was awarded its broadcast distribution licence a day before the CRTC made the Shaw PPV ruling. So far, neither SaskTel nor MTS have heard from Shaw since the CRTC ruling. Roy Sherbo, VP of MTS’ TV service, tells Canadian Communications Reports that the telco sent Shaw a letter a few days after the decision, asking about a new PPV agreement, but it has not yet heard back. If Shaw doesn’t respond, the CRTC has indicated that it could convene a public hearing to consider issuing a mandatory order to enforce its decision. A second decision issued just days after the Shaw ruling gives the telcos the opportunity to deal with Bell ExpressVu for PPV. On August 28, the CRTC agreed to amend some conditions of licence of the terrestrial PPV licence granted in 2000 to Bell ExpressVu to bring them in line with those of its direct-to-home television PPV undertaking and those of competitors (Broadcasting Decision 2003-429). The changes in licence conditions make the actual launch of its terrestrial PPV service more economically feasible, Bell ExpressVu says. (CCR Update, June 11, 2003). Sherbo notes, "We have another option relative to PPV that we can look at (since the Bell ExpressVu decision) and we’ll be pursuing that as an alternative to the Shaw PPV." Paul Armstrong, director of regulatory and government affairs at Bell ExpressVu, refers to the terrestrial PPV licence as a "simple extension of the business," and sees no reason for not moving ahead with its launch now that it has secured the licence amendments. "We don’t apply to the commission frivolously," he says, adding that Bell ExpressVu’s client base would be limited. "BCE owns an interest in a couple of small cable operations through TéléQuébec in northern Quebec, so potentially they could be a customer. Whether Bell Canada goes for a cable licence - I can’t comment on whether they will or not. But let’s face it, Shaw isn’t going to buy our service, Rogers isn’t going to buy our service, nor are Vidéotron or EastLink. Look isn’t going to buy our service because they don’t have capacity. Who is going to buy our service? It’s going to be new entrants and a few small cable companies." Armstrong adds that it will take time to set up the back office operations to make the PPV offering functional for distributors. Craig Rennick, head of programming at Bell ExpressVu, says the satellite TV distributor could reposition its existing PPV offering currently available to its subscribers tomorrow for the telcos. "We’re pretty much ready. There would be some integration work that has to be done, but it’s not a big deal. It’s sort of ironing out the contract and the business case and coming to terms at this point. There’s a great deal of interest (from telcos)," he says, noting that there are no technical difficulties in getting the ExpressVu signal to the telcos but that a billing system would have to be sorted out. Even without currently offering subscribers a PPV option, both SaskTel and MTS state that they are meeting subscriber targets. Sherbo tells CCR that MTS has signed up 3,400 customers for MTS TV, which currently reaches about 20% of the Winnipeg market. MTS is on track to expand availability of the service to 42% of the city by year-end, he adds. Smith notes that SaskTel currently has more than 9,000 installed and booked customers for Max Interactive Services throughout Saskatchewan. "Our customer base keeps growing, which is good news for any business," she notes. With the two CRTC decisions, it appears likely that the telcos will soon be able to add PPV as a feature of their TV services.

Two CRTC decisions boost chances of introduction of PPV on telco TV services

Broadcast | September 4, 2003

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