CRTC looking to industry for help with framework for migrating to digital

The CRTC appears to be looking to a divided industry to come up with the answers to establish rules for the migration to digital in a public notice it issued last week. Broadcasting Public Notice 2005-1, which is a call for proposals for a framework for the licensing and distribution of high-definition pay and specialty services, offers little direction and merely outlines some basic principles set by the commission in other related proceedings. "I appreciate that it is a difficult issue. It seems pretty clear that what they (the CRTC) are doing is looking to the players to come up with some sort of solution," Rogers Cable VP of regulatory affairs Pamela Dinsmore notes. "I think part of the problem is that for all the discussions in the working group and the clear divisions between the various parties, the commission hasn’t offered a lot of direction in the public notice. They’ve opened it up wide, looking to the various industries to come up with solutions that are going to please everybody. And I’m not sure there’s a solution that’s going to please everybody." Michael McEwen, president of Canadian Digital Television (CDTV), expresses similar sentiments about the public notice. "I’m confused (by the public notice)," he tells Canadian Communications Reports. "I know what the industry is looking for – what is the overall migration strategy and then within that strategy how do we move pay and specialty to high definition (HD). I think the PN is struggling with what is the overall strategy." He adds, "This is a policy that is in search of a home, or this is a policy looking for one. It is a cry from the commission saying, ‘We’re not sure what to do here.’ I think it’s an opportunity for the industry to have a frank dialogue." At the annual conference of the Canadian chapter of the International Institute of Communications in December, Alliance Atlantis Communications COO Phyllis Yaffe called for government regulations to ensure a presence for Canadian options in migrating analog specialty TV channels, which are aided by tiering and mandatory carriage rules, into the digital world. She noted that it was one rare issue upon which the industry has failed to come up with any compromise solution. A migration working group, with representatives from various parts of the industry, failed to come to an agreement in 2001 (CCR, June 7/01), and the broadcasters have also found themselves at loggerheads with small cablecos (CCR, Aug. 2/01). In its January 7 public notice, the commission makes no concrete proposals for the framework. The CRTC asks for comments on such issues as broadcaster consent, provision of a basic service, distribution and linkage rules, and wholesale rates. "As the industry moves toward the digital distribution environment, different packaging and marketing arrangements will continue to evolve. The commission invites comment on whether programmer consent should be required for the migration of analog services to digital distribution on all cable BDUs, and, if so under what circumstances. The commission also invites comment on the circumstances under which it should expect programmers to provide consent to cable BDUs," reads the public notice. Broadcasters are insisting that cable distributors obtain their consent before their channels are migrated, while the distributors complain that the programmers could slow down the pace of the digital transition by refusing to consent. The CRTC also proposes less restrictive distribution and linkage rules for high-definition transitional pay and specialty services, with a key change advanced by the commission being the elimination of the dual and modified dual status provisions of HD channels. "Consistent with the above, the commission invites parties to submit proposals that envisage less restrictive distribution and linkage rules for the migration of the analog services to digital distribution," states the public notice. "I guess what I would like to see is a combination of two things, and I’m not sure it’s 100% possible," notes McEwen. "One is that there is some degree of assuredness of migration to digital for both the carriers and service providers and that we’ve got to start HD programming. Two, that there be room to carry those services." McEwen thinks that the CRTC is leaning toward duplicating, at least in part, some of the rules in the analog world. "I think there is a lot of interest in preserving the viability of what currently is viable. And making sure that if you’ve got carriage in nine million homes in an analog world that you are going to be able to duplicate that in digital," he says. But Rogers’ Dinsmore prefers a more extensive overhaul of the rules, noting that cablecos need the same flexibility as their direct-to-home (DTH) satellite TV rivals. "The PN shouldn’t merely be a tinkering with the existing rules. I think there has to really be a re-think as to how customers perceive digital and the desire for choice," she tells CCR. Rogers introduced a full-digital service, which is a duplication of its analog lineup, late last year. "Our desire for more flexibility stems from the fact that now we can only offer on digital what we offer on analog. So we can’t mix and match the services and the tiers or offer theme packages," she says. "So what we need is the flexibility on digital that our competitors have, and certainly we don’t have that. The rules have to be the same. Whether they (satellite operators) comply with our rules or we comply with their rules." One problem faced by cable operators is that they have to carry dual status specialty services, such as Vision TV and Newsworld, in their basic packages unless they get the consent of the broadcasters to not do so. "But what rules govern the DTH providers? Their basic package is limited to CBC English, CBC French, APTN, TVA and CPAC. For us, under current rules, it’s a much larger basic package," she notes. But Pat Kiely, director of business operations and development at Mountain Cable, notes that digital technology allows cablecos to more easily personalize the channel viewing choices of subscribers. In the analog world, channels have to be physically trapped out to prevent a viewer from receiving a service. With digital, providing customers with the channels that they want can be done with the stroke of a computer key. Kiely, however, sees some benefit of having a large basic package. There are more channels, but he notes that because they are sold in bulk they are cheaper. If fewer customers chose specific channels, the per-channel cost would likely have to be higher. "With digital, it is easier to repackage channels, and that’s what the traditional broadcaster is scared to death of, and, honestly, I mean scared to death," he says. The CRTC has set an earlier deadline for submissions: March 7, but few players are expecting an early resolution to the issue of migrating channels from analog to digital. "I think it’s a very tough issue. There’s a lot at stake for all players," says Dinsmore. "It’s complicated, and the question has so many layers to it, and there are no simple answers to it," notes Kiely. "I think that digital migration is something that is real. You can’t close your eyes and say we hope it never comes. I wouldn’t even begin, and I don’t think any of us can pretend to have perfect answers. But I do think it needs to be dealt with."

CRTC looking to industry for help with framework for migrating to digital

Broadcast | January 14, 2005

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