Exclusive collection of set-top box data is undue preference, Pelmorex says

OTTAWA—Vertically integrated distribution companies act with undue preference when they use exclusive viewing data collected from set-top boxes to inform their own broadcasting services, Pelmorex Communications Inc. says. And the company intends to raise the issue at the CRTC’s hearing on industry consolidation next May. “The analogy would be an ISP that collects all the information on website visits, doesn’t give it to anyone and then starts creating its own websites,” Paul Temple, Pelmorex’s senior vice-president of regulatory and strategic affairs, said Wednesday at the Canadian Telecommunications Forum in Ottawa, hosted by Insight Information. Broadcasters can subscribe to data collection services for cable and online services, but only distributors have access to set-top box data. Speaking at a panel about the effects of the CRTC’s new broadcasting distribution undertaking (BDU) regulatory framework next year, Temple said the commission should have mandated that distributors collecting viewing information about a television service from set-top boxes be obliged to share that information with the service. “Give me some of that information—just on my own service,” he said. In October 2008, the commission set out a new regulatory framework that will come into effect Aug. 31, 2011. “ can say that, at 10 p.m., viewership on CBC Newsworld was up or down, or whatever the case may be. That’s the extent of the data they have,” Temple said in an interview following the panel discussion. “That’s a problem because … I come and say, ‘Hi, I want to renew my agreement, I have a great service. You should put me in more packages.’ They’re sitting there with all this information I don’t have, which puts me at a competitive disadvantage.” Temple said the situation is further complicated if the distributor is part of a vertically integrated company that has its own broadcasting services. “Now they can use that information, on my strengths and weaknesses, to their advantage,” he said. “The second thing is, I want them to be restricted from giving that information to anyone else, including their own services. That’s all we’re after.” Gary Maavara, Corus Entertainment Inc.’s executive vice-president and general counsel, said during the panel discussion that data sharing is a crucial issue for the broadcasting industry. “The challenge Corus has, and everybody has, is understanding the consumer better,” he said. “Understanding what the consumer wants is absolutely at the heart of what we’re all going to be doing in a fragmented world.” Maavara said the federal government should include research on what Canadians are watching, and want to watch, as part of its upcoming national digital strategy. Broadcasting expert Martha Fusca, president and CEO of Stornoway Communications, said in an interview that vertically integrated broadcasters have a “huge” competitive advantage over smaller broadcasters because the data collected from set-top boxes is the most detailed form of television data available. “ can take advantage of that data and are going to have a huge competitive advantage. Imagine that you can track what anybody’s watching at any time,” she said. “They can package themselves more favourably, they’ll have the data on which packages work better than others, which channel positions work better than others. Quite frankly, what would you and I do in that situation? We would ensure our channels have a preferred place.” She said integrated companies can also use data for targeted advertising. Fusca argued that sharing the data is to the consumer’s advantage because broadcasters can use the information to improve their services. She said she supports a CRTC policy that would enforce data sharing. But Serge Sasseville, Quebecor Media Inc.’s vice-president of corporate and institutional affairs, said by email that the CRTC shouldn’t step in to mandate set-top box data sharing. “We strongly disagree with Pelmorex's suggestion ... undue preference in that regard. The CRTC should not be involved at all in this matter,” he wrote. Sasseville said Quebecor does not collect data from its customers’ set-top boxes. Telus Corp. spokesman Jim Johannsson said in an interview that the company collects information from set-top boxes, but is “very concerned” about the potential consequences of vertical integration. “In this very competitive TV distribution business, as we’re negotiating for content and doing our best to market our products in a way that customers are better served than by our competitors, can our competitors that are vertically integrated use some of that intelligence to rework their own channel line-ups to maximize their profits?” he said. “These types of things can happen. We’re very encouraged to be able to participate on the upcoming hearings on this issue,” he said. Temple said Pelmorex will bring up the set-top box issue during the commission’s hearing on vertical integration. He said one solution would be to consider a distributor’s refusal to share the information as undue preference. Temple said he also plans to raise concerns about the dispute resolution system. “For smaller services, dispute resolution is really not much of an option. I’ve always struggled for an analogy, but it’s not good business practice to be dragging your biggest distributor into court all the time. It’s just kind of dumb, so smaller services suffer in silence,” he said. Bell Canada and Rogers Communications Inc. declined to comment for this story. kfournier@thewirereport.ca

Exclusive collection of set-top box data is undue preference, Pelmorex says

Broadcast | November 10, 2010

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