Cost of digital TV subsidy program ‘prohibitively high’: Heritage Department

OTTAWA—A subsidy program to assist television viewers affected by the transition from analog to digital television broadcasting could cost more than $200 million, Jean-Pierre Blais, assistant deputy minister of cultural affairs at the Heritage Department, told the House of Commons Standing Committee on Canadian Heritage Monday. “If you take a per-capita approach to what they spent in the United States, and convert it to the size of the Canadian population, it would be over $200 million in Canada,” Blais said. “I would fear that the administrative costs would be even higher because we do not have the food stamp process that the American government had to deliver the coupons.” In 2007, the CRTC announced a deadline of Aug. 31, 2011, for broadcasters to switch from analog to digital over-the-air television broadcasting. By that deadline, stations operating in “mandatory markets” must start broadcasting with digital signals. Mandatory markets are defined as those with a population of more than 300,000 or those with more than one local television station. The Public Interest Advocacy Centre (PIAC) has recommended that the government follow the experience of the United States, where television stations transitioned to digital broadcasting by the deadline of June 11, 2009. The U.S. government provided financial subsidies to consumers in the form of coupons for converter boxes, at a cost of $1.3 billion US. It also ran public education and consumer awareness programs. The CRTC has estimated a much cheaper subsidy program than $200 million. In a report to cabinet on March 23 last year, the CRTC said that, at $75 per digital converter box, a national subsidy program would cost approximately $67.5 million, excluding administration costs. It’s not the first time the Department of Canadian Heritage has warned about a costly subsidy program. In April of last year, the department recommended to Heritage Minister James Moore’s office that the cost of a coupon program would be “prohibitively high,” and warned about potential “cost overruns and wastage.” The memo, to Tanya Peatt, a policy adviser to Minister Moore, was dated April 20, 2010, and noted that “some kind of self-identification and information process” would have to be established to identify individuals eligible for the program. “Otherwise, coupons would have to be made to any household on request, as was done in the United States. As such, the cost for creating and administering a program comparable to that which was provided in the United States would be prohibitively high. The coupon program in Canada would also have to be carefully designed to avoid the possibility of fraud, as was alleged to have happened in the United States,” said the memo, obtained by The Wire Report through an access to information request. The memo, signed by Blais, added: “At the same time, the experience with the American program shows a number of problems with cost overruns and wastage. The total cost for coupons amounted to over USD $1.3 billion, after Congress had to approve an increase from the original authorized funding amount on two separate occasions.” It said that a subsidy program for Canadians could ultimately benefit foreign-owned electronics manufacturers. The CRTC says that in 2009 about 7.3 per cent of Canadian households relied on over-the-air television signals, and that approximately 826,000 to 857,500 households “may require” over-the-air digital converter boxes to ensure no loss of signal. Canadians with satellite, cable, or Internet protocol television (IPTV) services are not affected by the transition. Ian Morrison, a spokesman for watchdog group the Friends of Canadian Broadcasting, which supports a subsidy program for the digital transition, said that the Conservative government could face a backlash from people cut off from over-the-air signals. Most of the people affected will be part of a key, elderly voter demographic, he said. “The people giving advice to James Moore are insulated from these people. They just don’t get it. There’s an ostrich-like, head-in-the-sand like ignorance about the American experience,” he said. “The American congress is intensely sensitive to local opinion, and our system is top-heavy.” The CRTC is implementing a requirement for over-the-air broadcasters to air public service announcements about the transition and the upcoming deadline. The commission has proposed that broadcasters air 30-second ads six times per day, increasing to eight times per day on Aug. 1, and that at least 25 per cent of the 30-second announcements be broadcast between 7 p.m. and 11 p.m. At the heritage committee meeting Monday, Heritage Department officials and the Conservative government MPs played down the impact of the transition. Dean Del Mastro, the parliamentary secretary to Minister Moore, said the “mythical seven per cent” of Canadians who may be affected “may or may not be watching television, may or may not have U.S. satellite dishes, and may or may not have electricity in the first place. The reality is we seem to be really concerned about a group that, frankly, most people have a hard time putting their finger on.” Del Mastro referred to the CRTC decision last year that approved Shaw Communications Inc.’s purchase of the broadcasting assets of Canwest Global Communications Inc. As part of that decision, Shaw agreed to contribute to the Canadian broadcasting system by allocating $15 million to the installation of free satellite equipment and free local television packages for people left in the dark as a result of the transition. The Shaw plan only applies to television viewers in non-mandatory markets, where broadcasters are not required to switch to digital and could cease broadcasting altogether. The CRTC estimated last year that that a maximum of 31,500 households in non-mandatory markets may require satellite equipment. In a brief interview following the meeting, Del Mastro said that the Conservative government stands by the CRTC’s Aug. 31 deadline. “The decision was made four years ago. If four years isn’t enough time to get ready, four years and six months isn’t going to make any difference,” he said. “We think that the CRTC is managing this very well.” Discussion at the heritage committee Monday also turned to the cost of converter boxes and digital tuners. Blais said converter boxes can now be purchased for about $45, but Liberal MP Bonnie Crombie said she couldn’t find one for such a low price. “Probably, these are the most vulnerable of our population who can least afford the cost of a converter,” she said. Blais said the Heritage Department is also preparing a public awareness campaign that so far includes a 1-800 number and a website, www.digitaltelevision.info.gc.ca. sdoyle@thewirereport.ca

Cost of digital TV subsidy program ‘prohibitively high’: Heritage Department

Broadcast | March 8, 2011

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