Pelmorex says vertical integration hampering its interactive TV features

Pelmorex Communications Inc. says vertical integration is impeding its move to interactive television and that distributors are launching their own services to compete with or pre-empt The Weather Network’s interactive offerings. In a submission to the CRTC for its vertical integration hearings, Pelmorex senior vice-president for regulatory and strategic affairs, Paul Temple, wrote that the future of the company’s The Weather Network and MétéoMédia channels depends on the ability provide information to viewers on their own schedules. “Therefore, ITV presents an opportunity for Pelmorex to grow and enhance our services through on-channel, advertising supported, interactive content,” Temple wrote in the intervention filed with the commission last week. “However the business case for ITV will be determined solely by vertically integrated BDUs . They will have every incentive to establish deals that will inevitably favour their distribution undertakings at the expense of independent programmers.” Pelmorex said this has already been the case with Bell Canada’s ExpressVu satellite service and Shaw Communications Inc.’s Shaw Direct. Pelmorex filed an undue preference complaint against Bell for its iWeather service in 2003, claiming Bell was refusing to provide Pelmorex’s services with the same interactive capability Bell was giving its own weather service. Pelmorex president and CEO Pierre Morrissette said negotiations led to Bell dropping its own service and adopting The Weather Network’s. But Morrissette said that process took a long time, and today’s fast-moving market doesn’t allow for lengthy dispute-resolution processes. “It’s very important to meet consumer needs promptly, and I’m sure that all distributors would agree with that, and all programmers,” Morrissette said in an interview. “In the unregulated world of application services, whether it’s on iPhones or BlackBerrys or tablets, whoever’s there first—it’s a very important market advantage to be there early with a top-notch service.” Bell spokeswoman Jacqueline Michelis confirmed that it negotiated a resolution with Pelmorex on the issue. But Pelmorex said it is now facing a similar issues with Shaw Direct, which has launched its own interactive weather service. Morrissette said developing interactive TV requires collaboration between the distributor and the programmer, and that Pelmorex hasn’t been able to develop its own service. “ launched their own service, so the capability obviously is there, but to date we have not been able to conclude a similar arrangement to launch an in-channel service for our service,” he said. In the company’s submission, Temple wrote about the advantages afforded to vertically integrated distributors. “All the vertically integrated BDUs have ownership in over-the-air broadcast stations and/or specialty services which include weather reports and related programming,” he wrote. “All of these vertically integrated BDUs control set top boxes capable of creating ‘non-programming’ ‘virtual interactive channels’ and walled gardens so as to avoid falling under broadcasting regulations while providing subscribers with competitive content. All have the incentive to self deal.” The CRTC defines walled gardens as “a defined offering of content, access to which is dependent on access to an affiliated facility or network.” Morrissette said interactive television is regulated if it’s part of an in-channel service, such as a feature that’s launched by clicking a button on the remote while watching The Weather Network, bringing viewers to content related to the channel. Walled garden services, which he said are not directly linked to a channel, have a different status. CRTC spokeswoman Eleanor Belshaw-Hauff said some walled garden services are regulated “depending on what kind of content they’re offering.” Alphanumeric services, which only offer text, are exempt, she said. Other services defined as programming under the Broadcasting Act may be regulated, but some are exempt under the CRTC’s new media exemption order. Temple wrote in Pelmorex’s submission that Shaw’s weather service was alphanumeric, meaning that it’s exempt from regulation. Shaw did not reply to requests for an interview for this story. Morrissette said that even if some walled garden services fall outside of regulation, distributors should not develop their own services at the exclusion of the programmer. “ITV is a very important market going forward for the future of television,” Morrissette said. “If a distributor is offering an information service for interactive television, that’s combining both content and distribution. We just want to have the opportunity to launch in a timely fashion at the very least equal with their unregulated service and not be disadvantaged.” The CRTC’s vertical integration hearings are scheduled to take place next month. mburgess@thewirereport.ca

Pelmorex says vertical integration hampering its interactive TV features

Broadcast | May 4, 2011

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