Mandate all content available on all ancillary platforms: Rogers

GATINEAU, QUE.--All television content should be made available to competitors on ancillary platforms, Rogers Communications Inc. told the CRTC commissioners Monday at its vertical integration hearing. But companies appearing before the commission were far from agreement. Vertically integrated competitor Quebecor Media Inc. quickly challenged Rogers' position, calling it “problematic and dangerous.” Ken Engelhart, Rogers’ senior vice-president of regulatory affairs, warned of a “wild west” where content exclusivity becomes a norm for mobile and broadband platforms. Rogers vice chair Phil Lind raised the possibility of a world where different providers own exclusive rights to different professional sports leagues. “Sports fans would be forced to buy three iPhones or three iPads and subscribe to three distributors to ensure they could catch all the action when and where they wanted,” he told commissioners on the first day of hearings looking into vertical integration in the industry. “This is obviously unacceptable.” Lind said such behaviour would lead to less competition and higher prices. “We’re asking the CRTC to say there are no exclusive rights, that everyone gets everything,” Engelhart told reporters afterwards. But Pierre Karl Péladeau, Quebecor’s president and CEO, said a world of exclusive content and multiple devices would have the opposite effect, and that exclusivity is the only way to get distributors to invest in programming. “This is what competition is all about. Yes, at the end of the day you will have different products on different devices,” Péladeau told reporters Monday. “I think this is how you’re going to be able to stimulate competition, because if not, it’s going to be plain vanilla everywhere and only the large companies like Bell will succeed.” Péladeau warned that over-the-top services like Netflix, Google TV and others—which he called the “audiovisual Walmarts”—are benefiting from no regulation at the expense of national TV distributors. He said it's time for the commission to stop behaving like ostriches, covering their eyes and putting off consideration of what’s at stake. The regulated distributors are suffering, he said, and “the numbers speak for themselves.” When commissioner Peter Menzies asked how many subscribers had been lost to over-the-top services, Robert Dépatie, president and CEO of Quebecor's Vidéotron Ltée., said the company is researching the matter and would provide numbers in the “very near future.” Dépatie pointed to exclusivity deals Netflix has signed for content in Canada, saying it’s a reason that exclusivity is essential for Quebecor to compete. Menzies asked what is preventing Quebecor from creating its own over-the-top service. Pierre Dion, president and CEO of Quebecor broadcasting subsidiary TVA Group Inc., said that deregulation would allow for the emergence of new, competitive models. “We will have to start a service eventually. But we think we need less regulation in order to do so,” he said. Rogers proposed that “any television content broadcast in Canada, and also distributed on a broadband or mobile platform, must be made available to competitors for distribution on those same ancillary platforms, on a non-exclusive and non-preferential basis and on terms that are commercially reasonable.” The company said “television content” would include that on conventional stations as well as pay, specialty, pay-per-view and video-on-demand services. CRTC chair Konrad von Finckenstein noted that no other company made the recommendation. Engelhart said valuable rights like sporting events are often sold separately, which can blur the line between which companies are content providers. “It’s the KISS principle—keep it separate, sucker,” Engelhart said. “ want to have maximum revenue and for that reason they’ll often sell the mobile rights separately. We could certainly see Telus buying the mobile rights for Canada and if they weren’t covered by this rule they could give themselves an exclusive.” The simplest solution is to have rules apply to all distributors, Engelhart said. Rogers said its “no exclusives” rule is almost the same as what the commission imposed after BCE Inc.’s purchase of CTV, except that it would apply to all distributors rather than only vertically integrated ones, and would also include pay and video-on-demand content. For content where the rights holder is outside the Canadian broadcast system, like Masters golf, Engelhart said all distributors would get access to ancillary rights even if they were sold separately. “So that becomes the hook in Canada. You want to sell your programming on linear TV in Canada, which is where 95 per cent of the revenue comes from? You better provide it to all the mobile operators,” he said. TekSavvy Solutions Inc., an Internet service provider, and Public Mobile Inc., a wireless provider, also made presentations Monday. TekSavvy noted that it would soon be offering IPTV services. Patrick Lehoux, TekSavvy’s chief business development officer, said that vertical integration, while beneficial in some respects, incentivizes exclusionary and anti-competitive behaviour and called on the commission to protect against it. “If safeguards are not sufficiently robust or not applied in a full and consistent manner, competition will be unduly lessened,” he said. “Under this scenario, consumers will be worse off as they pay higher prices for fewer programming choices, and the pace of innovation slows.” Lehoux called for the prohibition of exclusive content across all platforms and said no programming services should be allowed to launch until they’re made available to non-vertically integrated distributors. Bob Boron, Public Mobile’s vice-president for legal and regulatory affairs, said that content distribution over wireless does not need regulation, but vertically integrated companies should not be allowed to use their content for unfair advantages in wireless. “No distributor should withhold content from a competitor, or enter into an arrangement with a third party which results in content being unavailable to a competitor,” Boron said. Allarco Entertainment Inc., owner of the Super Channel, cited a history of undue preference complaints to call for more regulation of vertically integrated companies. Malcolm Knox, the Super Channel’s president, said the commission should examine the risk of self-dealing between vertically integrated companies in relation to the promotion and sales of their own programming services and the treatment of independent services like Super Channel. mburgess@thewirereport.ca

Mandate all content available on all ancillary platforms: Rogers

Broadcast | June 20, 2011

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