Distant TV signals losing value, service providers say

OTTAWA — Canada's major TV service providers argued before the Copyright Board of Canada on Monday that they should pay less for distant-TV signals because these channels are losing value as more viewing options become available to consumers. It was the fifth day of a hearing scheduled to last until Friday, along with final arguments slated for Jan. 26 and 27. Before Monday, collectives representing broadcasters, producers and others holding the rights to programming had been arguing that the rate TV service providers pay for each subscriber who receives one or more out-of-market channels from over-the-air broadcasters should immediately double from 98 cents to $2, and go as high as $2.38 by 2018. Lawyer Jay Kerr-Wilson — representing Rogers Communications Inc., BCE Inc., Telus Corp., Shaw Communications Inc., Quebecor Inc. and Cogeco Cable Inc. — said in his opening statement Monday that higher rates are unwarranted since the time-shifting value of distant signals is diminishing as a result of newer viewing technology and services that give consumers other options to not only view programs when they want, but to do so on devices other than a television set. "There is no justification for the proposed doubling of royalties," Kerr-Wilson said. The broadcast distributors are calling for distant-TV tariffs to remain 98 cents in the first year of a term that goes from 2014 to 2018, Kerr-Wilson said, and then gradually decline. He said in an email that service providers are proposing the tariff decline two cents a year over the five-year term to as low as 90 cents in 2018. The first witness for the TV service providers was David Purdy, executive vice-president of content for Rogers, who said distant TV signals are becoming less valuable to the company and its subscribers. "The value that they had a decade ago would be greater than what they have today," he said. Reasons for the downward trend, he said, include the increased availability of video-on-demand services that lessen the need to rely on time shifting to watch shows that air at inconvenient times. New options that have emerged in the last decade, he noted, include set-top-box-based on-demand programming, TV-everywhere services offered by both channel operators and broadcast distributors, hybrid streaming services such as Shomi (operated jointly by Rogers and Shaw) and over-the-top streaming services like that offered by Netflix Inc. Information presented during Purdy's testimony showed that the on-demand programming Rogers licences from over-the-air broadcasters in Canada increased 29 per cent between 2013 and 2015, to more than 17,000 episodes of various programs. Purdy said most shows available on-demand are prime-time programs, including U.S. shows that have been licensed by Canadian broadcasters. Kerr-Wilson presented Purdy with a chart of the top 100 U.S. programs that are shown in Canada, evidence that came up before the board last week from University of Calgary economics professor Jeffrey Church, who testified on behalf of the collectives. Kerr-Wilson asked Purdy how many of these shows would be available to subscribers in Toronto if Rogers stopped carrying distant signals, to which Purdy replied all but three. Purdy said PVR technology, which has improved substantially over the years, is another reason time shifting is less valuable today. He said more than half of Rogers' TV customers have a PVR-capable set-top box, the most recent versions of which allow customers to record up to seven shows at a time while watching another live. He admitted that he once referred to time shifting as the "poor man's PVR," which he added was a poor choice of words. The Copyright Board is scheduled to hear from representatives of Bell, Shaw, Quebecor and Telus this week, as well as expert witnesses expected to make the economic case for lowering tariffs on distant-TV signals. Last week, the Copyright Board heard from representatives of the collectives that the royalty rates for distant-TV signals were first established at 70 cents per subscriber in 1990 and gradually increased to 98 cents as a result of negotiations between collectives and TV service providers, even as the number of distant TV signals received by households increased from an average of 4.5 to the mid-50s today. — With reporting by Derek Abma at dabma@thewirereport.ca and editing by Anja Karadeglija at akarad@thewirereport.ca

Distant TV signals losing value, service providers say

Broadcast | November 30, 2015

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Distant TV signals losing value, service providers say

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