ITV faces years of development before regulatory code can be written

Canada’s broadcast and cable companies were unable to agree on any principles related to interactivity in a new digital code released late last week by the Canadian Radio-television and Telecommunications Commission (CRTC). But the industry doesn’t seemed concerned, with many noting that interactive television is too premature and not well enough understood to reach any consensus on how it should be introduced or carried. Experts on the subject predict it will be at least three years before any kind of business case for interactivity is even understood. At stake, says Beverly Milligan, head of development for the Ontario-based Interactive Broadcast Development Group, is ownership of the content and who will share in the revenue pie. While interactivity will likely cost billions of dollars to implement, no one is yet sure who will control the content or charge consumers for the service and related charges. That uncertainty was reflected in PN 2001-57, Principles for the launch of Category 1 and 2 digital services, released by the commission on May 25. The notice sets out the joint principles whereby the industry can negotiate agreements to launch a raft of new digital specialty channels this fall. The document deals mostly with the minutiae of which distributors will carry which stations in an environment where cross-ownership between channels and distributors has become commonplace. Only a small paragraph refers to digital interactivity. "As for interactive services, the Commission agrees with parties who submitted that it is too early to develop principles specific to this type of service," the notice states. "The Commission expects that there will be developments in this area in the short to medium term that will clarify the issues to be addressed. To this end, the Commission encourages both programmers and distributors to work together in such areas as the development of technical standards." Milligan says unresolved issues go far beyond technical specs, and that the key issue for industry executives is the business model. "I don’t think there’s any doubt in anyone’s mind that interactivity is part of the shift to digital. Therefore, everyone wants a piece of the pie and are positioning for it. I would think that this discussion is front and centre," she told Canadian NEW MEDIA. Past precedent, she adds, makes it difficult to decide who will control and benefit from digital content. "Who at the end of the day owns the ITV content, and where do you fit on the value chain? If you’re talking to a cable carrier, you’re talking about a walled garden. It’s these (set-top) boxes that are creating an environment where the consumer feels they have easy access and a full selection of information and consumer goods and things like that," explains Milligan. "But, in fact, they don’t. It’s all box-dependent. At the end of the day, the owner of the box decides what gets carried on the box." On the other hand, she says broadcasters have traditionally been in control of the hidden content carried on analog channels such as closed captioning, a precedent which could lead them to want full control over ITV content. Regulatory issues complicate potential ITV agreements Industry analyst Mark Quigley of The Yankee Group in Canada agrees, saying that without an understanding of what digital interactivity will be capable of, pricing and tiering issues become moot. There are also regulatory issues which complicate the competitive stakes. He doubts the CRTC is willing to ask industry players for a code in the short term until it understands what kind of content is likely to be offered. For example, Quigley says the CRTC may decide in the future to revisit Canadian content rules and regulation of the Internet. Then again, it may opt for the status quo. "If you look at the Canadian context, there’s an awful lot being done in the interactive TV space, and perhaps they’re content to let things ride for the time being…," he says. "The thought might be that if they sit back, and observe things rather than going in and trying to throw regulatory shackles around it, that it might result in a little more innovation that can then be sold outside of Canada to cablecos in the U.S. or satellite companies elsewhere." Milligan is working on a business plan to create innovative content for ITV that can be used to stimulate market demand for the technology – something she says is needed before substantive discussions can take place. She says IBDG, in partnership with Canadian Digital Television, is developing a seven-year plan to introduce as many as two million people visiting the CN Tower to new interactive services. Until the market demand is proven, she says the CRTC is unlikely to press for any new codes. "I think it would be premature for the CRTC to want to do that," she says. "I don’t think anyone has the answers yet – over the next couple of years anyway. By the end of next year, after we do these trials, then they could commence a dialogue with some really solid information."

ITV faces years of development before regulatory code can be written

Broadcast | May 31, 2001

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