Cable industry raises concerns about MTS’ bid to enter broadcast distribution market

The cable industry wants the CRTC to ensure that Manitoba Telecom Services Inc. (MTS) doesn’t subsidize the rollout of its proposed broadcast distribution service with financing from its utility operations. The Canadian Cable Television Association (CCTA) warns that MTS’ earnings in excess of 16 per cent on its utility segment provide it with the resources to do just that. Concerned about anti-competitive behaviour arising from cross-subsidization, the CCTA says in comments filed with the CRTC that safeguards are needed to prevent MTS from allocating the costs associated with the deployment of broadband to its utility segment.In a January 10 submission to the commission, Shaw Cablesystems GP echoes those comments, and notes that in the past the CRTC has sought such safeguards when telephone companies have entered the broadcast distribution business. "There are no other safeguards that we’d like to see. Our main issue was the cross-subsidy issue, so we just wanted to deal with that," Janet Yale, CCTA president and CEO, tells CCR. In its submission, the CCTA points out that in approving a similar application by NBTel (now part of Aliant Inc.), the CRTC noted that procedures had been put in place to guard against the inappropriate allocation of costs and revenues associated with the deployment of broadband infrastructure. NBTel was the first telco licensed by the CRTC to provide broadcast distribution services. As well, the cable industry is recommending that MTS receive a broadcast distribution licence only for the city of Winnipeg, rather than the regional one encompassing the Prairies that it has applied for (CCR, Dec. 19/01). "When you look at the application and where MTS is proposing to roll out, it was only Winnipeg," notes Michael Hennessy, the CCTA’s senior VP of policy and planning. "Our concern, particularly on behalf of our smaller systems in Manitoba, is that there was no clarity on whether or not they actually ever intended to serve the rest of the province. And if they did, whether they would meet similar obligations to what our local members in other parts of the province would have to meet." Hennessy points out that the licence should be restricted to Winnipeg until MTS is prepared to commit to certain obligations, such as priority signal, substitution and deletion requirements, in the expanded area. NBTel had its bid for a regional licence to serve all of New Brunswick nixed. The CRTC granted the telco permission to serve Saint John and Moncton only – Decision 98-194 (CCR, Jul. 15/98). But that was before the commission introduced a regional licensing model for broadcast distributors. MTS has indicated that it wants to offer a bundle of digital TV, Internet, and telephony initially to customers in Winnipeg. Ken Stein, Shaw’s senior VP of corporate and regulatory affairs, claims in his company’s submission that the CRTC has yet to fully develop and implement its new regional licensing regime. As such, it is "premature for the CRTC to issue a broad regional licence to MTS…" He adds that the regional licence would encompass Manitoba, Saskatchewan, and Alberta, yet MTS has no infrastructure beyond Manitoba. He proposes that MTS provide signal information on a community-by-community basis for all the markets that would be encompassed in a Region 2 licence before the CRTC gives the provincial telco such a broad licence. Shaw is also asking for the disclosure of additional information, such as technical and geographical limitations on DSL technology, how third-party ADSL access service is accommodated when MTS is providing broadcast services over the same loop, and how two DSL modems (one for third-party access and the other for MTS broadcast services) will function on the same twisted copper pair. MTS is likely to claim this information as competitive.

Cable industry raises concerns about MTS’ bid to enter broadcast distribution market

Broadcast | January 31, 2002

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