Whistler Cable, CCTA want cable competition shut out of B.C. resort town

The incumbent cable operator in Whistler BC is arguing that allowing another Class 2 cable operator into the resort town would fragment the market and result in reduced cable service. Whistler Cable Television Ltd. is urging the CRTC to deny a broadcast distribution licence to David Reid and Richard Hazell, two entrepreneurs hoping to bring a second cable service to the town of 7,500. "I favour competition too, except I don't know what to do with unproductive competition," Whistler Cable president Manuel Saperstein tells Canadian Communications Reports. Saperstein contends that the new entrant is not planning to serve all of Whistler. "In our opinion, they're going to cherry pick. That's based on several statements and indications made in their application. Frankly, for the amount of money they plan to invest, they can only cherry pick." In an August 23 submission to the CRTC, Whistler Cable points out that Reid and Hazell will likely target hotels and multiple-unit dwellings since they plan to install their headend in a parking lot, near such buildings. They also only plan to spend $745,000 to establish a distribution system - not enough to provide service to the whole community, according to Saperstein. "Accordingly, the vast majority of the residents of Whistler will not even have access to his (Reid's) service. They will not, therefore, receive any benefit from the commission's approval of his application," Whistler Cable writes. But if Reid were to reach his projected 700-subscriber level in year one, Whistler Cable contends that its own community channel would suffer. The loss of 700 subscribers in one year would reduce Whistler Cable's subscriber base and operating revenues by almost 14 per cent, the incumbent notes in its CRTC submission. With lower revenues, less money would go toward its community channel. As well, Saperstein argues that the residents of Whistler will be forced to endure service interruptions and delays while the new entrant over-wires parts of the community. "Consequently, if (Reid) does penetrate the market, we would have to divert funds and fight him and thus reduce local programming and the number of new digital channels that come up," says Saperstein, who argues that the over-wiring in smaller markets is not viable because of the higher costs and lower revenues associated with providing cable service. Whistler Cable also attacks Reid's business plan, calling it unrealistic and unviable. "...We are not convinced that Mr. Reid's limited experience as a licence exempt cable service operator would adequately prepare him to operate his undertaking in full compliance...it is not clear that the costs associated with complying with these regulations and rules has (sic) been factored into Mr. Reid's business plan," Whistler Cable's submission states. The cableco also points out that Reid has included affiliation fees for such services as TSN and MuchMoreMusic in his business plan that are well below those that a Class 2 cable distributor is typically required to pay. Whistler Cable has the support of the Canadian Cable Television Association (CCTA), which also filed an August 23 submission that urges the CRTC to reject the bid for a new cable licence. "He (Reid) has a pretty weak business case and not necessarily a lot of financing. He should have to demonstrate that he can make this a viable business or otherwise everyone would be in there digging up the streets," Harris Boyd, senior VP of industry affairs and office of small systems at the CCTA, tells CCR. He points out that competition in Class 1 systems may be viable, but not in smaller markets. "VDN (Cable) seems to do pretty well in Montreal by picking some high-rise buildings (to target). Vancouver, Montreal and Toronto are quite different communities, of course," says Boyd. "With this size of community - unless it gets the Olympics and the place explodes - it is probably iffy for two guys on the ground." "While the CCTA supports the commission's policy of promoting competition in the broadcasting distribution market, there is clear evidence that in very small markets competition from multiple providers may not be sustainable," notes the cable association in its submission. "There is a limit on how many distributors most small markets can sustain...It is also possible that splitting the subscriber base between two cable systems combined with other legal and illegal satellite competition might reduce both systems to Class 3 status thereby eliminating the community channel altogether." Boyd adds that if the commission wants competition in smaller cable markets, then it should allow more regulatory flexibility at the same time. He says before the commission grants any competing cable licences for small markets, it should first rule on the CCTA's application to have Class 2s and the former Part IIIs exempt from licensing. "Obviously, if the CRTC exempts these systems then they wouldn't have to go through this (licensing) process in the future. It would make it simpler for everyone. And everyone would have more regulatory flexibility to deal with the competition," he notes.

Whistler Cable, CCTA want cable competition shut out of B.C. resort town

Broadcast | August 29, 2002

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