Bell’s strong support for licensing Internet retransmitters surprises observers

A lame duck CRTC process on Internet retransmission (PN 2002-38) has become significantly more interesting in the wake of a submission by telecom titan Bell Canada that advocates removing companies such as JumpTV.com Canada Inc. from the ambit of Bill C-48 and putting them under the "light-handed" regulation of the commission and allowing them to take advantage of compulsory licensing. The position is tantamount to tacit support for the activities of Jump and the former iCraveTV.com Inc. in retransmitting over-the-air signals via the Internet, and has industry observers anticipating blood on the floor as Canada’s most influential telco goes toe-to-toe with the previously unstoppable broadcasters. Bell’s submission, authored by chief regulatory officer Sheridan Scott, argues that companies such as Jump must conform to certain rules before being allowed to rebroadcast television stations such as Fox, NBC, CTV and others. Its position is in stark contrast to the pro-status-quo submission of the Canadian Association of Broadcasters (CAB), which has yet to face as influential an opponent on this issue. At issue is whether the CRTC should re-open its 1999 New Media Exemption Order to deal with the rise of new Internet retransmitters (CNM, July 25/02). The process, however, has been derided as moot in some circles since it was mandated by Cabinet before the passing in the House of Commons of Bill C-48. That bill denies companies operating according to the New Media Exemption Order the protection of the same compulsory copyright licensing afforded cable and direct-to-home satellite TV companies. Since Bill C-48 effectively aborts attempts by JumpTV to take advantage of compulsory licensing, it was widely assumed that most parties to the CRTC proceeding would argue in favour of the status quo, since re-opening the New Media Exemption Order would alter the regulatory basis for the legislation. Submissions in the public process were due September 13, and a motley crew of broadcasters, open-sourcers, producer groups and Internet service providers have responded with a range of opinions on how the commission should treat Internet retransmssion, and what recommendations it should make to Cabinet next January when it reports on the issue. As expected, most parties support the status quo, arguing against any modifications to the exemption order. CAB opposed to changes in order Chief among these is the CAB, which states in no uncertain terms that changes to the order would be inappropriate in light of the imminent passage of Bill C-48. It states that there "has been no change to the factual underpinnings that led to the issuance of the current Exemption Order that would warrant a change to that Order, at least prior to the normal review that is anticipated for 2004; or alternatively…if the Commission concludes that any amendment to the current Exemption Order is warranted, it should be amended so as to require the prior written consent of each broadcasting undertaking whose signal is being retransmitted, as a condition of being able to offer service pursuant to that Exemption Order." It continues: "The CAB stresses that the Commission should not create a new exemption order that is specific to Internet retransmitters, as this will undo the new copyright regime set out in Bill C-48 as passed in the House of Commons." The association warns commissioners against creating any new exemption orders, as the CRTC has proposed as one course of action in consultation documents. If Bill C-48 no longer captures companies such as JumpTV, it notes, then current uncertainty over their legitimacy remains, with all the negative consequences CAB officials have pointed out for the past three years. The Canadian Film and Television Production Association (CFTPA) backs its broadcasting counterpart, but, unlike the CAB, its submission also allows for alternatives to the status quo, including potential licensing for Internet retransmitters. Its submission states: "In the short term, we would certainly support the CRTC continuing its New Media Exemption Order unchanged, i.e., Internet transmitters would be covered by the Order and, by virtue of Bill C-48, would fall outside the compulsory licence regime. In the longer term, if the CRTC chooses to regulate broadcasting via the Internet, if Internet retransmission is licensed, it must be subject to the same regulatory obligations as other broadcast distribution undertakings." Commission’s intention was not to regulateAt the other end of the spectrum, though, is Bell, which has surprised industry observers by arguing fervently for a new exemption order with the full understanding that such a move would render Bill C-48 toothless in fighting Internet retransmitters. Bell writes: "The main copyright concerns associated with Internet retransmission include the impact of an advertising business model that competes with over-the-air broadcasters for advertising revenues, and the impact on rights owners when over-the-air signals are retransmitted outside of Canada. Nevertheless, these copyright concerns should not lead the Commission to reverse the overall decision to forbear from regulating broadcasting on the Internet… "In (Bell’s) view, given the wording of Bill C-48, it would be appropriate to amend the existing New Media Exemption Order by removing "Internet retransmission" activities and to issue a new separate Internet retransmission exemption order with appropriate terms and conditions…However, given the significant potential impact that Internet retransmission could have on the Canadian broadcasting system, (Bell) submits that the Commission should indicate either its intent to revisit this exemption order in three years or to put staggered levels of responsibilities into the order." The implication could be that government, through the introduction of statutory changes, has stepped on the CRTC’s toes in mandating regulation or not of the Internet, but that the commission can reverse that development through the issuance of a new exemption order rendering Bill C-48 moot and preserving the commission’s original intention not to regulate the Internet. Bell’s submission is backed up by other telcos. In a separate submission, Aliant Telecom Inc. also argues for the need for a separate exemption order for Internet retransmitters with, as Bell recommends, conditions on operation. "We believe it is preferable for the Commission to allow Internet retransmission under strict conditions in an exemption order and gauge the consequences. On the other hand, if the Commission were to over-burden such new services, Canadians could not develop new services, nothing would be gained and in effect, regulation would guarantee that Internet retransmission would never occur in Canada, even under strict conditions." Telus Corp., Bell’s western telco rival, falls in line. "Telus is of the view that Internet retransmission is simply a form of New Media, and that if Internet retransmission ever emerges as a substitute for existing broadcast technologies, it will be because of customer demand…The only way in which any of these developments can occur is if retransmission is allowed to develop with minimal regulatory oversight that interferes with the ability of Internet retranmsitters to innovate and respond to market demand." While Bell’s Scott was subtle in her argument that the commission should re-take the regulatory territory co-opted by the government in Bill C-48, Telus adopted a blunter approach: "Accordingly, Telus recommends that the Commission commit to a gradual deregulation of the broadcasting distribution and programming sectors as consumer demand drives New Media growth. The approach should be to establish milestones…for the elimination of various regulatory rules so that conventional industry participants can adapt and transform themselves in a market-driven restructuring of the broadcasting and production industries with certainty of the regulatory framework that will apply." Telus does not, however, go so far as to recommend a new exemption order, and stays instead on the safer ground of expressing concern about the effects of Bill C-48 on innovation while recommending the commission not revisit its exemption order. Process turned on endThe trio of telcos could make the commission’s job much harder than might have been anticipated. Bell’s regulatory shop is intimately familiar with the workings of the CRTC, and its demands carry significant weight both there and within the federal government – notably at Industry Canada. Early analysis seems to suggest that the Order-in-Council mandating a CRTC review of the issue is now a thorn in the side of the broadcasters – certainly not Canadian Heritage minister Sheila Copps’ intention. Shifting tides? Questions are also being raised about solidarity in the content industry over the direction developments seem to be taking in ensuring no JumpTV or iCraveTV could legally begin their controversial business plans. CTV Inc., a BCE Inc. subsidiary, has likely been sidelined in the debate and its executives are unlikely to cross swords with Bell’s legal eagles. CBC Television, in its submission, has come out in favour of Internet retransmission, and even the CFTPA has submitted less-than-devout comments to the commission on the issue. The CRTC may yet look at the landscape and see only CanWest Global Communications Corp. and CHUM Television, along with some smaller broadcasters, aligned against the emergence of Internet retransmission under the direction of their chief cheerleader, former CanWest executive and CAB president/CEO Glenn O’Farrell. A second round of comments due October 4 may even see the fence-sitting cablecos weigh in with support for the telcos’ position. No enemy of Internet retransmission, the Canadian Cable Television Association (CCTA) has long advocated allowing wriggle room for the likes of JumpTV through licensing. It accepted Bill C-48 as an acceptable outcome to the long process of debate over Jump since the law wouldn’t interfere with a potential shift to Internet protocol (IP) distribution of its signals. Now, however, it may sense the shifting of tides and support the telcos in advancing their arguments against outlawing Internet retransmission in line with the spirit of the association’s position since the rise of iCraveTV in 1999. CRTC officials tell Canadian NEW MEDIA that it is too early to tell if public hearings will be held on the matter – something previously thought unnecessary and unlikely given time constraints. The commission must report back to Cabinet with recommendations by January 23, 2003.

Bell’s strong support for licensing Internet retransmitters surprises observers

Broadcast | September 18, 2002

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