More concerns expressed as Telus’ TV distribution plans are back on CRTC agenda

The Telecommunications Workers Union (TWU) fears that Telus Corp.’s telephone service will further suffer if the telco is granted the regulatory go-ahead to offer a television service as well. The union is asking to appear at the public hearing on Telus’ bid for broadcast distribution licences to provide details on why the company’s existing phone service is "substandard." "The Telecommunications Workers Union is adamantly opposed to allowing Telus into the cable television business as long as the company continues to provide substandard service to its telephone subscribers," the union writes in a submission this month to the CRTC. "The funds that Telus will use to build a cable system have been generated from the telephone side of the business, where it has consistently failed to meet the commission’s quality of service standards." Arthur Beaudette of Vegrevill AB-based DigitalWeb Internet Services, an ISP that relies upon third-party access to Telus’ lines, also questions Telus’ ability to offer a TV service when it has been slow in meeting his company’s needs. "I cannot see how they can possibly provide this service when we cannot even get more lines for our contracted modem service with Telus," he writes in his submission to the CRTC. Beaudette points out that Telus took almost three months to provide DigitalWeb with a DialVPop with 24 lines, causing it to lose about 30% of its customers because the delays were causing busy signals. "Of course, Telus had their Internet service working fine with no busy signals, so our customers could go to them. This whole fiasco almost bankrupted our Internet business," Beaudette writes. Under a five-year deal signed in September 2002, DigitalWeb was to start off with 24 lines to service its customers, but the company says that Telus now refuses to give it more lines. "All we want to do is provide dial-up service to other locations we serve as well as Edmonton (since that is where the modems are anyhow). Telus can do this with their customers, why can’t we?" he asks. "None of this surprises me since we are a competitor to Telus and I’m sure they don’t need the $4,000+ we pay them monthly. Two other ISPs have already gone out of business in the area so all that is left is us and Telus will once again have a monopoly." Ironically, Telus subsidiary Telus Communications Inc., which has applied for two Class 1 broadcast distribution undertaking (BDU) licences to serve Alberta and British Columbia, argues that its applications are "in keeping with the development of an innovative and competitive BDU … environment…" (CCR, Sept. 26/02). Telus’ applications will be considered at a March 24 public hearing (CCR Update, Feb. 19/03). DigitalWeb and the TWU were among parties filing comments by the March 10 deadline for the proceeding. Also being considered in the process are submissions that were filed when the applications were originally scheduled to be heard at a November 18 hearing. The commission delayed the application while it sought clarification of unspecified concerns (CCR, Nov. 22/02). Those concerns may have centred around the creation of an independent programming committee (IPC) to ensure that the licences would not fall under non-Canadian control. The establishment of such a committee is a common CRTC requirement when dealing with a parent company that has more than 20% non-Canadian ownership. U.S.-based Verizon Communications owns 26% of the voting shares of Telus Corp. In Oct. 21, 2002 correspondence to Telus, the CRTC notes that "the above-noted applications should be considered complete (since they have been gazetted already )," but still seeks Telus’ opinion on the establishment of such a committee to oversee any programming decisions, such as the selection of signals to be distributed and their terms of distribution. "To ensure that the non-Canadian shareholder does not exercise control or influence over the licensee’s programming decisions, the commission generally requires the licensee to establish an independent programming committee for the purpose of making any programming decisions," the CRTC stated. Telus responded that it would be amenable to a condition of licence requiring the establishment of such a committee, but preferred that programming decisions be made by James Goliath, VP of Media Solutions, the department within Telus Communications overseeing the BDU application and that would run the service’s day-to-day operations. Telus pointed out that the BDU licence of the former Telus Multimedia did not require such a committee. "Rather, the commission added a number of conditions to Telus Multimedia’s licence to ensure that all programming and content-related decisions would be made by the head of Telus Multimedia (ie. the VP of Multimedia), rather than by other executives or board members within the Telus group of companies who were not directly involved in the operation of that licensee," Telus responded to the CRTC. Telus is of the view that conditions of licence similar to those imposed for Telus Multimedia "would prove far more effective than an IPC to address the commission’s concerns with respect to programming decisions of the proposed undertaking," it told the CRTC. Telus pointed out that because it doesn’t plan on offering a community channel, "its scope for making ‘programming’ decisions is very limited…As such, any content or programming decisions would be limited to non-programming content, or to channel line-up and packaging of service tiers, the latter two of which do not involve any changes to the programming service provided to Telus by licences (sic) programming undertakings…" The complaints by DigitalWeb Internet Services and the union join a host of other reservations expressed during the first gazetting of the applications. Concerns were raised about cross-subsidization, the ability of Telus to fulfill all obligations of a Class 1 distributor, technological limitations that would prevent third-party Internet access to its lines, and the distribution of out-of-market television signals. Funding issues were also mentioned. The Alberta Motion Picture Industries Association (AMPIA) complained that Telus was proposing to offer virtually no benefits to the Alberta production community in which it proposes to offer its TV service. Telus retorted that the concept of a "benefits test" as it applies to BDU licences is a dated concept that is no longer applied by the CRTC when assessing applications. Telus also pointed out that it’s unrealistic to use its entry into broadcast distribution to address the financial challenges currently affecting the production industry in Alberta. But in this latest round of submissions, the AMPIA seems to have resolved its differences with Telus. In a March 10 submission to the CRTC, the association supports the applications, "subject to confirmed commitments to Alberta-based production companies" based on discussions with Telus over the past two weeks. AMPIA supports Telus’ request to allocate 20% of its required contribution to Canadian production to an independent, arm’s length production fund. AMPIA notes that it has received Telus support that 20% of the fund be used for development loans, and that the money be distributed on a pro rata basis with subscriber roll out. "To facilitate this calculation, AMPIA further recommends that Telus provide subscriber numbers for this Telus BDU to the CRTC, broken down by province (Alberta and BC), on an annual basis." Despite the opposition to the Telus applications, it is expected that the telco will receive approval for the two Class 1 licences. In applying for the licences, Telus joins other telephone companies SaskTel and Manitoba Telecom Services Inc. vying to compete with cable and satellite television distributors in western Canada.

More concerns expressed as Telus’ TV distribution plans are back on CRTC agenda

News | 03/13/2003 5:00 am EST

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