Answered Prayers

The Standing Committee on Industry, Science and Technology has released its report on foreign ownership, Opening Canadian Communications to the World, and it has given the cable industry everything it asked for. The committee expressed the view that "... telecommunications common carriers and broadcast distribution undertakings (BDUs) can no longer be separated on the basis of their underlying distribution networks or the services they provide. The committee believes that carriage and content are distinct entities, and that distribution can be separated from programming undertakings. Cultural policy objectives can thus be achieved by treating content and carriage separately." On the basis of this reasoning, the committee recommended that BDUs be viewed as comparable to telecom carriers and that foreign ownership restrictions be lifted for both. The cable industry is delighted. But what would it really mean if the committee’s recommendations were accepted and fully implemented? The starting point would have to be the complete separation of carriage and content. This would involve more than just spinning off licensed programming services into a separate company. BDUs would not be able to have any involvement in programming. That would mean no more cable-owned community channels or cable-owned exempt programming services. All programming would have to be produced and owned by someone other than the BDU. But that wouldn’t be the end of the matter. The committee recognized that "BDUs influence programming in that they make decisions about which services to market, package and promote, about channel positioning, and about retail rates." So, if the separation of carriage and content were to be complete, and BDUs were truly to become carriage-only entities, then packaging, marketing and pricing decisions would have to be made by someone other than the BDU. This would require a radical change in the way programming is distributed in Canada. Under the most obvious scenario, new programming services packaging undertakings (PSPUs) would be created to assemble, package and market programming services to viewers. The carriage-only BDUs would provide transmission services to these PSPUs, perhaps on a tariff basis to protect against discriminatory treatment. And the PSPUs, in turn, would be licensed and subject to regulation under the Broadcasting Act to ensure that cultural policy objectives would be achieved. Such a change would appear to create an all-win situation. BDUs would get access to the foreign capital they say they need to expand and enhance their networks. Programmers would have the opportunity to control the packaging of their services and gain a direct relationship with viewers through programmer-owned and -controlled PSPUs. Canadian cultural policy would be preserved and could be effectively implemented through a revised regulatory scheme under the Broadcasting Act. And, Canadians would get the benefit of enhanced choice and flexibility as competing PSPUs offer a variety of programming packages over the transmission facilities of carriage-only BDUs. This type of regime may sound unfamiliar, but it would flow directly from the committee’s recommendation that there be a full separation of carriage and content in order to permit the lifting of the foreign ownership restrictions on BDUs. That separation must be the beginning and the end of the matter. Christopher A. Taylor is an Ottawa communications lawyer. He can be reached at cataylor@mail.cyberus.ca CCR welcomes columns to encourage debate about key industry issues. Email them to nreveler@decima.com

Answered Prayers

Broadcast | May 8, 2003

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