Wireless cablecos ask CRTC for licence exemption in wake of intense competition

Canada’s three wireless cable operators are seeking major regulatory concessions for their TV services in their licence renewals as they struggle with the technology and larger, more successful competitors. Noting that it lost $38 million during its first licence term and saw its subscriber base in Manitoba fall from a peak of about 10,000 in 1999 to 5,251 in 2003, Craig Wireless International Inc., which operates under the Skycable name in the province, asks the CRTC to exempt multipoint distribution system (MDS) distributors from licensing. "Skycable notes that the commission recently…exempted Class 2 cable operations that serve between 2,000 and 6,000 subscribers. As noted above, Skycable has fewer than 6,000 subscribers," Craig notes in its licence renewal application, which was filed in March and gazetted on August 21 (Broadcasting Notice of Public Hearing 2003-8). "Skycable believes that MDS operations should also be the subject of an exemption order rather than a licensing process. There are only three MDS licensees in Canada and the total number of subscribers is far less than those of Class 2 and Class 3 cable BDUs (broadcast distribution undertakings)…" There are a total of about 55,000 Class 2 and 3 cable subscribers compared to about 54,000 MDS subscribers. In addition to Skycable’s 5,251 subscribers, Look Communications Inc. has 45,200 subscribers and Saskatchewan’s Image Wireless Communications Inc. has 3,510 subscribers. "Skycable is in severe financial distress and needs a change in the regulatory approach going into the future if it hopes to reverse the situation…," Craig tells the CRTC. Like Craig, Image Wireless and Look have also requested regulatory flexibility. In its licence renewal application, Image Wireless asks the CRTC for "the carriage choice of a DTH (direct-to-home) provider coupled with the low level of regulation afforded to small systems i.e. Class 3 in cable terms." Image Wireless also wants the CRTC to remove the requirement to provide a community channel and to contribute to an independent production fund based on a percentage of revenues, and to perform simultaneous substitution. Image Wireless notifies the CRTC that it will no longer offer a community channel. Craig tells the CRTC that financial constraints prohibited it from even starting a community channel, as mandated by its original licence terms. Look asks the CRTC to maintain rules assuring the predominance of Canadian services but that MDS providers be exempted from the distribution and linkage rules, which are currently applicable to Class 1 systems, in favour of rules that are not dependent on distinguishing between basic and discretionary service. The three wireless cable operators also point to technological constraints, such as line-of-sight problems and a scarcity of spectrum, and ask for the flexibility to use the spectrum in different ways. For example, Look goes to great pains to explain that it has to use some of its spectrum for the provision of high-speed Internet. It notes that customers increasingly want bundles, and that the high-speed Internet option gives it an advantage over satellite TV distributors, which so far don’t have the two-way capacity to offer the service. It points out that it is currently using the 2150-2156 MHz frequency band as a return band for its Internet services. However, permission to use that band was only temporarily granted to Look by Industry Canada until it becomes available for 3G wireless mobile services. Once that shift takes place, Look says it will have to allocate return spectrum in its MDS frequency band, further stretching its limited spectrum. As well, Look tells the CRTC that it is considering the use of alternative technologies. Since there is only a handful of MDS operators left in North America, Look notes that it can’t benefit from the economies of scale and scope anticipated at the outset, and that it is increasingly difficult to buy equipment for customers. Look notes that it is studying the possibility of using MPEG-4 technology to increase channel capacity through more efficient use of its existing spectrum, and that it anticipates using alternative technologies to complement its MDS spectrum. "At present, alternative technologies or other networks that Look could anticipate using to distribute broadcasting services include other radio spectrum - both terrestrial and satellite - as well as wireline broadband technologies, including DSL," Look tells the CRTC. Craig Wireless says it is committed to MDS technology and that its comprehensive plan for Skycable over the next licence term includes providing innovative complementary wireless services to improve and build upon the video services. For example, it would like to bring its TV service to computer screens rather than the TV. "…Craig Wireless is committed to exploring and providing innovative services to our subscribers, such as wireless high-speed Internet access, and video services to closed computer networks during the course of our next licence term," it states in its licence renewal application. "Craig Wireless is also in the process of piloting a new wireless broadcast distribution service to its subscribers, which consists of the provision of video services to a closed computer network. This will allow Canadians to access programming services wherever they may access their computer terminals, whether at home, at work or elsewhere." Like Look, Craig Wireless is eyeing a MPEG-4 video network to which customers could connect via Craig Wireless’ transmission network, and not the Internet. To access the system, Craig Wireless notes, subscribers would simply have to obtain a high-speed modem and plug it into their computers. This appears to be the approach Craig Wireless is taking with the Stream:1 service it is rolling out in British Columbia (CCR, July 17/03). Lighter regulatory obligations and more flexibility with regard to the use of other technologies are necessary given the changed broadcast environment, the wireless cable operators state. They argue that not only are satellite TV distributors providing tough competition, but also that when wireless cablecos were first licensed they did not anticipate the speed at which the incumbent cable providers would develop and deploy digital. Comments on the licence renewal applications of the three wireless cablecos are due by September 25. The applications will be considered at an October 20 public hearing.

Wireless cablecos ask CRTC for licence exemption in wake of intense competition

Broadcast | September 4, 2003

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