Canada’s MDS operators seeking flexibility in delivering cable television services

The country's major wireless cable operators are seeking greater regulatory flexibility from the CRTC in the way they use spectrum holdings to deliver television signals to subscribers. Craig Wireless International Inc., Image Wireless Communications Inc. and Look Communications Inc. are each asking the commission for changes to their licences as part of their licence renewal applications. While Craig Wireless and Image Wireless are seeking modifications that would give them greater flexibility in delivering broadcasting services, Look is asking the commission to approve drastic changes to its broadcast licences. Among other things, Look wants more flexibility to use its spectrum to deliver high-speed Internet access and the right to use alternative methods of delivery to offer its services. (For more information on the broadcasting implications of this issue, please refer to the Sept. 4, 2003 issue of Report on Wireless affiliate publication Canadian Communications Reports.) "In order to deliver the benefits of innovation and choice, Look must have the flexibility to use its MDS spectrum in a manner dictated by its customers, and not by regulatory constraints," the company writes in its February 2003 licence renewal application, which was gazetted by the CRTC on August 21 (Broadcasting Notice of Public Hearing 2003-8). "…The first is to be able to make reasonable use of its spectrum to deliver high-speed Internet access services in addition to programming services. The second is to be able to deliver services on a technology-neutral basis in order to better respond to potential future technological and market developments." Look notes in its application that due to the capacity limitations of MDS spectrum the company is transforming itself into a niche player focusing on providing television service to selected market segments as a way to offer "meaningful competition" to the larger cable and satellite TV players. The Ontario-based provider says it requires a "lighter, more flexible regulatory regime" to successfully implement this vision. A key tenet of Look's new strategy is its ability to offer high-speed Internet access bundled with broadcast services to its subscribers. It already offers the service, but wants the commission to remove a provision mandating that programming services take priority over non-programming services as is indicated in Look's original Ontario licence. "Over its next licence term, Look must have the flexibility to make the most efficient use possible of its MDS spectrum or alternative technologies for the provision of unique bundles of digital television signals and/or high-speed Internet access that will permit it to meet consumer demand and to be a sustainable competitor in the long term," reads the company's licence renewal application. Look needs the commission to remove the technology-specific provision in its licences if it is to have the right to implement other technologies for the delivery of its services. The company believes that it would be better able to address the market and attract subscribers if it were able to use alternative delivery methods such as third-party networks, other terrestrial and satellite spectrum, or wireline broadband technologies. "hile today it might make sense for Look to use its MDS spectrum to deliver digital television and high-speed Internet access services, Look is of the view that its current licences, which are technology-specific, should be made technology-neutral by articulating the ability of Look to employ alternative technologies in the delivery of programming services," Look writes in an April 28 letter to the CRTC responding to questions from the regulator. Defending its claim that greater flexibility is required, Look notes that there are only a handful of MDS operators remaining in North America, making it hard to benefit from economies of scale. Similarly, the company has found it difficult to purchase equipment at affordable costs because of a lack of critical mass of MDS operators. "As a result, Look's request for flexibility to use alternative technology is meant to ensure that Look is positioned to take advantage of all technological developments to enhance its ability to provide choice and innovation, at affordable rates, to consumers," Look writes to the CRTC. The company states that it has begun to explore distribution possibilities using MPEG-4 video compression technology. Craig Wireless has stated that it will use the emerging compression standard in its British Columbia MDS network (RoW, July 22/03). Look's licence renewal application confirms that the company is currently undertaking a thorough review of its future business opportunities. Unique Broadband Systems Inc. (UBS) and Craig Wireless are locked in a battle for control of the company (RoW, Aug. 26/03). Both companies control 29.9% of Look's shares with UBS having an option to increase its stake to about 51%, while Craig Wireless can increase its stake to about 32%. "We haven't decided what we are going to do on a going forward basis. It's something we are actively working on and over the next three to five or six months I believe we will have an approach that we will all be happy with," Look chair and interim president and CEO Michael Cytrynbaum told RoW in the August 26 issue. Look recognizes its inability to compete head-to-head with the hard-wired cable providers and the satellite TV providers due to the difficulties associated with the use of MDS spectrum for the delivery of high-speed Internet and broadcasting services. The company states that it only wants a regulatory environment that allows it to compete in niche environments. "In sum, any policy framework for MDS undertakings should accept MDS as a viable alternative to large competitors, but should also recognize the special circumstances and limited resources of these smaller undertakings. MDS providers have a valuable role to play in the Canadian broadcasting system, and any new MDS policy should bestow sufficient flexibility to allow such providers to reach their full potential," Look writes in a June 17 letter responding to supplemental questions from the CRTC.

Canada’s MDS operators seeking flexibility in delivering cable television services

News | 09/09/2003 4:00 am EDT

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