Pelmorex files undue preference complaint against Bell ExpressVu over i Weather service

Pelmorex Communications Inc. is asking the CRTC to order Bell ExpressVu LP to cease and desist providing its weather information service unless it provides The Weather Network and MétéoMédia with the ability to deliver local weather reports. In an undue preference complaint filed with the CRTC against ExpressVu, it claims the direct-to-home (DTH) satellite TV distributor is "refusing to provide (its) two licensed services with an interactive capability that is comparable to the interactive capability that the DTH distributor has bestowed on its own unlicensed weather information service." Pelmorex tells the commission it would offer its local and regional weather information services to Bell ExpressVu subscribers at no cost. Bell ExpressVu charges its customers 50 cents a month to access its interactive weather service, which it obtains from Accuweather.com in the United States. Pelmorex estimates that about 750,000 Bell ExpressVu subscribers have the set-top boxes necessary to receive Bell ExpressVu’s interactive weather service, branded i Weather, and that 75,000 actually subscribe to the service. Without the interactive option where DTH subscribers can request weather information for specific communities, they only receive general forecasts for the major cities across Canada on Pelmorex’s two channels. Pelmorex wants access to the interactivity of Bell ExpressVu’s OpenTV platform so that its services can compete with i Weather. Pelmorex’s interactive weather service is already offered through Rogers Cable Inc.’s Wink interactive service to its digital subscribers with no fee levied by the cableco, according to Paul Temple, senior VP of corporate development for Pelmorex. In a May 30 filing to the CRTC, Pelmorex contends that Bell ExpressVu’s refusal to provide Pelmorex’s The Weather Network and MétéoMédia with the ability to deliver localized weather information contravenes section 9 of the Broadcasting Distribution Regulations in at least four ways. First, it states that the satellite TV operator is giving itself undue preference by operating an unlicensed weather service employing interactivity while refusing to provide it with a similar ability to deliver localized content on its two licensed specialty channels. "In the present circumstances, the preference that ExpressVu is conferring upon itself is particularly undue because the DTH undertaking is able to charge its subscribers 50 cents extra each month to receive local and regional weather information which could be made available, at no additional cost to those subscribers, if it permitted Pelmorex to provide this information as part of its specialty services," states the complaint. Second, Pelmorex says that its channels are being forced to compete with Bell ExpressVu’s unlicensed weather service that has been given enhanced capabilities that are not being made available to it. Third, it notes that Bell ExpressVu is subjecting it to an undue disadvantage by refusing to deliver the local and regional elements of its two channels to subscribers as described in its nature of service condition of licence, which clearly reduces the value of the services in the minds of those customers. Pelmorex’s application contains written complaints by new DTH subscribers who highlight the differences in the channels that they received on cable and what they receive on Bell ExpressVu. Fourth, Pelmorex states that Bell ExpressVu is subjecting its subscribers to an undue disadvantage by charging them 50 cents per month for a service they could be getting for free. Calling Pelmorex’s complaint "both premature and invalid," Bell ExpressVu responds that it prefers to partner with the broadcaster on the interactive service. The satellite TV distributor tells the CRTC that Pelmorex’s proposed iTV plan offers it no incremental revenue or other incentives that would compensate the distributor for the substantial investments required to enable iTV. Chris Frank, Bell ExpressVu’s VP of programming and government affairs, tells Canadian Communications Reports that he cannot reveal how much the satellite TV distributor has spent so far on iTV for competitive reasons. Bell ExpressVu states that its interactive weather service, which was launched in September 2001, is a standalone discretionary service that is profitable and "is helping to provide a return on the major investments that ExpressVu has made in iTV." The DTH operator’s submission notes that if subscribers don’t want to pay for their local weather, they have the option of switching to cable. Pelmorex sends local weather information to cable headends so that cable subscribers in Halifax, for example, would receive Halifax weather reports. Bell ExpressVu tells the commission that it has been trying to negotiate an agreement with Pelmorex that would see the two entities jointly provide one interactive weather service on Bell ExpressVu, and share the risk and return. Key features of Bell ExpressVu’s proposed deal with Pelmorex include joint ownership of the iTV weather service, with Pelmorex supplying all the data and graphics for the local weather reports, sharing ad and subscription revenue from the iTV service in the same proportion as the capital and operating costs, giving Pelmorex an equitable branding opportunity, allowing Pelmorex to sell advertising on the service, and giving subscribers the ability to import the primary video signal of The Weather Network and MétéoMédia into the iTV service. Bell ExpressVu adds that it is in discussions with six Canadian programmers to jointly develop and own iTV applications, and that all of them agree with the broad principle of sharing costs and revenues. Frank says that since responding to Pelmorex’s complaint some of those deals have been concluded but not announced. "What’s very key to our filing is that we have made a concrete offering to Pelmorex to solve this dispute. It seems to be neither black nor white because the CRTC has not pronounced definitively on interactive television," he adds. "Our position is clear. We believe that there should be partnership between programmers and distributors. And we have made a proposal to Pelmorex to do just that - to create a partnership to go forward in this business. We are using the same template for the completed deals as for Pelmorex." Temple laughs at the proposal. "That’s analogous to them saying they’ll let us compete against ourselves and they get to keep some of the money. I mean, why would we want to compete against ourselves? Our main services are our licensed services and that’s where we want people to be able to go and get good weather information." Pelmorex notes in a June 23 follow-up filing to the CRTC: "If the partnership proposed by ExpressVu were implemented, it would seriously harm The Weather Network and MétéoMédia because it would be designed to draw viewers away from our existing two licensed services. The content on the jointly operated weather service would be vastly improved - comparable to the service that we currently provide to our cable subscribers - and for that reason would encourage viewers to increasingly tune only to the interactive weather service in order to get their weather information." But Bell ExpressVu protests Pelmorex’s plan to relegate it to the role of a pure transport carrier for Pelmorex’s interactive weather service. "ExpressVu would not receive any compensation from Pelmorex or from customers for either the extra satellite transmission capacity required or for the use of ExpressVu’s iTV facilities. Further, distributing Pelmorex’s interactive weather application would lead to the demise of ExpressVu’s standalone interactive weather service and the loss of related subscription revenue," the satellite TV distributor tells the CRTC. But Temple doesn’t think the service would require that much bandwidth and wonders why it can access Rogers’ Wink iTV platform, while Bell ExpressVu can’t provide it with any interactive capabilities. "We’ve never even got to the point of figuring out how much bandwidth it takes. If (Bell ExpressVu) said, yes you can do it provided you work out something that requires a minimal amount of bandwidth or a reasonable amount, maybe we would have been talking with them. But we never got that far," Temple says. He adds that Pelmorex would incur all the costs of customizing its service for Bell ExpressVu’s OpenTV platform. The comments and replies between the two parties that went back and forth until July 30 debated such issues as whether the OpenTV platform could support Pelmorex’s localized system, and whether the unlicensed i Weather service should actually be considered programming. Bell ExpressVu points out that its OpenTV platform would only be able to accommodate the on-screen iTV content of Pelmorex’s channels in an inefficient and bandwidth-intensive manner. Pelmorex retorts that it’s ironic that on the one hand the DTH operator praises the power and diversity of the platform but then claims the broadcaster’s interactive services won’t function with its interactive content. Bell ExpressVu argues that its interactive weather service consists of alphanumeric text complemented by graphics and hence is not a programming service, and is not subject to the Broadcasting Act. Pelmorex argues that the i Weather service could be exempt from licensing as a still image programming service but still must be considered programming. If it is determined that it is not a programming service, then Pelmorex suggests that Bell ExpressVu is operating in contravention of the Telecommunications Act because it is using its distribution facilities to deliver an untariffed telecommunications service in violation of sections 25, 27, and 36. Furthermore, the broadcaster questions whether the New Media Exemption Order could come into play since i Weather is not being distributed via the Internet. Regardless of whether it is determined to be a programming service or not, Pelmorex contends that "it is readily apparent" that the distributor is giving undue preference to itself. Bell ExpressVu also notes in one of its submissions responding to the complaint that the CRTC has not completed a process looking into the matter of to what extent broadcast distributors must carry, at no cost to the programmer, iTV content. That CRTC process was initiated after Pelmorex applied for a licence amendment in 2001 that would make interactivity an integral part of its service (CCR, July 4/01). The CRTC denied the request and instead launched a fact-finding process on iTV (CCR, Nov. 7/02, Nov. 9/01). "If iTV is going to develop and flourish, it has to be a partnership between distributors and programmers because both are integrally involved in the dissemination of interactive TV. Both have to make substantial investments so both deserve to earn a return," Frank says. But Pelmorex points out that it is not suggesting that Bell ExpressVu be required to make interactivity available to all of the services it distributes. "To our knowledge, ExpressVu is not distributing any other unlicensed interactive service that is competing in the same genre as a licensed specialty service," Pelmorex notes in reply comments. Temple tells CCR that Pelmorex hasn’t, for instance, filed a similar complaint against satellite TV distributor Star Choice Communications Inc. because it doesn’t offer an interactive weather service. "We’re waiting for the commission to decide on the matter. But one of the things is that they continue to do this, and it harms us the longer it goes on," he says. "To us, it’s more of an issue of undue preference than it is an iTV matter."

Pelmorex files undue preference complaint against Bell ExpressVu over i Weather service

News | 09/18/2003 4:00 am EDT

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