Look, Craig Wireless say TV services won’t suffer as they increase Internet offerings

Wireless cablecos vow that the added flexibility the CRTC has given them to use more spectrum for Internet services will not result in watered down TV services. A ruling made in conjunction with the licence renewals of multipoint distribution system (MDS) operators Craig Wireless International Inc., Look Communications Inc. and Image Wireless Communications Inc. is bound, however, to result in fewer TV channels being offered in their TV packages (CCR Update, Aug. 19/04). The regulator refrained from giving free rein on the use of its spectrum to the wireless cablecos because that could "create a situation where their distribution of programming services, particularly Canadian programming services, is reduced, and the amount of MDS spectrum devoted to Internet services is increased to an extent that is contrary to the objectives of the (Broadcasting) Act." In granting the wireless cablecos the right to use more spectrum for Internet services, the CRTC has placed a limit on how much can be converted away from the provision of their TV services. The commission has stipulated that wireless cablecos must devote at least 50% of their allotted frequency spectrum to the distribution of programming services, other than pay-per-view programming services (Broadcasting Public Notice 2004-63). "It’s what we were asking for, so we’re actually quite pleased that we received it," Craig Wireless president Boyd Craig tells Canadian Communications Reports. He says that using some spectrum once devoted to the provision of TV services for non-programming services, such as the Internet, doesn’t mean that the TV service is doomed. He adds that Craig Wireless does have plans for new uses of its spectrum, but that the key now is using the flexibility to stabilize the MDS industry. "The MDS band, not only in Canada but also throughout the U.S. has been struggling for the last 20 years - struggling to find a place. But with new technology - it’s non-line-of-sight and it’s self provisioning - portions of the band are going to turn around," he notes. He would divulge no details about how Craig Wireless plans to use its spectrum, stating only that an announcement would be made in about 30 days. Asked what impact the reconfiguration of spectrum would have on Craig Wireless’ TV service, Boyd responds, "I think that first of all, the most important thing right now is to strengthen the financial viability of our entire industry. It’s our hope that this (the commission ruling) is going to do that. By doing that you ensure, or help ensure, that we’re around as an alternative video provider." Look Communications chair Michael Cytrynbaum says the decision looks good, but that it’s complicated and needs to be examined in depth. "Our initial reaction is it looks good. That’s the initial reaction," he notes. "We’re looking at the entire decision. It’s not simple. They (the CRTC) say you have 50%, and then in the next line, they say if you want to do video-on-demand, it has to come out of the other 50%. So you have to go through the whole thing and there’s linkage rules." While granting the wireless cablecos more flexibility with regard to their spectrum, the CRTC is also requiring more on the TV programming side. For example, in renewing the licences of Look and Craig, which are Class 1 distributors, the CRTC mandated that they carry at least one French-language channel (either conventional, pay or specialty TV) for every 10 English-language programming services carried. Class 3 wireless cableco Image is simply expected to increase the number of French-language specialty TV channels it carries as channel capacity increases. Look has also been ordered to carry La Télé des Arts, as part of its basic service, in Quebec as well as in the national capital region (Broadcasting Decision 2004-347). Currently, both Look and Craig Wireless devote about 6 MHz of a total of 90 MHz of spectrum, or sufficient capacity for three to 10 digital TV signals, to the delivery of Internet services. Both companies have indicated plans to increase the amount of spectrum devoted to that purpose. Look stated that it plans to reduce the total TV channels it distributes to 70, and Craig intends to reduce its number to about 50 channels. Look’s offering in southern Ontario currently includes more than 90 television channels, and Craig Wireless currently carries 60 television services in Manitoba. There was other good news for the two wireless cablecos as the CRTC reduced the percentage of revenues they are required to spend on Canadian programming and community television. Craig Wireless’ amount was reduced from 6% to 5% of its total subscriber revenues, putting it in line with the level of contribution generally required of other Class 1 distributors (Broadcasting Decision 2004-349Look’s systems in Quebec and Eastern Ontario had their required contribution to Canadian programming lowered to 5% of subscriber revenues from 7% of gross annual revenues. However, the CRTC denied Look’s request that it not be required to support Canadian TV programming until its annual revenues reach $35 million. "The commission notes the licensee’s projections, which suggest that annual revenues might not reach the $35 million level until well into the new licence term in the case of the MDS BDU serving southern Ontario and, in the case of the other undertaking, not within the next seven years. The commission is concerned that the licensee’s proposal would be inconsistent with the contribution levels required of other BDUs, which help to maintain stability of funding for the production of Canadian television programming," states the regulator. Image has said it will also pay 5% of its gross annual revenues to the support of Canadian program production, even though such contributions are not generally required of Class 3 distributors.

Look, Craig Wireless say TV services won’t suffer as they increase Internet offerings

Broadcast | August 27, 2004

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