Telcos want more pay TV options, but not mandated carriage

TELUS Communications, Saskatchewan Telecommunications and MTS Allstream in a joint submission last month tell the CRTC to go ahead and license more pay television services. The submission was filed in a process undertaken by the commission to determine if it should greenlight any of the four applicants seeking a pay TV licence. Quebecor Media Inc.’s Boom TV, Spotlight TV headed by George Burger and Larry Tanenbaum, Allarco Entertainment’s unnamed channel, and Channel Zero’s Canadian Film Channel are all looking to break the pay TV monopolies held by Astral Media in eastern Canada, and by Shaw Communications Inc.-owned Corus Entertainment in the west. The western-based telcos, which have had trouble coming to terms with Shaw on pay-per-view (PPV), are welcoming with open arms new competition (CCR, Sept. 4/03). But the telcos caution they don’t want to be forced to have to carry any new pay TV service. The DSL (broadcast distribution undertakings) fully support the notion of competitive licensing for pay television services. An increase in Canadian services provides a welcome opportunity for BDUs to offer more Canadian choices to Canadian consumers. The DSL BDUs agree with the applicants that there is room in the Canadian market for additional pay television services and that the market is now mature enough to support competitive services, as it does in the U.S. As noted by some of the applications, however, success of the competitive model may be contingent on the ability of the services to differentiate amongst themselves. Indeed, distinctive services are more likely to lead subscribers to increase their consumption, instead of picking only one service for their household. A key to a vibrant pay television market may well lie in subscribers choosing to receive more than one pay television service. Competitive services will benefit the Canadian broadcasting system in many ways. First, the likely surge in marketing from competitive services is likely to increase awareness and interest in the pay television category. This in turn may bring new subscribers to these discretionary services and grow the pay television services category significantly, resulting in more revenues being raised for contribution to Canadian content. Second, since pay television services are available through digital boxes, increased interest in pay television may entice more subscribers to switch to digital technology, thereby furthering the commission’s digitization agenda. Finally, complementary pay television services will provide greater diversity of television content. Competition in the area of pay television services should not come, however, at the price of increased BDU obligations. While the DSL BDUs support competition in the pay television services market, we oppose mandatory carriage of these services. The DSL BDUs believe that competition should result in fewer regulatory requirements, not more. The requirement that BDUs carry all licensed pay television services broadcasting in the primary language of the market is a regulatory burden which is not consistent with a competitive licensing model....Mandatory carriage defeats the ability of BDUs to differentiate their services. Just as the programming services must differentiate to compete with each other, so must distributors. Competitive pay television services have the potential to provide excellent opportunities for differentiation of services amongst BDUs. Without differentiation, there can be no meaningful, sustainable competition in the BDU market. As the DSL BDUs have noted in other proceedings, the current highly restrictive distribution regime creates little opportunity for competitive BDUs to differentiate their product offerings, meaning that they are left to compete primarily based on price. Price competition, however, is not sustainable, nor does it provide Canadian consumers with another important benefit of competition: greater programming choices.

Telcos want more pay TV options, but not mandated carriage

News | 10/07/2005 4:00 am EDT

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