CRTC backs off on avails, gives BDUs what they want

A significant component of Canada’s broadcast distribution industry was fundamentally changed on June 2 when the CRTC decided to permit cable broadcast distribution undertakings (BDUs) to use 25% of their local availabilities to promote non-programming services (Broadcasting Public Notice 2006-69). On the same day, the commission demonstrated consistency with the ruling by dismissing a December 7, 2005 complaint from MTS Allstream Inc. that alleged Shaw Cablesystems Ltd. violated the conditions of its licence by using local availabilities to promote non-programming services (Broadcasting Decision 2006-204). The rulings not only tread new ground in broadcast distribution, they also signify a diminishing desire to adjudicate these kinds of affairs on the part of the CRTC."You can attribute to a tendency by the commission to regulate only when it has to," Denis Carmel, a spokesperson for the CRTC, tells Canadian Communications Reports. "We’re moving away from the regulatory heavy hand and going to a lighter hand. I would say that’s probably a sign of the times more than anything else." Indeed, BDUs have been trying for over a decade with no success to change the regulations regarding local availabilities, confusing some as to why the commission would suddenly bend on its formerly hard-lined stance.Local availabilities (avails) refer to the approximately two minutes per hour of airtime of certain American satellite programming services reserved for use by distributors in the US. The Canadian BDUs offering these services – which include CNN, TBS, A&E and TLC – have previously filled these two minutes under the standard condition of licence, which require that at least 75% of the avail time be used to promote licensed Canadian programming services or to distribute unpaid Canadian public service announcements and community channel promotions. Up to 25% – the remaining portion in question in the decision – may be used by BDUs to promote programming services and packages, customer service information, channel realignments, cable FM service and additional cable outlets.As recently as September 2005 the CRTC ruled to maintain the status quo on local avails (CCR, Sept. 27/05), but BDUs are finally getting their way. "The commission finds it appropriate to update its policy with respect to the use of local availabilities," reads the CRTC’s conclusion. "BDUs that seek and receive amendments to their conditions of license that allow them to use local availabilities for this purpose will be authorized to use a maximum of 25% of local availabilities for the promotion of…non-programming services, including telephone and Internet services."The submission to amend the conditions of licence was put forth by Rogers Cable Communications Inc., Shaw Communications Inc. and Bragg Communications Inc. While these parties and most other Canadian BDUs now have cause to celebrate the new advertising freedoms potentially afforded them, not everyone supported the application.MTS stated that approval would give BDUs additional means to maintain their dominance in their own markets and added that altering the use of avails in this way would not support the objectives of the Broadcasting Act. The company also felt this matter had been substantially dealt with in September.The Association of Canadian Adver-tisers, the only other party to oppose the amendment, intervened in the public notice on the grounds that the access to this promotional resource by BDUs was anti-competitive and unfair to other advertisers. "This is an incredible marketing resource that has just been ceded to those cable companies," says Bob Reaume, VP of policy and research at the ACA. The association proposed that the commission should open up the 25% avail time to all advertisers, not just the BDUs.Reaume says the ACA had unsuccessfully made this appeal in the past, suggesting that part of the money received from selling avail time could be put back into Canadian content production. He feels the ruling confers a special status on wireless phone and Internet providers, giving them an advantage over other advertising categories. At the very least it provides a significant benefit to wireless phone, VoIP and Internet providers who also happen to be cable television distributors."I think it’s a blatantly unfair decision," continues Reaume. "I really was because it didn’t follow what I think had been tough but fair decisions by the commission in the past. It was a very good opportunity for a fairness doctrine to reign, but the commission must have their reasons for doing so. I’d love to hear them." The commission is aware of the ramifications of its ruling, according to Carmel. "It does provide an advantage, it’s obvious," he says. "And obviously we didn’t feel it was unfair." As for the reasoning behind the decision, the commission stated it recognized "that the ability to package programming and non-programming services and to promote these packages is of substantial importance to the applicants." And the CRTC felt there was still enough incentive for BDUs to use avails to promote Canadian programming services that it was unnecessary to parse down the time further to leave a smaller percentage requiring it.The Canadian Association of Broadcasters supported approving the applications, but did suggest BDUs still be required to use part of their local avails to promote broadcasting service only. The process was also supported by Aliant Telecom Inc., Alliance Atlantis Communications Inc., Bell ExpressVu, the Canadian Cable Telecommunications Association, CanWest MediaWorks Inc., Cogeco Cable Inc. and Quebecor Media Inc. Some of the supporters suggested other changes to accompany an amendment to the avails rule, including a proposal by Bell and Aliant that the commission should also remove marketing and promotion restrictions applicable to incumbent telephone companies in relation to their telecommunications services, a suggestion that the CRTC ruled beyond the scope of the proceeding.In their own defence, the applicants stated that approval would not present an undue competitive advantage, with Rogers reminding that "each major incumbent telephone company has a BDU affiliate that could apply to use local availabilities in a similar manner." Shaw also noted that the largest incumbent local telephone company with which it competes, Telus Communications Inc., did not intervene, further suggesting that this new supply of free advertising time isn’t unfairly advantageous to BDUs – despite MTS’ objections.Further, as part of its decision the commission ruled "that the promotion of non-programming services in local availabilities should generally be limited to those non-programming services that are made available in conjunction with programming services, and that are offered by the BDU, by an affiliated company, or by a third party pursuant to a marketing arrangement with the BDU." When asked how strictly the CRTC is prepared to act on complaints concerning this condition of the decision, Carmel answered: "Obviously at some point in time if there’s such an occurrence where we get a complaint then we’ll see then. We set rules and we enforce them."More good news for ShawBut Shaw had more reason to smile on June 2 as the CRTC also ruled in its favour regarding a complaint from MTS contending that Shaw used local availabilities to promote non-programming services. "This decision will help provide additional resources to better serve our customer base and promote choice to customers," said Peter Bissonnette, president of Shaw Communications, in a news release following the CRTC’s ruling. The complaint stemmed from a series of 30-second advertisements that MTS claimed Shaw used to promote its high-speed Internet and telephony services. Describing one of the commercials to the CRTC, MTS said "the viewer sees a laughing girl holding a telephone to her ear while sitting in a white swivel chair. The word ‘CONNECT’ appears below the image of the girl laughing on the phone." MTS submitted that this is image was unambiguously directed at telephony services, and that another image from the commercial where a woman was above the word ‘SELECT’ could be an attempt by Shaw to endorse its Internet services.In its defence, Shaw claimed that MTS had misinterpreted the meaning of the ad, and that the image of the girl holding a phone above the word ‘CONNECT’ was "intended to signify the many positive benefits and experiences associated with Shaw’s cable television services… that it was also intended to convey the way that young subscribers connect with each other by sharing their encounters with programming services or their favourite program." Shaw also claimed that if the advertisement was intended to promote telephony services, there was no reason to assume it was directed at Shaw’s.Rightly so, MTS did not accept Shaw’s interpretations of the images in the commercial – no voice-over or speech was used – particularly on the grounds that it was explicitly a Shaw advertisement. However, the CRTC felt the evidence didn’t prove guilt beyond a reasonable doubt: "The commission considers that the individual images used in the advertisement can be subject to different interpretations, thus making it impossible to conclude that any one image in particular is more a reference to one of Shaw’s non-programming services than to a broadcasting service. Accordingly, the commission is unable to conclude that Shaw has violated its conditions of licence respecting its use of local availabilities."

CRTC backs off on avails, gives BDUs what they want

Broadcast | June 20, 2006

Unlock all the Canadian telecom, broadcasting and digital media news you need.

FREE TRIAL

SUBSCRIBE

Inside The Wire Report

Information

Hill Times Publishing

Get in Touch With Us