BDUs bite back at digital 9(1)(h) hopefuls

After the CRTC heard cases for mandatory carriage on digital cable by both existing and proposed specialty services last week, it was the BDUs' turn - and they presented a unified front in condemning all applications.At issue during the hearing was whether or not section 9(1)(h) of the Broadcasting Act, which essentially gives the commission the power to earmark services deemed to be of exceptional importance to Canadian audiences and the broadcast industry for mandatory carriage on the basic tier, has served its purpose and shouldn't be extended to services in the digital cable distribution world.The BDUs appearing sought to hammer home three main points in their arguments: according such treatment is contrary to fostering increased competition, consumer choice, and a cost-effective roll-out of digital cable television."At a time when Canadians are turning to unregulated platforms, it is hard to believe that we are talking about introducing new restrictions on consumer choice," said Rogers vice-chairman Phil Lind. "It is also hard to believe that we're talking about using section 9(1)(h) to protect popular services that have had twenty years to build a national audience."Rogers noted that DTH providers - which have by necessity been digital since inception - are exempted from carrying local signals as part of their basic packages. As BDUs covering a national footprint, it would severely tax capacity for Bell ExpressVu and Shaw Communications Inc.'s Star Choice Communications Inc. to include every local signal for distribution to every market. This exemption puts cable distributors on an unequal footing with their DTH competitors, Lind said.Furthermore, Lind continued, if the basic package offered by DTH services has thus far satisfied the objectives of the Broadcasting Act, then so should a cable basic tier scaled down to match the size and scope of that offered by satellite providers.Echoing the fears over the growing threat posed by alternate distribution systems voiced in the Rogers submission, Shaw representatives told commissioners that enacting policy that works against consumer choice and cost-effectiveness will only drive Canadian viewers away from the regulated broadcast system and into the arms of unregulated new media outlets."The existing distribution and packaging rules are a maze that consumers really do not accept or understand," said Shaw VP of regulatory affairs Michael Ferras. "Further restraints will only serve to drive consumers outside of the system." Later, Ken Stein, Shaw's senior VP of corporate and regulatory affairs, said the commission's earlier decisions to apply section 9(1)(h) to existing services were "all mistakes."In Shaw's opening remarks, Ferras outlined the company's main objections to the applications for mandatory carriage on digital basic, noting that the CRTC crafted the digital migration framework with the goal of ending existing dual-status channels, and that such channels must be prepared to compete in the new digital environment.Additionally, Ferras pointed out, the commission has ordered BDUs - such as the Shaw-owned Shaw Cablesystems Ltd. and Videon CableSystems Inc. - to mirror their existing analog tiers on digital until at least 2010, giving them ample opportunity to tweak their offerings and business plans. "The CRTC has given these services almost a decade to adjust their business plans," he said.As for the proposed, as-yet unlicensed services applying for mandatory carriage on the digital basic tier, both Shaw and Rogers pursued the same tack: they haven't proven themselves important enough or distinct enough from existing services to merit such treatment.The two BDUs sought to weaken the case for the Accessibility Channel - a service proposed by the National Broadcast Reading Service which would feature 100% described video (DV) content - by highlighting their own efforts to promote DV.Rogers' VP of regulatory, broadband and video Pamela Dinsmore told the commission that all DV programming available is passed through to consumers on its digital cable network, and in many places on its analog service as well. "In the vast majority of our systems, we are passing through the SAP ," she said.Ferras, meanwhile, noted that Motorola Inc. - Shaw's set-top box provider - will upgrade its software this summer to include described video as part of the main broadcast stream.The economic impact represented by the new applications was also an issue with both BDUs. When asked by Commissioner Michel Arpin whether it was the carriage fees themselves causing the consternation at Shaw, Ferras replied that even if the services were free to consumers and therefore didn't provide a disincentive to subscribe to digital cable, their inclusion on the basic tier would still represent additional costs for Shaw at a time when it's building out capacity and upgrading its network to deliver high-definition programming.For his part, Rogers' VP of regulatory affairs Ken Engelhart suggested that the proposed services be granted another specialty status, then negotiate their own wholesale rates with BDUs. "If problems develop, the commission might have to step in, but I would think that's the place to start," he said.

BDUs bite back at digital 9(1)(h) hopefuls

Broadcast | April 4, 2007

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