BDUs sing the praises of latest CRTC policy review

The CRTC seems determined to keep to its rigorous self-imposed schedule of reform: amid all the other proceedings underway at the regulator, it announced a sweeping review of the policy frameworks of both broadcasting distributors and discretionary services earlier this month.Notice of Public Hearing 2007-10 is just the latest policy procedure that reflects chair Konrad von Fickenstein's mantra: regulate lightly, and let the markets decide. Nothing illustrates this point more clearly than paragraph 16 of the document, which places the onus on those seeking regulatory redress to prove that such measures are necessary."In general, the commission will expect parties arguing for continued regulatory intervention to provide a full rationale for that intervention, with supporting evidence, to establish that such intervention is essential to the objectives of the Act," the paragraph reads.With their core businesses facing threats from the disintermediating powers of the Internet and other unregulated networks, such talk is music to the ears of broadcast distributors."I think it's an extraordinary public notice," says Ken Engelhart, VP of regulatory affairs at Rogers Communications Inc. "I think it's particularly interesting that they haven't just identified the issues, they've actually told you what side they're coming down on....As an advocate, that's very helpful, because you know where their thinking is and it lets you tailor your arguments accordingly."Mirko Bibic, chief of regulatory affairs at Bell Canada, echoes the sentiment, saying the tone and timbre of the wording in the notice bodes well for Bell ExpressVu. "The commission in the past has overly regulated and micromanaged and interfered with the market in many ways, both on broadcasting and on telecom," he says, adding that the regulator has now accelerated its move to deregulate telecommunications under the direction of Industry minister Maxime Bernier.Recent CRTC actions - such as the release of NPH 2007-10 and the soup-to-nuts review of regulations currently being prepared by noted communications lawyers Laurie Dunbar and Christian Leblanc - seem to hint that deregulation is the imperative on the broadcast side as well. "That's a very good approach for good regulatory policy, and also for the broadcasting sector," Bibic concludes.Even smaller cablesystems are heartened by what they see in the notice. "We think this notice is absolutely in the right direction," says Chris Edwards, VP of corporate and regulatory affairs at the Quispamsis, NB-based Canadian Cable Systems Alliance, which represents more than 85 smaller cable providers with fewer than 60,000 subscribers each.To illustrate the CRTC's new thinking on regulation and market economics, one need look no further than its proposed intention to "eliminate most of the distribution and linkage rules, in respect of both analog/SD and HD services, and both analog and digital distribution" and leave the matter to commercial negotiations, as stated in the notice. Proponents of those distribution and linkage rules, which mandate BDUs to offer one Canadian specialty channel for every foreign one and one Canadian pay TV service for every five foreign pay services - argue they're essential to ensure that Canadian content is represented on the dial (see Norma Reveler's story for programmers' takes on NPH 2007-10).But BDUs remain unconvinced of the rules' merits. "I've always thought that the linkage rules for cable made no sense," Engelhart says. "They're unnecessarily complicated, and it would be much better just to have a simple preponderance rule as they've proposed in the public notice."The CCSA's Edwards agrees, adding that many of the group's member firms don't have the bandwidth to simultaneously mirror their analog and digital tiers. "Certainly, removal of both the access rights and the distribution and linkage rules in favour of a preponderance concept is exactly one of the things they need to help them deal with the capacity issue," he says.Likely adding to programmers' anxieties, however, is the fact that preponderance is a somewhat nebulous term: it could mean the majority of services offered to consumers need to be Canadian, but subscribers don't necessarily need to take them. "That may be one of the live issues in the responses to this thing," concedes Edwards.The commission also seems anxious to update its treatment of on-demand services and other such offerings within the purview of broadcast regulation. This is to allow BDUs and programmers alike to deploy them as a countermeasure against competitors on unregulated platforms, such as Web-based rebroadcaster JumpTV. Here, again, distributors like the thinking contained in NPH 2007-10."Customers are seeing a lot of free content over the Internet, and it's advertising-driven. We want to be able to replicate that environment on video on demand," says Engelhart. "We already have some free content on video on demand, but we could have a lot more if we could support it with ads."ExpressVu's Vu On Demand service, meanwhile, currently airs ads, but only where they've been inserted into the program during its first-window broadcast. "If there's an audience in the market for that advertising time, then everyone should be given the flexibility to try to find those opportunities," says Bibic.While he agrees that advertising on VOD services would be a boon and offer "revenue opportunities not just for the distributors, but for everybody in the chain," Edwards is most enthused about the commission's inclusion of signal transport and delivery in the document. In particular, the notice seeks input on how current obligations for pay and specialty service providers to deliver their services to distributors would change under a preponderance regime, rather than the current distribution and linkage requirements. "While many people in the more populated areas in particular can pick up HD signals through terrestrial interconnections, it's not possible for some of the more remote systems," Edwards notes. "Somehow, the industry's going to have to find a way to make sure that those small systems aren't carrying the full burden and the cost of getting those signals to their headends and to their customers."Initial comments in the process are due by October 9, with a reply phase ending November 5. The actual public hearing will take place in Gatineau QC on January 28, 2008.

BDUs sing the praises of latest CRTC policy review

Broadcast | July 30, 2007

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