Analyst predicts CRTC will support carriage fees for local broadcast signals

Broadcasting consultant Michael McEwen predicts the CRTC will rule in favour of a carriage fee for conventional broadcast signals following April's BDU and specialty review, but that, in return, broadcasters will be required to put some of the new revenue back into the system. "I don't know whether 50 cents is the right figure, or 25 or 10, but there is a figure there and my gut tells me that the consumer is probably prepared to pay," McEwen tells Canadian Communications Reports, stressing that he has no inside knowledge on this situation. "So I wouldn't be surprised to see the commission move on this, but there will be a price tag with it.... Things like more drama and more localism, or regionalism at the very least. But more local reflection I think will be a big number. And that's a good thing."In their joint intervention to the CRTC last Friday CTVglobemedia Inc. and CanWest Media Inc. advocated a monthly fee of between 50 and 70 cents per subscriber, per signal so over-the-air (OTA) broadcasters can continue to be economically viable. A joint submission from Bell Canada, Rogers Communications Inc. and Telus Communications counters that a carriage fee would only drive more viewers away from the regulated system. The sides and the arguments are predictable, not only because all stakeholders involved are firstly concerned with protecting their business interests, but because the commission examined fee-for-carriage at 2006's OTA review. That the CRTC denied carriage fees when it ruled on the OTA framework in the spring of 2007 only to hear arguments again a year later is one of the reasons McEwen believes the regulator is prepared to go the other way. "I don't think they would have put it back in the agenda unless they were inclined to give this a very sober second look," he says. "I don't think it's a done deal, but it's far more likely they're going to look at this and say ‘I think there's something to the argument. There is a benefit for BDUs to carry the broadcast signal. It does push a lot of the other stuff, and therefore there should be some economic benefit going back to the originator of that signal.'"Should the CRTC rule in favour of carriage fees it would be setting a global precedent, and few would seem to realize this more than McEwen. Within the past two years he has prepared three background papers for the CRTC including A Selected International Survey of Industry Practices, Regulations, Policies and Plans with regard to the Distribution of Program Services and A Report to the CRTC on Digital Transition Strategies in a Number of Different Countries. In the latter, McEwen notes that broadcasters in the US, Mexico, Australia, United Kingdom, France, and Germany have all unsuccessfully lobbied for carriage fees. However, he says his examinations of foreign broadcast environments has also led to an appreciation of just how distinct Canada's situation is. "What may pertain in the rest of the world does not necessarily work here," he adds. "You can see it in all kinds of ways, and this may well be something that's time has come."One of Canada's most distinguishing factors is its size, particularly from east to west. Spanning multiple time zones opens our system to issues of distant signals and time-shifting. Distant signals are also up for discussion in April and broadcasters seem to have a strong principle to press for fees on this issue. To put it in practical and personal terms, I can watch Arrested Development on CBC at anytime between 4 p.m. and 8 p.m. because Rogers carries all of CBC's cross-Canada signals. While BDUs argue that consumers will resist paying for services they already receive for free, customers in Ottawa cannot receive CBC Vancouver with an antennae. Rather, these distant signals could be seen as a premium service that customers are willing to pay extra for - that could be a compromise the CRTC is willing to consider.McEwen, however, believes there will be more at play in April than that. "Distant signals is part of it; it makes a rational argument to me, but I think it's also the changing nature of the free-to-air broadcast market. And I think that's pushing it as much as some of the chops and changes that are going on."Another factor to consider is that April's hearing is about more than fee-for-carriage. As a complete review of the BDUs regulations, the hearing could lead to a major structural change in signal delivery. If, for instance, a more market-forces oriented pick-and-pay channel subscription system is put in place, fees for conventional broadcast signals may not be noticeable on new cable and DTH bills.

Analyst predicts CRTC will support carriage fees for local broadcast signals

News | 02/01/2008 6:01 pm EST

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