Rogers accuses BDU hearing of getting off track; wants CRTC to focus on less regulation

The fee-for-carriage debate has hijacked the CRTC's upcoming BDU and specialty review and if the commission doesn't re-adopt its original focus on market-forces, television will soon become irrelevant, say Rogers Communications Inc. executives. "Consumers are very important, but they've never been much of a factor in the CRTC's thinking," says Rogers' vice chairman Phil Lind. "Now, through technology, the customer is king. We either recognize it, or we don't." With only five days left before the long-anticipated hearing kicks off, Canadian Communications Reports sat down with Lind, as well as Rogers' VP of regulatory affairs Pam Dinsmore and VP of communications Jan Innes to talk about carriage fees, the broadcast system ‘end game' and the perceived withdrawal of the CRTC from its market-forces dictum. "We are going to stick to our guns and tell the commission that as far as we're concerned the consumer is the cornerstone of the broadcasting system," says Dinsmore. "And if you don't get that, the rest really doesn't matter because in five or 10 years no one's going to be watching TV anyway. They'll have gone to other platforms; TV won't be relevant to them." Those guns, thought Rogers, were very much aimed at the same targets as the commission. Through last spring and summer, the message coming out of the commission was to reduce regulation where possible in favour of market forces, Rogers argued the BDU and specialty review represented an opportunity to move to a more customer-centric distribution model. However, since the CRTC introduced fee-for-carriage into the scope of the hearing and issued its directional document on the hearing last month, Rogers now feels a push to have a heavy regulatory model maintained. Or as Lind says, "It's back to the past." "We were very in tune with because we felt it really, finally showed the commission began to understand that the world is changing and that consumers can vote with their feet because they have alternatives," says Dinsmore. "I think Konrad came in riding the silver horse of market forces, but his thoughts have changed somewhat." What's worse, says Rogers, is that the attention being given to carriage fees threatens to diminish the importance of the other issues. "I think largely people have begun to forget why we started this hearing in the first place," adds Dinsmore. Of course, Rogers is prepared to take the con side of the carriage fee debate. The BDU has long contended that Canadian consumers won't pay for television services they already get for free, and Rogers calculates - based on the broadcasters' proposed $0.50 to $1.50 fee per signal per month - that if such a fee were instituted monthly cable bills would increase from $10 to $14 in large urban centres. And while OTA broadcasters maintain that carriage fees are essential to remain viable, Rogers notes the financial position of most OTAs has stabilized over the last year. "Over the air may not be doing as well as specialty," says Innes, "but own both. We have many parts to our company and not every part is as healthy as the rest, but should the consumers pay to correct that?" Rogers had hoped the hearing would focus on allowing the industry to move away from the ‘appointment television' model by opening up video on demand, and not just to the benefit of the BDUs. Currently, Canadian broadcasters who air programs like Survivor don't benefit financially when that show is sold on a VOD platform - for the simple reason that they don't secure VOD rights. Instead, the profit go to the BDU and the US network. Rogers suggests the broadcasters who secure the original Canadian broadcast rights for shows stay involved as the shows move to VOD platforms and split the proceeds with the BDUs. And those profits will come not from the current pay-per-view model, but from advertisements inserted into the VOD program. As CCR was told last month, It's a model also being advocated by the Association of Canadian Advertisers, but first the commission will have to change regulations to allow for advertising on VOD. Lind says this is part of moving towards the television end game, where viewers choose to watch what they want, when they want, with advertising maintained as a major revenue source. This end game also involves opening up the system by completely removing genre protection for new Canadian services, and making it easier for more foreign programming to find its way onto Canadian dials. And while some smaller Canadian broadcasters want genre protection and priority placement rules maintained, Lind says embracing a VOD television model actually benefits these broadcasters because it keeps Canadians in the broadcast system. "It's not a closed system anymore, it's a dangerously open system," says Lind. "So we've got to decide right now whether we can have a system that can be Canadian and somewhat protected, or have a system that is going to breakdown. Because if we continue with this tight regulation everywhere people are going to leave the system all over the place."

Rogers accuses BDU hearing of getting off track; wants CRTC to focus on less regulation

Broadcast | April 3, 2008

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