CRTC approves new BDU in GTA despite objections from Rogers

Amid objections from cable giant Rogers Communications Inc., the CRTC has approved a licence for a new BDU in the Greater Toronto Area (GTA), a move likely to up the competition in the already crowded GTA market. Ravinder Singh Pannu, on behalf of a yet-to-be named corporation, applied for the licence in February this year. Rogers urged the commission to deny the licence, citing several concerns including what it claimed was the absence of a viable business plan. While in principle it did not object to Pannu’s proposal to operate a BDU to serve the GTA, Rogers noted that it had “little confidence” in the applicant’s business plan and generally cast doubt on its feasibility and sustainability. Pamela Dinsmore, VP, regulatory, broadband and video distribution, also noted that Pannu had no experience operating a BDU. “All aspects of the application, including its financial projections, reflect this lack of experience,” she wrote in Rogers’ intervention to the CRTC. Dinsmore also observed that Pannu had under estimated pre-operating costs, outlining that the price-tag was above the $180,000 budgeted ($120,000 for reception equipment and $60,000 for distribution equipment). In addition, Dinsmore also questioned what she called low staffing costs in the application, noting that the projected number of subscribers would not be adequately served by just one full-time technician and assistant. The proposed BDU aims to reach a minimum target audience of 3,600 subscribers, although it would be available to more than 1.3 million households. “We do not consider these estimates to realistically reflect what is required to provide a BDU service to customers. In addition, the applicant has only budgeted $75,000 in year one to acquire 3,600 customers. At $21 per subscriber, we believe this proposed acquisition cost is significantly less than what must be incurred by a new entrant to convince these subscribers to leave their existing provider,” Dinsmore stated. Apart from what it sees as inadequacies in the business plan, Rogers also raised objections regarding a slew of regulatory requirements. These include issues regarding migration from analog to digital, priority signals, local digital television signals, affiliated and unaffiliated category 2 services, dual status services, mandatory services, and video-on-demand. In response to Rogers’ objections, the CRTC noted that it does not generally require evidence about viability, only that applicants prove they can operate in the specified period outlined by the commission and observe Broadcasting Distribution Regulations. The commission also dismissed Rogers’ objections regarding regulatory requirements. Reached for comment, Pannu says he’s pleased the application has been approved and declined comment on his business experience and plan, saying he will address the issue in January. After a licence is granted, CRTC rules stipulate that undertakings must be operational at the earliest time possible and not later than 24 months from the time the commission approved the licence. Pannu declined to say when the new BDU will be operational.

CRTC approves new BDU in GTA despite objections from Rogers

Broadcast | October 7, 2008

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