Municipal-owned BDU gets green light in Thunder Bay

The City of Thunder Bay scored a long-awaited victory this week when the CRTC approved an application by TBayTel to enter the cable TV business. It represents the latest move by a dwindling number of municipally owned telcos to expand into the television market.In Decision 2008-289, the commission granted TBayTel a seven-year licence for both a broadcast distribution undertaking (BDU) and a video-on-demand (VOD) service, providing the telco with its first opportunity to bundle phone, Internet and TV services.Canada's largest independent telco had originally applied for a BDU licence in 2005. But it faced a major hurdle - it needed the government to amend a 1985 ruling that prohibited the CRTC from granting a broadcasting licence to municipal governments. That change came in April 2007.Then there was opposition from Shaw Communications Inc., which urged the CRTC to turn down an earlier application by TBayTel until it was allowed to compete against the municipal telco in the local telephony market. That competition arrived in January.TBayTel was handed another setback in April when the CRTC ruled the telco couldn't reclaim some of its coaxial cable - currently used by Shaw to provide video and Internet services to customers in Thunder Bay - for its proposed cable TV service. Instead, TBayTel will use a more costly DSL-based infrastructure.In the end, the CRTC's only concern with the broadcasting applications was that TBayTel was "not directly controlled by the governing body of the municipal government, and the public utility service provider enjoys freedom of expression and journalistic, creative and programming independence in the pursuit of its object and exercise of its powers."TBayTel regulatory analyst Robert Olenick says having a municipal services board in place appeared to satisfy the commission's concern. "Having this board in place separates the management of the television division from the city. The company is still owned by the city but it's arms length."The telco had hoped to begin offering a cable TV service to residents in Thunder Bay and 21 surrounding communities by year end, but Olenick says all the delays will push that launch at least into next year. "We don't have a firm date yet. We will have a better idea within four to six months once we finish our planning. And with winter coming on, it will make it difficult to do any outside work to get the operations up and running."The CRTC decision won praise from Renée-Claude Boisvert, president of Canadian Independent Telephone Association, which represents small independent telcos across the country, including some municipally-owned telcos."The CRTC opened the door to local (phone) competition, so they have to allow us to be competitive by offering cable TV services and wireless. Now you see all the independent telcos trying to get into the television business. Many are also hoping to start offering wireless services, and are looking to participate in Industry Canada's auction in the near future to get some frequencies (in the 700 MHz band) to offer cellular services in rural areas."Boisvert is also president of privately owned Sogetel Inc., which recently applied to the CRTC for a broadcasting licence and VOD licence, using IPTV technology. Other municipally owned telcos that currently offer cable TV services include Bruce Telecom in Ontario and CityWest Telephone in Prince Rupert BC.TBayTel hopes to generate about $8.4 million in revenue from its broadcasting revenues within five years of launching, rising to $10.5 million by year eight. Its goal is to break even and begin generating profits by year six.TBayTel's BDU service will rely on SaskTel to transport video signals from its head end in Regina to Thunder Bay. The two companies are also developing a Digital Interactive Video service that will offer full-motion NTSC and HD video signals. As well, customers will be able to use their television set to browse the Internet, and to send and receive email.

Municipal-owned BDU gets green light in Thunder Bay

News | 10/23/2008 4:56 pm EDT

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