Questions surround FreeHD Canada’s pitch to save local TV with “free” DTH service

As FreeHD Canada Inc.’s application winds its way through the CRTC’s assessment mechanisms, industry observers wonder if the new satellite TV service will be and do everything it says it will. “It’s not any different from what Shaw Direct and Bell are offering,” says Karen Wirsig, spokeswoman for the Canadian Media Guild (CMG), which represents workers at broadcasters such as the CBC and TVOntario. “Customers will still need fairly expensive equipment to access the service.” Earlier this month broadcast industry veteran David Lewis announced FreeHD Canada as a new satellite TV venture that has filed applications with the CRTC to provide direct-to-home (DTH) satellite TV service and a wholesale distribution service for Canadian programmers. The company expects to begin operating in early-2011, just prior to the industry’s big switch from analog to digital over-the-air (OTA) transmissions. Lewis is the firm’s chair and CEO. The new firm is positioned as an answer to the ensuing end of OTA broadcasting in many of Canada’s smaller communities. According to CRTC Broadcast Regulatory Policy 2009-406, broadcasters won’t have to provide OTA TV in markets with fewer than 300,000 people once the industry migrates to digital. FreeHD plans to carry all of the 100 or so local TV stations via a free local-program package for customers. The firm also plans to offer wholesale satellite carriage to broadcasters seeking some way of getting their content out to viewers in high-definition (HD), says Lewis, who has helped with the launch of satellite TV start-ups ExpressVu (Bell TV) Star Choice, AlphaStar Canada and AlphaStar in the U.S. More recently, he was the founding president of Ciel Satellite Group. “There are probably several hundred pay and specialty services as well as over 100 over-the-airs that would like to be carried and distributed,” he says. “That’s a lot of capacity.” The answer: more modern compression technologies and more efficient satellite modulation techniques. “Part of the issue is that people are dual-feeding both standard definition and high definition channels in an older legacy technology,” says Lewis. The CMG is particularly concerned about the end of OTA TV in smaller communities. The organization recently announced the results of a survey in Kamloops, B.C., suggesting that Canadian TV watchers might not want to see the end of OTA. (See “Media union says loss of free TV signals unfair.”) But Wirsig says her group isn’t convinced that FreeHD is the solution. At issue is the definition of “free” – receivers will cost customers, and “the way make money is to get subscribers to pay for additional services.” Lewis says his company hopes to keep the cost of the customer-premises equipment below $250. “The business case relies on subscribers moving up to the paying models ultimately,” he says. One industry observer suggests FreeHD could be a welcome addition to the broadcast industry landscape. “I believe in the principle of giving the consumer the most options possible to improve the service and at the same time keep rates competitive,” says Jerry Chomyn, director of broadcast media at Humber College in Toronto. Referencing FreeHD’s mid-August press release announcing its plans, he adds, “It is interesting to note that no specifics were given regarding costs except to say they will be competitive. I’m not sure this will save local television since the business plan for these enterprises has to be reassessed. “Certainly if FreeHD can reduce distribution costs normally associated with OTA broadcasters, this might help the current dilemma broadcasters face, although it does not address the cash flow of local stations,” Chomyn explains. “If FreeHD can position themselves in their application as a solution to some of the challenges recently identified by the CRTC and to be addressed in the CRTC policy hearing on the 29th of September, they might have a chance.” That late-September hearing will focus on a new regulatory framework for conventional TV broadcasters, according to CRTC documents. Wirsig says the CMG has been promoting its own answer to the end of OTA obligations: multiplexing technology that allows BDUs to make more efficient use of their capacity. Wirsig says the CMG is encouraged by the fact that the CRTC pointed to multiplexing as a potential solution for efficient OTA transmission in Broadcasting Notice of Consultation 2009-411, but from her group’s perspective, “it has fallen off the agenda” as the industry has been focused more on fees for carriage and Canadian content requirements. Lewis says it’s not clear how far along his company’s application to the CRTC has progressed. “We’re waiting for them to Gazette-notice it and decide when to process it.” FreeHD can’t wait forever. In order for the company to be ready for the industry’s switch to digital in 2011, the firm would have to be up and running with a satellite and the other infrastructure before the end of 2010. “I would say it will take a minimum of nine months to build the facilities,” Lewis says. Stefan Dubowski is a freelance writer in Ottawa. You can reach him via sdubowski@rogers.com.

Questions surround FreeHD Canada’s pitch to save local TV with “free” DTH service

Broadcast | August 30, 2009

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