Fee-for-carriage of Canadian TV signals could trigger “border broadcasting war” with U.S., warns Rogers

Allowing Canadian television stations to charge a fee for their signals could create a trade war with U.S. border stations which would demand similar compensation when cable and satellite carriers redistribute their signals to Canadian homes, Rogers Communications Inc. executives warned the CRTC yesterday, during day one of its group-based licensing hearing. Rogers executives argued that if Canada adopts a fee-for-carriage regime, then U.S. border stations will demand equal treatment. If denied, Ken Engelhart, Rogers senior VP, regulatory affairs, predicated that such discriminatory treatment could lead to a U.S. border broadcasting "war", similar to the one waged in the mid-1970s relating to commercial deletion. “If Canada were to accede to similar anticipated U.S. trade demands as a result of the current FFC (fee for carriage) proceeding and recognize a FFC right (or retransmission right) in respect of U.S. conventional television signals, received off air and redistributed in Canada, this would add another significant monthly increase to many millions of Canadian consumers who subscribe to cable or satellite services,” Rogers warned in its written submission to the CRTC. Rogers seeks concessions Rogers maintained a hard-line stance on carriage fees throughout its appearance at the hearing, saying it would accept a U.S-style retransmission regime only if the CRTC allows cablecos to sell ads on local avails, removes access restrictions, genre protection and packaging regulations for specialty services. “We prefer participating in the current Canadian system over the U.S system, but in no case can we be expected to accept a new model made up of the most onerous parts of both systems,” said Rogers vice-chair Phil Lind. Lind told commissioners that a cash-for-signal compensation regime would be expensive for BDUs, which he stressed are already facing much higher costs than their American counterparts because of regulation. Another concession Rogers seeks is the deregulation of its video-on-demand service. Engelhart said a signal compensation regime would force the cable giant to raise prices. “The negative impact on consumers and the system would be significant,” he said. Engelhart also warned that allowing fee-for-carriage would trigger a consumer revolt marked by large scale defections from the regulated system. He said Canadians would seek alternative modes of accessing television programming through the Internet, antennas, and illegal satellite transmissions. “Make no mistake, the market for BDU services is vulnerable. A significant rate increase with no corresponding increase in value could lead to a tipping point. Once a sufficient number of viewers desert, the entire debate about the future of local television, as well as Canadian programs, becomes academic,” he said. Similarly, Engelhart argued that fee-for-carriage would open a slew of legal dilemmas because the regime would create a “new form of copyright” that exceeds the mandate of the CRTC. He suggested that only Parliament has the authority to enact a compensation regime. Throughout their presentation, Rogers executives continually reminded the commission that a compensation regime is not suitable for Canada. Nadir Mohamed, president and CEO, suggested that conventional television is not in a state of crisis, stressing that incentives offered by BDUs (mandatory carriage, lowest channel positions on the cable dial, exclusive access to local advertising markets, and simultaneous substitution) offset any financial troubles broadcasters face. If broadcasters are continuing to have financial difficulties, Mohamed said it is due to “destructive over-spending.” But CRTC chair Konrad von Finckenstein seemed unimpressed by Rogers hand-line position. Reiterating what he had said earlier in the day to CTVglobemedia executives, a visibly frustrated von Finckenstein asked why the two parties are not able to reach a deal on signal carriage on their own. After asking the same question about three times within the space of less than 10 minutes, Engelhart replied to the CRTC chair, saying negotiation for fee for carriage is “off the table.” “I must say I find your responses not very helpful,” said von Finckenstein, adding that Rogers’ position was “dogmatic”.

Fee-for-carriage of Canadian TV signals could trigger “border broadcasting war” with U.S., warns Rogers

Broadcast | November 17, 2009

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