FreeHD secures foreign satellite capacity, eyes Canadian launch next year

FreeHD Canada is on track to launch a new satellite broadcasting distribution service in Canada next year after securing an agreement to use foreign satellite facilities, company chairman and founding CEO, David Lewis, said in an exclusive interview with The Wire Report this week. “It’s probably time for us to say, at least, that we’ve nailed down the biggest pieces and we are progressing forward,” Lewis said. “We’ve been at this two-and-a-half years now and we’re making a lot of progress now working with the right people.” Lewis, who has more than 25 years' experience working in the Canadian broadcast industry, said Industry Canada authorized the company's use of foreign-owned satellite facilities in 2009. FreeHD's February 2010 CRTC licence to offer direct-to-home satellite and satellite relay broadcasting distribution services notes that agreements with foreign satellite companies are permitted “in the case of emergencies leading to lack of availability of Canadian satellite facilities.” “There are guidelines that Industry Canada enforces with the CRTC called the Satellite Use Policy, which suggests that ultimately, Canadian services should use Canadian facilities. But we have a temporary authority to launch our service on a foreign satellite, and that’s reflected in our conditions of licence attached to our service,” Lewis said. FreeHD was forced to look for foreign partners over the past year after failing to secure Canadian satellite capacity. The company could not reach an agreement to use Telesat Canada’s satellite services in 2010. In January this year, the CRTC denied FreeHD’s application to force Telesat to grant access to its Nimiq 5 satellite. Foreign companies then became FreeHD’s only viable option, and the company embarked on a long series of negotiations with potential partners, Lewis said. “The agreements have been in discussion as far back as the springtime, but putting pen to paper has only been in the last month or six weeks,” he said. Lewis said that, “primarily for competitive reasons,” he could not disclose which foreign company FreeHD has reached an agreement with, but added the new partners are well-established worldwide. “We’re working with a recognizable name that does a lot of work internationally,” he said. “They have a lot of expertise and it gives us a lot of comfort to work with guys who have done this before in other markets.” Lewis said FreeHD’s next step is to integrate its hardware with the foreign-owned facilities it intends to use and to customize the equipment to carry broadcasts that conform to Canadian broadcasting standards. The process will take approximately 12 months, leaving the company’s updated launch date for sometime late next summer, he said. Lewis declined to say which firm FreeHD has hired to handle the system integration process. Once ready, the integrated facilities will enable FreeHD to utilize CRTC licences for four different satellite services, he said. These include the relay distribution and direct-to-home broadcast distribution licences received in 2010 as well as a pay-per-view licence granted in February and a video-on-demand licence that the company received last week. FreeHD is likely to face pressure from other distributors offering services on more cost-efficient technologies, Gregory Taylor, a broadcasting expert and post-doctoral fellow at Ryerson University, said in an interview. “They’re facing a lot of new competition right now from IPTV and over-the-top providers that are going to prove to be a real challenge for any satellite-based system,” Taylor said. Taylor added that he believes another player in the Canadian broadcast distribution field will be good for consumers. “When we get new competition in the sector, it’s generally good for Canadians. We just have to see if this company actually does get off the ground and whether they’re going to have enough of a base to launch their services,” he said. FreeHD will not provide free, high-definition programming that Lewis had originally intended to provide to Canadian communities expected to lose over-the-air television signals as a result of the transition to digital television broadcasting. “That piece of the potential market came and went. We did get authority from the commission to offer that kind of a service, but in the end, I don’t think it will play a piece going forward,” Lewis said. As a result, it is unlikely that the company’s services will be marketed under the FreeHD brand. They could be sold under another name, such as the BluSky HDTV brand that the company adopted last year. “The FreeHD name has a kind of connotation around a free service that confused everybody, not only consumers, but also partners and investors,” Lewis said with a laugh. While the company attempted to “fly under the radar” of Canadian media and industry insiders during its negotiations with foreign satellite companies this year, it spent time studying how satellite and other broadcast technologies are used in markets around the world, Lewis said. FreeHD will look at using new forms of on-screen graphics generators, smartsearch guidance and pre-loaded push-on-demand set-top devices, among other new technologies, he said. The company will also use spot beam technology, which allows signals to be directed at provinces or municipalities, and MPEG 4 receivers that afford better picture quality. “If you look at systems in China, India, and Turkey, for instance, they’re way ahead of what we have here in Canada in terms of features and technology,” he said. One industry insider, who asked to remain anonymous, said it's not unusual for Industry Canada to issue “waivers” that permit direct-to-home satellite operators to use foreign facilities on a temporary basis. The insider noted that former satellite radio companies Sirius Canada Inc. and Canadian Satellite Radio Inc. (now merged as SiriusXM Canada) once received permission to use U.S. satellites. Lewis said the company will have to eventually build its own Canadian-based facilities to maintain its CRTC licences. It will take FreeHD about three years to build its own facilities and launch a satellite, he said, which will be the company’s top priorities at the start of 2012. “We’ve got an obligation to come back to Canadian satellite capacity at some point in the future once the business gets launched and Canadian facilities are generally built and made available,” he said. “There’s an expectation that we would operate relatively quickly in this regard, I don’t think there is a hard and fast deadline in our licence conditions.” nkyonka@thewirereport.ca

FreeHD secures foreign satellite capacity, eyes Canadian launch next year

Broadcast | September 8, 2011

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