Telus calls Shomi service undue preference by Rogers, Shaw

GATINEAU, Que. — Telus Corp. says it is “very concerned” Rogers Communications Inc. and Shaw Communications Inc. are using the beta-test phase of their recently launched over-the-top (OTT) service to give themselves an undue preference. Rogers and Shaw announced the launch of the Netflix-style service called Shomi in late August. The service will initially be available only to those who subscribe to Internet or TV services through Shaw or Rogers, though Rogers Media president Keith Pelley has said he is “comfortable” other broadcaster distributors will jump on board by the November launch date. Ted Woodhead, senior vice-president of government and regulatory affairs, told the CRTC on Friday, as part of its two-weeks of hearings on the future of television, that offering Shomi as an Internet service to Rogers and Shaw subscribers only is an undue preference. Speaking to reporters after Telus’ appearance, Woodhead said that limiting the service to Rogers and Shaw customers is “a de facto exclusive. Other competitors’ customers are being deprived of that content, and that’s an undue preference.” Telus might consider filing an undue preference complaint to the CRTC, after it has seen what the terms of getting access to the service are, Woodhead said, adding that “we’ll see how it shakes out.” Woodhead also told reporters that he doesn’t believe instituting a pick-and-pay system, which it supports, would result in price increases, as others have warned. “I think, ultimately, consumers will pay what consumers believe the service is worth. And once that all works through the system, the prices will reach the natural point where demand and supply meet, and there won’t be excessive pricing,” he said. Telus chief marketing officer David Fuller told the commission during its appearance that he wasn’t concerned U.S. channels would stay out of Canada if pick-and-pay was instituted for all channels, as Rogers has expressed concern about. “I do think, at the end of the day, though, the economic reality of them wanting to access the Canadian market will cause many of them to say that they’ll stay,” he said, adding that the high-quality programming produced by those that don’t stay will find its way back into the Canadian market as distributors buy up the rights for the shows Canadians are interested in. CBC/Radio-Canada also appeared in front of the commission on Friday, saying it wanted over-the-air (OTA) transmissions shut down, and for conventional television to be paid fees from broadcast distributors. On Wednesday, BCE Inc. proposed a similar idea that it called “local specialty,” arguing that conventional television needs a second revenue source. CRTC Chairman Jean-Pierre Blais asked the CBC whether Canadians are ready for the “fundamental change” of eliminating of OTA transmissions, noting that the CRTC has received many comments from the public opposed to the disappearance of OTA transmitters. Steven Guiton, CBC’s chief regulatory officer, said that people who are using OTA “are not people who believe TV is an important part of their lives,” and that 80 per cent of them also have broadband Internet access. Tom Pentefountas, the CRTC’s vice-chairman of broadcasting, pressed the CBC panel on the money that would be involved in going this route. “How do we arrive at the correct figure, in terms of subscription fee per station?” he asked. “You must have a dollar figure that you put next to this idea.” Guiton declined to name numbers and responded that “the dollar figure is not the issue. It’s the policy decision to allow conventional broadcasters to be able to say: 'OK, I’m selling a service here. I think I’m going to negotiate for the dollar figure of that service.' ” Later on in the hearing, Pentefountas returned to the issue, saying that “at $2 a sub retail … your 27 conventionals for CBC, 92 conventionals for private make it a round figure of 120 conventional TV stations.” With around 12 million subscribers, “you’re over $2 billion retail out of Canadians’ pockets.” Under those numbers, “$325 million would go into the coffers of the CBC, and $325 into BDUs,” he said. “I think if you’re going to make a proposition, you have to know what that proposition looks like on the other side.” The CBC has been cutting jobs and reducing costs following a cut of $115 million in CBC funding over three years in the 2012 federal budget, as well the ending of a $60-million content-creation subsidy that the CBC had been getting every year since 2001. Other conventional broadcasters, such as Rogers, have also sounded the alarm about the viability of conventional television that is seeing falling advertising revenues. — With reporting by Anja Karadeglija at akarad@thewirereport.ca and editing by Derek Abma at dabma@thewirereport.ca

Telus calls Shomi service undue preference by Rogers, Shaw

Broadcast | September 12, 2014

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Telus calls Shomi service undue preference by Rogers, Shaw

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