Vision TV says wholesale rate increase will help ensure diversity in broadcast system

Broadcast distributors should look at the granting of a wholesale rate increase to Vision TV as an investment in the diversity of Canada’s broadcast system, says the channel’s director of corporate and legal affairs. Vision’s request for a 3-cent increase is facing opposition from the Canadian Cable Television Association (CCTA), the Canadian Cable Systems Alliance (CCSA), and distributors such as Bell ExpressVu LP and Vidéotron ltée (CCR, July 4/02). "Diversity is a real buzz word in the industry right now and this is an opportunity to invest in the diversity of the broadcast system. It’s a very small investment that we’re asking for but it could make a big difference to little Vision TV," Brant Kostandoff tells Canadian Communications Reports. "A 3-cent increase as a percentage of the basic fee is less than a tenth of a percentage. So it’s a very, very small amount that Vision is requesting in this circumstance. In our view because it’s such a nominal amount, it’s a minimal cost for subscribers to pay relative to the rates that other services receive," he adds. Vision had initially asked for a 7-cent increase during its licence renewal process (CCR, May 23/02), but Kostandoff says the amount was lowered to deal with the pressing matter of infrastructure, while new initiatives were set aside. "About 3.5 cents of the 7-cent request was to go toward new initiatives and programming laid out in our licence application, but we’ve put them on hold," he notes. Kostandoff says Vision had extensive discussions with distributors over the need for a wholesale increase, but that they did not include talk of what amount would be an acceptable increase. "The CCTA went as far as to suggest (in its intervention) that while it may not support a 30-cent increase, a lesser amount might be appropriate," he notes. "I was pleased that each distributor acknowledged in differing degrees the importance of Vision TV to the broadcast system." In its July 2 reply comments to the objections, Vision TV notes that as long as the rate increase applies equally to all distributors and they are allowed to pass through the rate to their customers, there will be no net change in their relative competitive positions. "We understand that the BDU (broadcast distribution undertaking) industry is adjusting to competition," the submission further points out. "We understand, better than most, the importance of stretching the dollar. We understand that every penny that doesn’t go to Vision is a penny that each BDU can keep from its next increase. And we understand that those rate increases are disciplined only by the ‘market’, as even the remaining Class 1 cable systems that still have their basic rates regulated can put through whatever increases they want on the discretionary tiers that the vast majority of their subscribers take. In Vision’s view, the BDU interventions should be seen in that light." The distributors have argued that neither they nor their subscribers should be unnecessarily subsidizing Vision. The CCTA also raises concerns about non-profit Vision TV using the rate increase to subsidize its for-profit digital channels. But Kostandoff counters that cash-strapped Vision would need the increase even if it didn’t own any digital channels. "To a certain extent, any service that receives subscriber fees that is part of a group of companies, indirectly those subscriber fees benefit other companies in the group – whether it is because the company is able to amortize costs and share costs for staff or overhead," he says. "But in this case, what we’re trying to address is a financial need at Vision TV." Kostandoff uses the diversity argument again to counter claims by the CCSA that the collection of bad debt should be addressed rather than the granting of a rate increase. He says the majority of the $3.5 million owed to Vision is by clients, often reliant on contributions from viewers, who produce shows as part of its Mosaic programming. He points out that if Vision starts taking the programming of the Mosaic clients off the air over non-payment of accounts, the service would lose some of its diversity. "If Vision could, for example, spend more on marketing and raise viewer awareness of the programs to help drive viewers to the Mosaic programs or help them increase their production quality, then our clients might be in a better position to raise the funds they need." Vision further points out that because it is consistently behind in paying its bills, including to producers and distributors, it has become increasingly difficult to acquire programs.

Vision TV says wholesale rate increase will help ensure diversity in broadcast system

Broadcast | July 18, 2002

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