Access, revenue sharing emerge as issues in fact-finding inquiry on interactivity

Many broadcasters and producers are advocating for CRTC intervention in interactive television (iTV) to ensure equitable access and to iron out revenue sharing. But the cable industry maintains that it is still early days and that existing rules against undue preference in broadcasting and telecommunications are sufficient to protect iTV players. In submissions filed last month in the commission’s fact-finding proceeding on interactivity – Public Notice 2001-113 – access and revenue sharing emerge as contentious issues. Michael Hennessy, the Canadian Cable Television Association’s (CCTA) senior VP of policy and regulatory affairs, says regulation isn’t possible without concrete examples of the problems that may arise – something that won’t come until more players have tested the iTV waters. But at least one broadcaster has already brought forward a specific example of what it considers undue preference. "The scenario is unfortunately already in play: Bell ExpressVu is currently offering the Instant Weather virtual channel to its subscribers, giving the American service a head start while denying The Weather Network and MétéoMédia access to bandwidth for enhanced interactive television," Pelmorex Communications Inc., parent company of The Weather Network and MétéoMédia, states in its submission. "Clearly, it is essential to the business models of licensed programming services that they be allowed a fair start in offering interactive television services before consumer habits become entrenched," adds Pelmorex, whose failed bid last year to have interactivity recognized as an integral part of its weather channels initiated the fact-finding proceeding (CCR, Nov. 9/01). "The ExpressVu experience illustrates the importance of rules denying a head start to unlicensed and foreign services." Pelmorex calls on the commission to "act speedily" in a follow-up proceeding to the fact finding to "take actions that will ensure priority access to bandwidth for iTV services provided by licensed Canadian services." Pelmorex also wants regulatory safeguards to allow fair competition and to preserve diversity of voices, "which could be inhibited by distributor gatekeeping practices favouring themselves, their own networks and those of American allies." The call for equitable access to bandwidth is echoed by other broadcasters, including CHUM Ltd. and the Canadian Broadcasting Corp., as well as the Canadian Association of Broadcasters (CAB), representing private television broadcasters including specialty channels. The CBC is also calling for a public proceeding with the goal of establishing a policy framework and regulatory rules that are conducive "to the successful development of interactive services in Canada". "…the seriousness of the bottleneck facility and undue preference issues in possibly impeding the future development of interactive services to the detriment of Canadians and the Canadian industry, underscore the requirement for an over-riding regulatory framework for the distribution and offering of these services," the CBC states in its submission. Like Pelmorex, CHUM is also advocating for a Canada-first approach by the CRTC when it comes to interactive content. "Interactive television programming is the heart and soul of the Canadian broadcasting system of the future," CHUM writes in its submission. "Without Canadian interactive content and revenues, there will be no Canadian broadcasting system. Any policies that the commission develops with regard to interactivity should ensure that the focus remains on the development and promotion of content." CHUM contends that interactive data should be considered an integral part of a broadcast, and that interactive services should not be considered separately from the licensed programming service. It advocates that program-related interactive data that falls within existing bandwidth must be passed through by a distributor without any hesitation or limitations, and that distributors provide a return path to customers without altering the data and without any additional charges. No business model for iTV yet Hennessy wonders why some broadcasters are getting all worked up if there are no dollars on the table. "Once there’s actually some revenues being generated, then you’ll start to see people competing for those…At the end of the day, I think our biggest message throughout this whole thing is let’s not inflate another bubble. Let’s get a grip on this. TV is still fundamentally about TV," he says. "I was reading some submissions that said the future of the Canadian broadcasting system is dependent on interactive revenues. If the future of broadcasting is dependent on interactive revenues, then we might as well pack it all in and go home." Hennessy further argues that the regulator doesn’t have enough experience with iTV under its belt to begin dictating market competition issues. CHUM, Pelmorex, and other broadcasters are already moving ahead on adding interactive elements to their programming, even without a regulatory framework in place (CCR, Jan. 31/02). Despite CHUM’s call for some regulation of iTV, the managing director of the broadcaster’s interactive division is happy with how things have unfolded thus far. CHUM became the first Canadian broadcaster to introduce basic interactive elements to programming on four of its channels on February 8 (CCR Update, Feb. 6/02). "It’s all about collaboration… I think if business people get together around a table and there’s an opportunity that works…then let’s do it," Maria Hale of ChumCity Interactive says. "A lot of people try to make big drama around – Oh, cable’s going to get a piece and so on, and they should. They do their deal with the middleware company just as we’ve done our deal, and at the end of the day if it makes sense, we sign it. And if it doesn’t make sense, we don’t. And, we did. I think we’re happy with the way everything seems to have worked out." In a joint submission by Bell Globemedia on behalf of CTV Television Inc., and affiliated satellite TV distributor Bell ExpressVu LP, the BCE Inc. companies agree that a cooperative approach is needed. "The BCE companies submit that iTV should be developed in a competitive milieu that will allow for maximum speed-to-market, innovation, experimentation and opportunities for return on investment for producers, broadcasters and BDUs (broadcast distribution units)," Bell Globemedia and Bell ExpressVu note in their submission. "Enhancing the content of Canadian programming with iTV applications will require programmers and distributors to work together to develop a business model that provides ample opportunity to share risks and rewards." The BCE companies note that there are currently but a few "rudimentary services" and that broadcasters, distributors and programmers face persistent challenges in delivering iTV, including developing a viable iTV business model. But the CBC prefers the implementation of a regulatory framework with the rules spelled out for iTV at an early stage, rather than after problem cases have emerged. The public broadcaster tells the CRTC that a case-by-case approach is also likely to be the most expensive "since it would result in the application of remedies to anti-competitive or other non-productive situations only after they are put into place or develop". "This would potentially create large costs for those parties, such as distributors, required to alter or change-out certain technical or marketing arrangements related to the cause of the problem, and could inhibit the growth of interactive services in Canadian broadcasting," the CBC states. While advocating for a more open and market-driven approach, BCE does make some commitments in the joint submission. It vowed to distribute out-route datastreams used to provide enhanced or interactive content connected to a digital service on Bell ExpressVu unaltered and at no additional cost if they fit within the bandwidth normally assigned to such a programming service and are receivable by a Bell ExpressVu set-top box.

Access, revenue sharing emerge as issues in fact-finding inquiry on interactivity

Broadcast | March 15, 2002

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