No fee for carriage, says CRTC

Originally published in Marketing Magazine, October 31, 2008 | By Canadian Press, with files from Chris Powell

The CRTC says Canadians will get more choices in the television programs they watch at no additional cost under new rules the broadcast regulator plans to introduce.

The federal regulator’s vision of Canadian television in the future would allow cable and satellite operators to provide a wider menu of conventional and specialty channels, as long as the entire package contains at least 51% Canadian content.

CRTC chairman Konrad von Finckenstein said Thursday there is no longer a regulatory reason why cable companies need to offer a package of stations in their services, rather than letting viewers order a la carte.

The regulator also opened the door for the creation of a third national cable news or sports broadcaster to compete with the existing CBC Newsworld and CTV Newsnet, as well as TSN and Sportsnet.

“Existing services in these genres have achieved maturity,” said the CRTC. “They are strong, healthy, popular and highly competitive despite the differences in their programming. They have also established brands that are attractive to consumers and instantly recognizable.”

But in a decision that will frustrate conventional broadcasters such as CTV, Global and CBC, it rejected a request that they be allowed to charge cable and satellite distributors such as Rogers Cable, Shaw Cable or Bell for carrying their channels. The fee-for-carriage charge would have added anywhere from $2 to $10 to a consumer’s monthly bill and brought in an estimated $300 million in revenues to the broadcasters.

The regulator did give broadcasters a consolation prize however, saying they can negotiate with distributors for so-called “distant signals”’ something that could provide anywhere from $70 million to $90 million in additional revenues. Distant signals enable viewers in one region of the country to watch a show in a different region that is airing the program in a different time zone.

The federal regulator also created a new Local Programming Improvement Fund, which will be funded by a 1% increase (to 6% from 5%) in the amount that cable and satellite companies must contribute to Canadian programming. This will add as much as $60 million towards Canadian programming, said the CRTC.

The fund represents an additional 50 cents per subscriber per month, although it was noted that “given the health of the broadcasting distribution industry and the new revenue streams provided by the policies announced today, the CRTC does not expect companies to pass this cost along to their subscribers.”

Most of the changes will go into affect on Aug. 31, 2011, when analogue television gives way to digital.

Noting that the digital environment will allow viewers “to watch ads that are more relevant and better suited to their interests,” the CRTC has initiated a proceeding to consider whether cable and satellite companies should be permitted to inserted so-called “targeted advertising” into local ad avails on U.S. specialty services like CNN and A&E. The CRTC currently requires that the two minutes per hour allotted to cable companies on those channels be used to promote Canadian programming services.

The regulator also issued a proposed framework for allowing cable companies to insert ads into video-on-demand programming. Such ad time, it notes, could also be used for targeted advertising.