ONE THING BECAME CLEAR pretty quick when I sat down to with Phil Lind a not long ago. He wanted to talk about fee-for-carriage.
The vice-chairman and executive vice-president, regulatory, at Rogers Communications gets a little animated and agitated when it comes to fee-for-carriage(or the renamed value-for-signal). Over four years ago, when we said (wrongly at the time) that it seemed inevitable the CRTC would grant OTA broadcasters the right to charge a fee for their signal, he called me up out of the blue to tell me in no uncertain terms how wrong I was.
For that particular proceeding, my prediction was too early. However, when it was granted in 2010, I saw him at a public event not long after and he admitted that in the end, I was right after all. And then he told me how wrong the Commission was (and is) to have granted it.
And now, even though all the major Canadian broadcast networks are owned by distribution companies (leading some, ahem, us, to call FFC/VFS a moot point) Lind is adamant that this bit of CRTC policy must be erased forever and the company is leading the fight against it in the courts. So when we sat down last month for our interview we barely chit-chatted about the group licensing renewal proceedings before getting down to what he really wanted to get off his chest.
But fee-for-carriage wasn’t all we talked about. What follows is an edited transcript, broken up into five parts, of my interview with Lind (pictured) just last month.
ON FEE FOR CARRIAGE
Phil Lind: One thing I want to talk a bit about is fee for carriage, or value for signal.
Greg O’Brien: Telus brought that up at the group licencing hearing.
PL: Yeah, (Richard) Stursberg (now working for Telus as a consultant) especially. And they did a very good job of it, I thought. (CRTC chair) Konrad (von Finckenstein) said “We can’t discuss this now.” He said that the last hearing, too. But this time, he gave a reason: Because it’s sub judice, or before the courts. Well, it’s not before the courts. The jurisdiction issue is before the courts, not whether (VFS) makes any sense or not. The merits of the public policy issue is entirely open to debate. And he, a former judge, should know this.
It’s a well known trick. Politicians use it all the time. “Oops, sub judice. The police are looking into it. Therefore, we can’t even talk about it”… But in this case, this thing has been discussed. Only (whether the CRTC has) jurisdiction (to impose a VFS policy) is before the courts.
GOB: He just doesn’t want to talk about it anymore for now I guess.
PL: Well, he never did. You and I discussed this before. Honestly, twice after long hearings, (it was) rejected. The third time, he decides yes – at an appearance at a House of Commons Committee, he all of a sudden says, “Yes, we’re going to have value for signal; you can call it fee for carriage, you can call it anything you want, but yes, we’re going to have it.” So then we go through this hearing, but he’d already made up his mind. And he’s still made up his mind.
GOB: A lot are saying though “What’s the point now of pushing this?” You own City, Bell owns CTV, Shaw owns Global. Fees would be pointless.
PL: Where’s the tin cup? There’s no tin cup any more. Nobody is begging for money. They’re all healthy now… and that is the difference. Plus, of course, the advertising market has come back with a vengeance. So I don’t see it. But then Bell says, “Well, we’re for it. We’re not going to charge our customers for it, but I don’t know about anybody else’s.”This is what we’re talking about in vertical integration: advantaging one over another. It’s further proof, I think, that (VFS) is wrong, and it should be negated.
GOB: Even though it’s really kind of a moot point now? When companies are negotiating for content now, you’re negotiating now for all the signals, all the channels, correct? Is there really going to be, “Well, we’re adding a fee for CTV, CKCO Kitchener. Is it really going to be anything like that?
PL: Yes. It could be. It could be. So why not just put it away? Why not just say, “It’s over. It’s finished. It’s time.” It’s usefulness, if indeed there was any usefulness at all, has passed… And remember the American situation. Number one, if you black out a station in Canada, you have to black out the American programs… and that’s going to cause an enormous ruckus in the States. Then of course, if (the Canadian stations) are getting money for their signal, why not Americans? Why not?
Now Konrad has said “you never raised that at the hearing.” So we pointed it out again and again, pages, citation after citation after citation. This has been raised…Rogers raised the issue… we raise it all the time. Maybe he should say, “I didn’t hear it.” That would be different.
The real issue is he can say this jurisdiction issue is before the courts. Yes. But he cannot say that the broader public policy issue is before the courts because it isn’t.
GOB: And you’re going to keep pushing that…
PL: Oh, I’m going to push it until time immemorial. Believe me.
GOB: Or until the Supreme Court decides.
PL: And even after that… It’s caused enormous problems in the United States, and it continues to.
GOB: Well, look at the re-trans fights that they have in the States where customers lose their programming. Can you envision that happening here?
PL: Of course, yes.
GOB: Where Bell would pull their CTV or whatever signal in a contract dispute?
PL: Absolutely. Why not just say, “It’s over?” So long as (VFS/FFC) is on the books, anybody can do anything with it.
ON CANCON AND OVER-THE-TOP VIDEO
GOB: In doing my research on Pierre Juneau,
PL: Great guy.
GOB: For sure. I came across a few CBC radio reports from the ’70s and the arguments the industry was having then between the broadcasters and the CRTC about Canadian TV content are the exact same that we have today.
PL: Absolutely.
GOB: It was a little depressing to see that we’re still having the same argument 40 years later.
PL: And probably less viewing of Canadian programming now than was then.
GOB: So after this long of a battle, is there a solution? Do we just say you can get popular U.S. content like City’s Modern Family from anywhere at any time so maybe Citytv should instead make much more of its own Canadian content? Maybe getting rid of all the regulation and protection will spur production of Canadian content because if you can then get U.S. content on Hulu.com (in the future), for example, to differentiate yourself maybe you have to do more of your own exclusive content. Does that make any sense?
PL: No.
GOB: I’ve been harping on this for some time…
PL: Everybody knows that it’s tougher and tougher to regulate because of the ubiquity now of the (content) and where they are and how you get them, etc. But so far, we’ve managed to keep a reasonable system here in Canada that sure, we complain about, but we still have Canadian programs. We still have Canadian news and some drama. So long as the system exists in the Canadian sphere, we can probably keep it going for a while.
Now you can’t get Modern Family from anywhere but Citytv at the moment, but if, say, Netflix or somebody else buys those rights, then things change. So for example, if you have a provider that can provide all kinds of things that rival a regulated system and he’s unregulated, then you’ve got a breakdown. Then you’ve got a problem.
GOB: Do you see that problem approaching? I mean I certainly do. Netflix is signing more and more deals – you know, Apple TV has more than you can get on cable VOD for example. Do you envision this coming to a head where the industry goes to the Commission, goes to the government and says, “Look, if we’re going to have a business, if we’re going to have an industry, we’ve got to do something.”
PL: I think they’re going to say at first, “Well, let’s regulate what’s there.” If it proves unregulatable, then it may go to the second step. But the first step is to try and bring them into the system somehow. But if forcing all kinds of regulations on them proves to be impossible, then it may go to what you suggest. But you were saying also then let City make its own Canadian content, I don’t think that’s going to work very well.
GOB: I see through the prism of my own business. If I were to go to Multichannel News or whatever in the States and buy their content, put a lot of it on my web site and only have a little bit of stuff about the Canadian industry in there, that doesn’t work. I have to produce content for the people in this industry from Canada. So I tend to compare things that way.
PL: I don’t think it works that way in the entertainment business. As Canadians have shown for decades, they respond to the programs that have big money behind them and the big stars. Those programs happen to be produced in Hollywood. Nothing is going to change that. Nothing. So if you decide to make all your programs in Canada and try to differentiate yourself, you’ll differentiate yourself all right, but I wouldn’t want to be the differentiator.
GOB: So, do you see Cancon minimums for the likes of Netflix or anybody else?
PL: Some obligations have to be laid on for sure. There have to be some obligations. What, I’m not sure. But yes.
GOB: That’s a contentious issue that you’re broaching there. You know that. Right? Nobody knows if Netflix would be much interested in that.
PL: Usually people aren’t interested in having regulations imposed on them. In fact, we’re not either, but that’s the world we live in.
ON CONTENT EXCLUSIVES
GOB: What else is top of your mind heading into the vertical integration hearing in June?
PL: Certainly fee for carriage again. We’ll bring that up. But I think the whole issue of exclusivity is going to be a big issue at the June hearings. A big issue.
GOB: And what are your thoughts on that? From a content owner perspective? Take the Blue Jays, for example. You want everyone to see as much Blue Jays as they want. That’s good business. But can it also be good business to take a piece of that or something different and say, “Okay, this part here is only available to Rogers customers.”
PL: We as a company are attracted to the position that if it’s been on linear, regulated television, then it’s non-exclusive. So for example, NFL, CFL, movies – anything that’s on regulated television should be non-exclusive. That’s the position we’ve come to.
GOB: But if you experiment with a Jose Bautista cam or something, for example, that could be made available for Rogers Wireless customers only. That can be an exclusive type of deal.
PL: Could be.
GOB: Just to expand on that a little more, when it comes to vertical integration that makes you similar to what Telus has to say, and different than what Bell has been saying.
PL: Yes.
GOB: Bell seems to want as many exclusives as they can get, but when you talk about stuff that’s available on linear TV service – NFL games for example, what about slices of that content? Whether it’s feeds of scores or stats or highlights or something special. Should that all be part of the non-exclusive nature because the games are on linear?
PL: If it’s taken off the existing network, I suspect they should be non-exclusive. The Jose Bautista cam is a different thing though. It didn’t appear on network television. It never appeared, so that would be different. But the other things… our position is that you probably shouldn’t have to change carriers in order to follow a team or personality. That’s probably not the right thing to do, and I think that’s our position.
GOB: That would be a pain in the ass if you’re a Jays, Leafs and Argos fan if you need three different phones.
PL: Exactly right.
ON TED ROGERS
GOB: As the media world develops and we see all these different experimentations now and different devices you can use… what would Ted make of all this now? He saw some of this before he died, but what would he think of the rapid ascent of the iPad, for example, and all of the other different things like Apple TV and the Boxee I have to bring in as much content as I want to locate into my home?
PL: I think Ted would have been crazy about the iPad because it makes a lot of things simpler. All these things he was sort of conceptualizing came true with the iPad. We talked about the tablet during the MacLean-Hunter hearing (back in 1994). He talked about the tablet and how it would revolutionize. And then, of course, ten years later, nothing had happened. But eventually, it did.
And the other thing Ted would have done is he (pounding on his desk) would be saying “We should be doing more. We should be doing more. We should be doing more,” running up and down the hall here.
He was very much into experimentation and opening up and trying new things, but also making things simpler, and we didn’t do that, the Apple engineers did it. It is a marvelous thing that people can sit with the iPad now and do things that before you had to use either Fortran or some sort of computer language or something like that.
Ted never understood computers. He understood what the concept was… but he could have done the iPad for sure, and the iPhone, and some of the things from RIM. We were the first one to put RIM on the air and the things that RIM are doing – especially with their tablet now, he would have been extremely comfortable with that and loved it. He would have embraced it.
GOB: Is there going to be more integration through the rest of Rogers with these tablets? You know, Cablevision, Comcast and Time Warner have all these different things (apps that let customers watch TV or VOD on their tablets, for example) that they’re now fighting some broadcasters about…
PL: Absolutely. We’re right in the middle of that, and we’re looking at doing exactly the same kind of thing. Time Warner had a full page ad in The New York Times saying how wonderful their customers thought this service was (it was downloaded 360,000 times in the first month of availability). They contend, and some program suppliers agree, and some program suppliers don’t agree, that this is no more than a TV set. It’s just another TV set, and it’s fantastic… And the best part about it is you can have a TV guide that actually is really cool.
GOB: A lot better than the old grid guide that all the cable companies are stuck with now.
PL: A lot better.
GOB: The one I remember the most and saw first hand is the Xfinity iPad app that Comcast has, where you can search easily and integrate it with Facebook and invite people to watch at the same time.
PL: And you can search by time. You can search by anything. Search is a great methodology.
GOB: Compared to what’s out there right now, Telus’ Optik TV and Bell’s Fibe TV, I mean their guides are better than cable.
PL: Marginally.
GOB: So this type of thing will bring the competitive aspect for cable closer to that, especially with search.
PL: But most important, as we do around here, is the customer. The customer will love it because it simplifies this whole process. If you’re at home with a regular converter, you’re missing a whole lot of things you probably would want to watch, but you don’t know that it’s on, or you don’t know where, why, when, etc. If you can simplify these things and put power into my hands as a consumer, that’s so much better for everyone, for the program producer, and for the distributor.
GOB: Do you know when we might see something like that arrive at Rogers?
PL: Soon, probably. But there’s some battles to be fought.
GOB: There always are.
PL: But it is definitely the right way to go…
GOB: … Are you worried, with what we’re talking about with these new devices, about cord-cutting where people are just going to say: “Forget it, I’m going to go off-air, and internet. The end. I’ll keep my broadband subscription and forget about paying however many dollars to pay for all the rest of the channels.”
PL: We’re very concerned about that. That’s why we want to advance other forms of getting the service. For example, the iPad – so we can say to people, “We’re working hard to make this available to you in any possible way that you can get it.” That way, they’ll hopefully maintain their connection with us.
GOB: Yeah. The fewer roadblocks they have to get the content, the happier they’ll be with Rogers.
PL: That’s right. So RODO has to be improved. All these things have to be improved to make it easier and easier and easier for customers to get the service when they want it, how they want it as quickly as possible, as easy as possible.
ON FUTURE GROWTH
GOB: I’ve got one more question for you that I’ve been asking a lot of people I talk to, and it has to do with our mature industry and where the growth is going to come from. You’ve plateaued at cable subscribers, plateauing at home phone subscribers. The growth in internet is slowing down.
PL: Not Internet usage.
GOB: No, not the usage. I’m just talking signing on customers. Where do you envision more of the growth coming? Do you see it from mergers and acquisitions, perhaps buying Astral or Maple Leafs Sports, or buying Cogeco, or is there another level of services coming that aren’t quite visible yet?
PL: The growth pattern for wireless is limitless. It’s huge. We’ve barely scratched the surface of how much we’re going to be using wireless technology in the next five to ten years. That’s going to be a huge driver. It includes commerce, using your device to be a personal identification device, for transactions and things like that, as well as just a tremendous amount of usage. More usage for whatever we do in life, and then of course, there’s the machine to machine (communication) that’s happening all over the place.
So everywhere you turn, you hear about new uses for wireless technology, and it’s quite amazing what it does. So that, plus the Internet usage, I think are huge areas of growth. Huge.
GOB: Any comment about the merger and acquisition side of the growth curve?
PL: No.
GOB: I’ve seen your company is on the record as a “no comment on the Maple Leafs thing. Cogeco has been a non-stop acquisition rumour for what, 15 years? No thought to go to Bermuda or elsewhere like the Braggs have?
PL: No, we’re a domestic company. It just takes so much money to build good systems in this country. We can’t afford to do anything else. We wish we could because we could, if we had the money, have been a major player in the United States. We could have been number 2, 3, 4 in the U.S. We just plum ran out of money.
GOB: Well, hindsight is 20/20. You had Unitel and Cantel and other interesting things going on up here (when Rogers sold its U.S. interests), right?
PL: Yeah. But honestly, I used to tell (former British Columbia premier) Gordon Campbell this. We pump about $200 or $300 million into BC over a period of one or two years. The same amount of money is spent on the best, most modern pulp mill that ever existed. If we put that into B.C. every year or two – a pulp mill or a lumber mill or quarry or factory or something like that where people see hundreds of jobs created – we’d be heroes.
But the fact is that we put all this stuff in, and no one sees anything, really. We spend almost $1 billion in wireless every year, and slightly less than that on cable. We pour it into the ground. We just pour it, or into the air, whatever. And no one sees it. They see the results, the outcome, where the service gets better and better every year, more channels, more this, more that. More things you can do.
But they don’t really see the amount of capital that has to be deployed in these networks. It’s something.
…One thing for sure is our business on the demand side, no worries. What we have, people want. In a recession, in good times, in bad. Whatever the case. They want what we provide. And so it’s very good in terms of our future.
