GATINEAU – Independent ISP TekSavvy Solutions told the CRTC Tuesday it would love to become a broadcast distributor because that’s what its customers are asking, but added it can’t enter the game at the moment because the cost of bandwidth is simply too high.
According to a study from Nordicity, the bandwidth costs for the ISP to provide basic service would come to $80 if networked PVR capability was included. “That’s just the bandwidth – before we pay for content or anything else,” said TekSavvy CEO Marc Gaudrault in his opening remarks to the Commission’s Let’s Talk TV policy hearing.
He delved into the telecom arena in his presentation, noting that telecom tariffs are one of the obstacles to the company’s ability to become a broadcast distributor. The capacity-based billing decision instituted an appropriate model but uses the wrong numbers, added Gaudrault.
“It’s the right model, but it seems like it’s got the wrong numbers plugged in. The bandwidth costs to offer the kind of non-crippled, good-quality TV service we’d like to offer are prohibitive,” he said, adding that it doesn’t make sense to not have a discussion about telecommunications tariffs in this hearing, too.
The TekSavvy CEO pointed to multicasting as one of the inconsistencies of Internet service regulation. In one particular 2009 telecom hearing, it was considered a broadcasting service, yet on another, it was determined to be in the domain of high-speed Internet. In this case, multicasting is considered out of scope of that particular proceeding.
“If broadcasting-related Internet Protocol carriage is out of scope when we are talking about Internet under the Telecom Act, and is out of scope when we are talking about video distribution under the Broadcasting Act, then where does it belong?” he asked. “The underlying costs of providing BDU competition have got to be something you can look at under the Broadcasting Act.”
“If broadcasting-related Internet Protocol carriage is out of scope when we are talking about Internet under the Telecom Act, and is out of scope when we are talking about video distribution under the Broadcasting Act, then where does it belong?” – Marc Gaudrault, Teksavvy
TekSavvy is taking the idea of becoming a BDU seriously. The company announced at the hearing that it has acquired ownership of Hastings Cable Vision, a licence-exempt cableco operating in Madoc, Ontario, primarily to figure out video from an operating BDU perspective.
THE CRTC STARTED TUESDAY by hearing from provincial Crown Corporation SaskTel. The company argued in its presentation the Commission should abandon ideas regarding a small basic package whether it be price capped or skinny, and said its customers are not demanding pick and pay.
Stacey Sandison, CMO at SaskTel, said a-la-carte packages would only “introduce complexity” for customers. Besides, she added, customers like the packaging options the company already offers so any move to break that up “I think just adds noise to the system and become more complex to explain to our customers.”
Sports services was raised during SaskTel’s appearance, too. Unlike its western Canadian brethren Shaw Communications and Telus, who would like better conditions in wholesale contracts so it becomes more affordable to sell sports services outside of basic packages, SaskTel argued keeping sports in its entry level tier is important to its business and is desired by what it considers a significant part of its customers. It carries two sports services in its basic package. There are practical reasons for this, said the company.
Prior to including sports in basic, SaskTel used to see a run on customers subscribing to the sports channel just to watch Saskatchewan Roughrider games and then see a similar rush of customer calls cancelling the service after the game was over. This is costly for any BDU.
Under questioning, the company appeared to be less concerned about rising rates for sports services and the potential impact on the basic retail price. SaskTel acknowledged that the rate for one of its sports services is expected to increase, but argued that there will always be people who are cost conscious.
TWO OF THE NEWER independent broadcasters also appeared on Tuesday. Both DHX Media (the new owners of Family Channel) and Gusto TV welcomed greater competition and more consumer choice, but said there still needs to be protections for the smaller independents to ensure they are carried by the large distributors.
DHX said it prefers the current system whereby BDUs have developed a range of packages giving their subscribers a wide range of options. Opting for a la carte or build your own packages would result in a decrease in penetration with the result being less money to spend on Canadian programming, the company argued in its presentation.
It added, however, that it isn’t looking to be insulated from “consumer choice or dynamic competition,” but rather needs time to adjust to new realities.
“We’re spending a lot of time talking about the size and shape of the bottle and not the quality of the wine that goes into it.” – Chris Knight, Gusto TV
Dana Landry, CEO of DHX, described this as a “bridge – not wholesale leap – that allows for a transition to a system with greater choice.” This transition period needed would be three years and would essentially fall in line with the company’s next licence renewal.
For Gusto TV much of the conversation to date in the hearing has focused on flexibility rather than choice.
“What’s the point of multiple packaging options if you’re limited in your choice of channels that go into the packages?” asked Chris Knight, president and CEO of Gusto TV. “To use a foodie analogy, we’re spending a lot of time talking about the size and shape of the bottle and not the quality of the wine that goes into it.”
Gusto TV argued in its presentation the Commission must ensure there is choice from all broadcasters, not just from the vertically integrated companies by mandating enforceable provisions that allow independent channels to compete.
“Not because we’re fragile hothouse flowers,” said Knight, “but because it is in the best interest of the Canadian TV viewer to have real choice – not simply VI choice.”
The hearing continues Thursday with a wide variety of independent broadcasters taking the stage, including Stingray Digital, Channel Zero, Fairchild Television, Ethnic Channels Group and the Small Market Independent Television Stations Coalition.
Follow the hearing live on cpac.ca, crtc.gc.ca or on Twitter via @gregobr and @CarttCa
