TORONTO – It’s a little complicated (and raises the spectre of the long-gone iCraveTV), but a Bell Canada injunction says VMedia can’t apply the BDU regs to its new OTT vice service.
Bell says that the independent ISP and BDU is in the wrong by claiming it can distribute CTV and CTV2 as a retransmitter under section 31 of the Copyright Act.
“There is nothing in the Act, or otherwise at law, that permits VMedia to do so,” Bell writes in an October 3 injunction filed with the Ontario Superior Court of Justice against the recently announced VMedia Roku service. “To the contrary, the argument that the Act permits a service provider in VMedia's position to engage in this conduct was explicitly considered, and rejected, by Parliament nearly fifteen years ago by way of specific legislative amendments targeting services that streamed television over the Internet while claiming the benefit of a retransmission shelter.”
The media and communications giant asserts that the retransmission shelter is only available to licensed cable retransmitters (this includes IPTV and satellite) and explicitly excludes unlicensed streaming services delivered over the public Internet. VMedia’s new online service, described by Bell as the New Internet-Delivered Service, doesn’t meet the criteria for inclusion under the shelter.
“In offering the New Internet-Delivered Service, VMedia is no more ‘a person who performs a function comparable to that of a cable retransmission system’ than Netflix or YouTube or any other video application available on the Roku box,” says Bell, referring to the definition of a retransmitter.
The company doesn’t have an issue with VMedia offering CTV and CTV2 as part of 'The Skinny', VMedia’s entry level TV package distributed to its BDU subscribers via the VBox. But because the Roku-powered service is being delivered over the public Internet, VMedia “is acting outside the ambit of its BDU licence” and is “instead operating as a new media retransmitter.”
(For its part, VMedia vehemently disagrees and has launched its own legal proceedings against Bell, as we wrote earlier this week.)
A 2012 order from the CRTC and referenced in section 31 of the Copyright Act defines a new media transmitter as being any person that broadcasts services that are delivered and accessed over the Internet, notes Bell in the court filing. It adds that VMedia acknowledges this fact it in its application before the same court.
There are other reasons why VMedia’s service isn’t covered under the shelter provision in section 31 of the Act, says Bell. Just because VMedia has a BDU licence doesn’t mean it can offer an OTT service. This section doesn’t give VMedia “blanket immunity” to carry on activity outside the scope of its BDU licence.
“The New Internet-Delivered Service bears no resemblance to this licensed activity.” – Bell Canada
Bell points out in the injunction application that when VMedia obtained its BDU licences, it agreed to key provisions. It would operate a “private and managed” network and “would not deliver its service to Internet users at large.” In agreeing to do so, only VMedia subscribers would be able to get the services via the VBox and it would be an authenticated offering. As well, the BDU service is to be delivered over an Internet connection controlled by VMedia.
“The New Internet-Delivered Service bears no resemblance to this licensed activity,” argues Bell.
In addition to being a unlawful service, VMedia is in breach of its agreement to distribute Bell Media content. The company says VMedia has the right to distribute Bell content to its BDU subscribers over the Internet as long as it’s done on an authenticated basis. By offering the service over the Internet to anyone with an Internet connection and a Roku device, it’s in breach of that contract.
VMedia is also putting Bell in breach of agreements it has with program owners. For example, Bell has deals in place that prohibit it “from offering, or allowing its sublicensees to offer, the licensed copyright content over streaming services with the attributes of the New Internet-Delivered Service.”
Other broadcasters are also concerned that VMedia is putting them offside with their content agreements. They worry that VMedia is streaming programs that they themselves don’t have the authority to do.
Bell argues that ordering VMedia to immediately cease from offering the service will have little impact on the independent ISP and BDU because subscriber count to the online service is likely limited as it launched two weeks ago. On the other hand, Bell fears the impact on it could “become a permanent reality” because other BDUs may feel compelled to offer a similar service or “demand that Bell Media authorize them to distribute CTV and CTV2 in the same, over the top manner as the New Internet-Delivered Service does in order to fairly complete with VMedia.”
Bell and others believe that only as a broadcast distributor can VMedia avail itself of the compulsory licensing regime, which allows it to grab over the air signals and redistribute them but also requires it to pay copyright royalties which go to nine collectives representing groups such as the broadcasters, sports leagues and songwriters. The big rub is VMedia’s Roku offering isn’t considered a BDU by broadcasters and copyright owners, so then no fees are gathered for the copyright collectives, nor has VMedia cut any streaming deals with the broadcasters.
“Are they a BDU out of compliance or are they an OTT trying to take advantage of the retransmission regime that they’re not entitled to take advantage of?”
VMedia can’t have it both ways, say broadcasters. It can't be a BDU and an OTT provider, but instead has to abide by the separate rules which apply to each.
“Are they a BDU out of compliance or are they an OTT trying to take advantage of the retransmission regime that they’re not entitled to take advantage of? The content owners still need to get paid,” said a source who asked not to be named.
Bell isn’t the only broadcast distributor unhappy with VMedia’s new service. Sources say that CBC/Radio-Canada is looking into the matter while Corus Entertainment is examining its options but isn’t yet ready to take action. Rogers Communications has, however, sent a letter to VMedia expressing its concern regarding the Roku streaming service.
“We don’t think it’s right for the folks who create and produce great City and OMNI shows every day to not get paid for their work, so we’ve asked VMedia to stop their unauthorized distribution of those channels,” Rogers said in a statement.
George Burger, co-founder and a director with VMedia, maintains that the company isn’t skirting any rules. Based on the company’s interpretation of the Copyright Act, VMedia is entitled to retransmit over the air signals without authorization from the channel owners.
“The bottom line is we are a licensed BDU and as a licensed BDU we’re entitled to retransmit signals. There is nothing in the Broadcasting Act, the regulations or even our conditions of licence which would make what we are doing unlawful under the Broadcasting Act,” he told Cartt.ca in an interview Wednesday.
“You simply cannot go around flapping your arms, moaning about Netflix which is stealing everybody over the top and not try to engage them on their own battlefield. It simply doesn’t make sense.” – George Burger, VMedia
Aside from the legal wrangling, Burger insists that it’s in the best interest of broadcast distributors and content owners to start delivering television over the top as soon as possible. “You simply cannot go around flapping your arms, moaning about Netflix which is stealing everybody over the top and not try to engage them on their own battlefield. It simply doesn’t make sense,” he says.
The vertically integrated entities want to prevent this because “it impinges on their BDU business. But the reality is they are partly wrong on that because the people we’re attracting are cord cutters and soon to be cord cutters,” explains Burger.
Think of the advertising revenue broadcasters are losing when people cut the cord, he adds. “If we can reach 10,000 more people who would otherwise be out of the system, that’s 10,000 homes of more ad revenues. How can that possibly be bad for anybody?” he asks.
With files from Greg O'Brien
