I READ WITH INTEREST your commentary concerning the dispute between the independent BDUs (CIDG) and Bell Media.
Like Kevin Crull, the CEO of Bell Media, I too have “walked on both sides of the fence” (as noted in his letter of March 28). I was the president of the Canadian Cable Television Association and the CEO of Star Choice, Bell ExpressVu’s principal competitor, now known as Shaw Direct. More recently, I was the head of English services at the CBC, which, like Bell Media, includes a big conventional network and a number of specialty channels. Where Mr. Crull’s experience leads him to conclude that CIDG’s position would lead to “lower quality programming, less variety and less choice”, I draw the opposite conclusion. The result of accepting Bell Media’s position would be significantly less choice and more cost for consumers.
Bell now owns the CTV network and over 30 specialty channels – including, of course, “must have” channels like TSN. This, then, is the first time that the independent BDUs have had to negotiate access to the CTV services since Bell took control of them. Bell’s ownership changes everything. The members of CIDG must now negotiate with one of their biggest competitors for access to the channels that constitute the very basis of their businesses. It is not hard to see that Bell has both the incentive and the opportunity dramatically to disadvantage its competitors.
The Commission dealt squarely with this issue in the Vertical Integration hearing and provided a Code of Conduct for negotiations between independent distributors and powerful vertically integrated companies such as Bell. Now the CRTC’s determination to stand behind its decision in the Vertical Integration decision is being tested by Bell.
Bell’s key demand is that packaging of its services by independent BDUs must stay exactly as it was in January 2011 throughout the length of the new contract. Even if that existing packaging is maintained, the BDUs cannot offer Bell services in new, incremental packages without Bell’s consent. That means Bell gets advance notice of – and a veto – on any of its smaller competitors’ new package offerings.
CIDG’s customers – like customers everywhere – want flexible theme packaging and more choice. Bell has the right to make more flexible packaging and choice available to its customers, but insists on a veto over whether CIDG can do so. What is Bell’s incentive to agree when a denial of consent enables Bell, as a distributor, to offer theme packages that its competitors cannot?
Bell also wants to insist that the distribution of TSN be subject to minimum penetration requirements. In effect, they want the members of CIDG to force TSN on customers who do not want it. To quote Mr. Crull again, this is clearly an excellent example of “more choice”.
Bell has now raised the concept of a penetration-based rate card, though the details (such as the price) that have been disclosed so far are very limited. All indications are that Bell’s penetration-based rate card will impose practical limitations on competing BDUs not through obvious restrictions on packaging but, rather through impossible pricing. The choice that Bell appears to be forcing on the CIDG members is that if they want to offer their customers more choice, they can do so only by charging their customers dramatically more money.
Finally it is important to point out that Bell has refused to agree on access to the multi-platform and non-linear rights to their channels. Mr. Crull said that he might want to withhold them, so that he can go directly to the CIDGs’ customers. This is a recipe for anti-competitive behavior and a consumer nightmare. One thing everyone knows is that Canadians do not want to have to subscribe to multiple service providers to get their television show. How do we explain to them that they can go to one BDU to get their favorite channels on their television set, but must go to another if they want to watch them on their tablet and another still to watch them on-demand? That is hardly a consumer friendly proposition.
Bell claims that if the CRTC does not accept its position and limit consumers’ choice or force them to pay dramatically more, the broadcasting system will be in peril. This is clearly nonsense. A great broadcasting system must be based on giving Canadians what they want. If we do not do so, they will simply leave the broadcasting system altogether and get their television services from over- the-top operators. When that happens we will have really damaged the broadcasting system.
Our industry and Commission policy decisions have been promising choice to Canadian customers for well over a decade. For the sake of our industry, we must deliver that choice: the customers have already decided.
Richard Stursberg
Senior Advisor on media and entertainment
Telus
