GATINEAU – Telus Corp., a relatively new entrant into the broadcast distribution field with the IPTV service it launched in 2006, says it would prefer the regulatory status quo than a descent into a “rabbit hole of new regulations for problems which simply don’t exist”.
In a presentation before the CRTC’s hearings on broadcast distribution and specialty services Wednesday, Telus’ vice-president for wireless, broadband and content policy Michael Hennessy said he was concerned that “false assumptions” could persuade the Commission to add regulations when what the industry needs is space to flourish.
“The future has to be based on the consumer,” Hennessy said. “We believe we will best serve consumers by partnering with Canadian broadcasters to unleash the full potential of TV, whether through creative packaging or exploiting on-demand platforms.”
However, he said Telus rejects the idea of fee for carriage (except in the case of Quebec broadcasters such as TQS). It also rejects a minimum basic package, and consent for distant signals, as such fixes “would have the effect of reducing competition by making it more difficult for a new entrant like Telus to win customers.”
“While Telus supports the maintenance of key regulatory requirements related to the current linear TV environment, we firmly oppose adding any layer of regulation to new, developing platforms such as video-on-demand. These platforms must be given a chance to flourish without additional constraints in order to provide a viable Canadian alternative to other platforms ranging from the black market to the internet.”
Telus is investing heavily in new platforms, such as VOD and SVOD, to enrich the television experience, added Maria Hale, Telus’ vice-president of digital content. The technology can provide an alternative to over-the-top internet services and “extend known Canadian brands into the interactive space”. It can also support highly-targeted ads, which would increase the value of the programming rights held by broadcasters, she said.
Hale grabbed the attention of CRTC Chair Konrad von Finckenstein, when she referred to the concept of a network personal video recorder (NPVR) that would allow audiences to access on-demand programming from existing branded linear channels.
“That means on-demand becomes part of the overall broadcaster experience,” she said. “NPVR is not a pipe-dream; distributors like Comcast in the U.S. are already creating business models for this strategy.”
Von Finckenstein was intrigued by the fact that no other intervenors have referred to NPVR, adding Telus had just “put a regulatory issue on the table that we didn’t even know about.”
Later in the day, Dan McKeen, co-CEO of Bragg Communications (owners of MSO EastLink) said his cable service is looking at the technology and expects to offer it at some point.
(Ed note: Network PVR is on the radar screen of all terrestrial distributors, including Canadian cable companies.)
In rejecting demands for carriage fees, Hennessy called it a “fix to a problem the Commission addressed at great cost in terms of diversity of voices with the exit of Alliance Atlantis and CHUM from the system”.
“As a result of consolidation, the conventional ownership groups are now stronger and more profitable than ever. Accordingly, there is no need to force consumers to finance these billion-dollar consolidations through higher fees for basic service,” Hennessy said.
When von Finckenstein insisted on the point, Hennessy offered a more blunt reply:
“I totally believe it is fundamentally wrong to have approved the kind of consolidation that the Commission did, and then allow the broadcasters to put a portion of that debt on the backs of consumers. And that’s exactly what they want to do and that’s wrong.
“I find it remarkable that broadcasters go: the specialties don’t count. Now all the program rights we acquire and replay on all those specialty channels, but don’t worry about that. Don’t look at the 35-40% PBIT on the specialties. Don’t look at the fact we now control most of the market and cross-promote, those revenues don’t count,” he said. “When their revenues stop growing, then it will be time for them to come back and beg for more money.”
However, both Hennessy and Mainville-Neeson agreed a different approach could be taken in Quebec.
Questioned by Michel Arpin, CRTC vice-president of broadcasting, about TQS’s financial problems and its demand for carriage fees, Mainville-Neeson said noted that Quebec’s smaller market means a smaller pot of potential revenue. However, its four main networks draw sizeable audiences for original programs
“So can the Commission have a different conclusion for the English and French market?” Arpin asked, noting the Act allows for such an approach.
“Absolutely,” said Hennessy, adding Prime Minister Harper has recognized Quebec’s unique status. “If Stephen Harper can go there, anybody can.”
Turning to the issue of distant signals, Telus’ director of broadcast regulation, Ann Mainville-Neeson, said there is no need for change, as there is already a satisfactory compensatory regime in place, which can be re-negotiated at any time between the parties.
Telus also supports maintaining the current access rules for analog and category one digital specialty services, and maintaining existing rules for genre protection, she said. And since Telus is focussed on VOD, it does not want any increased regulation on VOD services.
Where change is necessary, said Mainville-Neeson, is on distribution and linkage rules, which should be eliminated in favour of a simple preponderance rule based on services received by each subscriber.
She also outlined the company’s proposed model for a new advertising framework, to allow for new incremental revenue for Canadian rights holders and distributors.
Under the Telus proposal, new ad opportunities “can only stem from content sourced from Canadian rights holders with their explicit consent”. This provides incentives for distributors to pursue rights through Canadian broadcasters, and for Canadian broadcasters to make their content available on-demand, she said.
Glenn Wanamaker is Cartt.ca’s Quebec Editor.
