As the CRTC gears up for yet another round of hearings later this fall that will address the fee-for-carriage issue, the most recent batch of submitted comments contains what may constitute an interesting shift in policy by the Conservatives. Earlier this year, the Standing Committee on Canadian Heritage conducted extensive hearings on the future of local broadcasting. Fee-for-carriage (ie. a requirement for broadcast distributors such as cable and satellite to pay for retransmission of over-the-air signals) figured prominently in the discussion. The Conservative members of the committee issued a dissenting opinion in the final report and offered up the following:
this dissenting report must now indicate our most fervent and rigorous opposition to any potential fee for carriage system, either negotiated or imposed, that would have a detrimental effect on the consumer. We believe it is fundamentally unfair to expect Canadian consumers to pay new and substantial charges each month to their cable or satellite distributor to reflect such a system.
Fast forward several months later and Conservative MPs Ed Holder (London West), Laurie Hawn (Edmonton Centre), Bruce Stanton (Simcoe North), Patrick Brown (Barrie), Gord Brown (Leeds-Grenville), and Lois Brown (Newmarket-Aurora) have each submitted comments to the CRTC public hearing process on the issue. Each MP sent roughly the same letter, suggesting that they all come from the same playbook. The new message:
Consumers already pay for local television in their monthly cable bills, as it forms part of the fee which consumers pay under their "basic" service rate. But there is no return from cable companies. In other words, consumers are billed by cable companies for local television, but cable companies do not compensate local television stations. A rebalancing of this system is needed in order to sustain local television and service to consumers. The Commission's stated intent of implementing a negotiated, fair market value for local signals is essential to continued local service.
While these two positions are not necessarily conflicting (cable and satellite companies could pay a fee-for-carriage without passing along the fee to the consumer), the recent experience with the LPIF suggests that new fees are invariably passed along to the consumer. To remain consistent (ie. FFC but no new consumer fees) would seemingly require considerable market intervention into cable and satellite billing rates to require the imposition of a fee-for-carriage system and a requirement that those additional fees not be passed along to subscribers.
Simple Solution
There is a simple solution to all of this. Cable and satellite companies should pay everyone for the signals they sell to their customers AND customers should be free to purchase ONLY those signals they wish to watch. In other words, completely eliminate the mandated “Basic Service.” Give consumers the complete freedom to pick and choose what they want to see and what they’re willing to pay for.
Yup, this will raise the cost of cable/sat service, which in turn will drive more people to cancel their service to get their content from Bittorrent sites instead. This is the same effect caused by; DVD encryption, PVR subscriptions, delayed releases in certain markets, and channel bundling.
Adding extra cost and/or inconvenience for the consumer will only drive them away that much quicker.
I was pointed to this series of videos recently which is very illuminating: http://www.youtube.com/watch?v=LxCoCTc3T5Q
Of course the more they drive people to the filesharing sites, the more they can justify their draconian methods to protect their monopolies.
Whipping for Rogers…
The real issue here is why did the Heritage Committee report contain the dissenting opinion from the Conservative’s to begin with? The opinion was not supported by the Conservative caucus. Rather, the position seemed to have been forced on the Tory backbench by the Parliamentary Secretary to the Minister of Heritage… Why’s that, eh? It is good some of the Tory MPs are standing up for themselves.
Isn’t this reversed?
Shouldn’t the broadcasters be paying the cable companies for access to a larger advertising market? National distribution vastly increases the broadcaster’s ad revenue potential.
Madness
Distribution of TV isn’t cheap, no matter which method you use. Put up a broadcast mast – not cheap to build or to run. Put up a satellite – not cheap. Put down cable – not cheap either. Internet – bandwidth costs too. P2P – ok, we’re getting cheap 🙂
For years cable companies have helped local broadcasters by redistributing their content, at their own expense (see above – not cheap) for their mutual benefit. The local broadcaster reached a broader market without added infrastructure costs to themselves, thus allowing them to get better advertising revenues from their larger potential viewership, and the cable companies could offer more content to their customers to encourage them to subscribe.
Now the local broadcasters want their cake – the larger market, and it eat it – to be paid by the cable companies for it! Ludicrous beyond belief and a pure cash-grab on their part.
Now, if the cable companies replaced out all the adds with their own and took advertising revenue too, I could see the local broadcaster’s point. But this is not the case (is it?)
Meh
The local TV tier should have been FREE to begin with. The distributor compelled to do so in exchange for the rights of way. The local broadcaster in exchange for the wider reach allowing them to charge ‘better’ rates for commercials.
Not that complicated. As usual, both sides choose instead to turn a win-win situation into yet another opportunity to gouge the customer…
I trust the CRTC will file them all under “form letters”?
Fee for carriage will kill over-the-air
If networks earn a substantial portion of their money from cable companies (instead of advertising, as it is now), they will be dis-incentivised to continue supporting their expensive broadcast networks. Kill off OTA, and they get two paychecks instead of one. As long as they make all their money from advertising, networks shouldn’t care how their content gets broadcast or redistributed -the more eyeballs the better.
Lois-brown (Newmarket) wont even respond to her own constituents. Its amazing that she found the time to respond to this.
A lot of cable spin in the comments here: “Shouldn’t the broadcasters be paying the cable companies” right, just like HBO should be paying the cable company for access to the “broader advertising market”. I should get HBO for free. CNN too. It’s not that complicated to regulate a basic service for Canadians. Every time the price for basic goes up, it requires CRTC approval after a public review. There should be transparent accounting for consumers on what is included in the basic rate as well. Record $10 billion in revenues last year for the BDUs. Next thing you know, Rogers, Shaw, etc., will start claiming increases in Hydro rates are an unfair TV tax on consumers. Copper price goes up, oh, another unfair TV tax. Green fees go up at the country club for the executives, well there is another unfair TV tax.
No spin
Billy Bob, you are mistaken.
Your point would be valid if local stations were optional as HBO and CNN are.
You don’t have to pay for HBO and CNN and neither of these are available over the air.
Local stations are available OTA and the rules for cable providers state that they MUST provide all local stations and national OTA networks.
Now, tell me that I can opt out of receiving and paying for any local station I don’t want, then I’d say sure, let them demand a piece of the cable pie. But they want to continue forcing people to subscribe to their broadcasts and force the cable companies to pay them for the privileged.
This is a case of having your cake and wanting to eat it too. Not nice!
Community channels, CPAC, not available over the air and they get fees, why not local tv stations. It works in the US and it can work here. You are right about customers having choice. Customers deserve choice, including in TV service providers.
The problem will be…
.. a 1% raise in fees for the cable company will translate in a 10% raise for consumers.
OK, let me get this straight. The local broadcasters are currently spending a great deal of money to build and operate OTA transmitters in order to give their signals away. At the same time, they are saying that they cannot afford to continue letting someone else absorb the costs of distributing those signals. Does that make any sense?
Given that the cable companies are required to carry the local broadcasting, and a fee for it is mandatory as well, this is not a ‘business deal.’ It’s a forced transfer of money from the general public to the local broadcasters. Most people call that a tax. why don’t we eliminate all the waste of processing the payments through the cable company, and simply give the local broadcasters a direct subsidy from the government.
Town hall meeting idiots
To all those town hall meeting attendees who lapped up this complete BS from the “providers”. Time to go underground and ditch cable.
I download all of my programming now. I don’t need cable, just an internet connection..lmao. I’m not paying for “local TV”. I watched the CRTC hearings on this a few months ago. CTV took on more than it could chew with respect to buying out CHUM. It’s not the consumers fault or the cable providers. Start managing the stations right, and maybe, just maybe they’ll survive.
What happened to the old neo-con proverb about less government intervention? Geez, we just went through a copyright consultation with respect to government involvement. Why not leave free markets alone for a change and let them sort themselves out. Those that can’t will die off, and good riddance. The tax payers nor cable providers should be on the hook yet again for mis-management. How much more in debt do the tax payers have to go? Look who’s in charge of industry..the same dude that screwed up our health care in Ontario. Time for another election, lets kick out these hill-billy religious nuts from the west out!!
There is leverage on Canadian cable providers like Shaw and Rogers systems to ensure tht they do not impose new charges on consumers if fee for carriage funding to broadcasters is approved. The cable companies have consistently. since the 60’s, failed to meet their local programming commitments, but the CRTC has applied waivers on their conditions. A threat to lift the waiver if costs are passed on, and to open competition would resolve the problem quickly.
Local TV is now worthless
Im sorry you guys have missed why Fee for Carriage is another corporate money grab. When was the last time you saw any of the TV conglomerates improve local TV programming. Ive watched local TV here in Victoria BC get gutted over the years. CHEK is going to employee ownership because there owners were just going to shut the station down. The staff saved it before CanWest Global just put it to death. When it first opened The New VI tv had 3 times the staff it had today and did lots of local programming. That was what they promised to do as part of getting the license to operate, but once they were in operation they have gone through 2 major “restructurings” which meant gutting programming and local air time. And a lot of local folks were canned.
So heres what frost my butt. They cant afford local TV, but they can afford to buy TV shows and NOT show them, but buy the exclusive distribution rights so other canadian broadcasters cant show the program either. Buying it to not broadcast is a savage waste of money and some of that came out of the money the cable company does pay these scumbags.
I think its time for the real free market to come into effect. If the companies cant afford local TV then let it die. its not making enough money by its Ads, take it behind the barn and put a bullet in its head. No more of my money for the same crap. you know damn well that Fee for carriage will result in the price being passed on to us, and we are spending more money to networks who have no intention of providing better local service. They guys deserve to go out of business. someone else will take their place who can think about programming we give a hoot about.
Don’t forget about satellite…
Satellite providers are in this mix too. You can’t tell me that they include ALL of the local channels in my area — that’s one of the reasons I’ve hesitated moving to satellite from cable.
Why don’t we make it a level playing field? The non-OTA providers today must negotiate with the “cable channels” like TSN and CNN while trying to figure out how much to charge their customers for the service and making sure the revenues from subscribers minus the costs to the “cable channels” makes them a profit. So why don’t they include the local OTA’s and let the consumer decide what they want.
Consumers are paying the cable and satellite companies to provide them with the local television stations so that they don’t have to go to the expense of putting up their own antenna systems. Since these companies are getting paid to provide this service should they not have to pay the local TV stations for using their signal which they’ve spent millions in equipment and hardware alone to broadcast?
The CRTC should remove the requirement of satellite and cable carriers to provide local programming. This will force them to have to negotiate service agreements with these local stations and to determine their customers’ needs and wants. If they want to argue the “supply and demand” economics, then make the rules the same across the board.
R. Canuck
If local tv goes where do we get our local news from. Who is going to cover local news, sports, politics. You name it. Have you ever watched a community cable channel. Its a joke. No production value horrible audio. It amazes me that people want to ditch CTV and Global and CTV while they are more than ready to watch imported american tv with most of the same shows. I fully support our Canadian broadcasters and if I have to pay another $1.50 on my $200 cable and internet package to do it that’s just fine with me.
Putting the hyperbole from both camps aside for a moment – and ignoring the existence of the two satelite providers – the fact remains that the top four players in the Canadian cable industry (Rogers, Shaw, Videotron and Cogeco) accounted for 6,795,000 subscribers in 2006 (the most recent figure I can find from the CRTC). This represents a gross monthly revenue of over $228M – or over $2.7B yearly – for BASIC service alone, forget the higher-priced specialty tiers. This basic service contains the local feeds that are at the centre of the debate.
Also putting aside the unquestionably ill-conceived and arguably unbelievably greedy concepts of “convergence” and debt-funded expansion from the private broadcasters – primarily CanWest and GlobeMedia – which proved to be the undoing of both – the fact remains that the cable industry has for years benefitted from the production work of others.
Yes – the capital expense of the cable industry is huge. Yes – they should operate with an expectation of making a profit. But not by using the product of the work of others without paying for that work product.
Perhaps we should forget the red herring of the national broadcasters – again, primarily CanWest and GlobeMedia – buying redundant programming from foreign producers (primarily the USA) rather than supporting Canadian production. Perhaps we should, instead, focus on the issue of losing our local broadcast voices across the country – voices that, once lost, will probably never surface again.
It’s tough to make a case for controlling the cable industry while the problem, in large measure, is a result of runaway greed from some of the private broadcasters. Ask the laid-off Global workers who now find themselves listed as unsecured creditors how they feel about the Asper dream of a media empire. But the fact remains that fee-for-carriage is NOT a tax – it is a bill, long overdue, for product being used without compensation.
Perhaps once that issue is confronted and settled then we can all move on to debate the very real problems arising from allowing virtually all of the Canadian media to be controlled by a very small group of companies.