Broadcaster Plan Involves More Than Just Fee-For-Carriage

In the weeks leading to the CRTC hearing on broadcasting licences, Canadians were inundated with splashy advertising campaigns claiming that new fees for local signals were either a TV tax or would save local television.  With all of the major broadcasters and cable companies appearing before the commission, the fee-for-carriage (or value-for-signal) issue unsurprisingly took centre stage at last week's hearing.

Yet those convinced that the broadcaster plan was limited to a new fee were in for a rude awakening.  My weekly technology law column (Toronto Star version, homepage version) notes that fee-for-carriage is only part of the story, as broadcasters are also seeking to block U.S. signals, leave some Canadian communities without over-the-air television, and delay the transition to digital television transmission until 2013.

The prospect of blocking U.S. television signals will come as a shock to many, but both CTV and Canwest, Canada's two largest private broadcasters, have asked the CRTC to establish a new program deletion policy. 
For many years, Canadian broadcasters have benefited from simultaneous substitution, which allows them to air U.S. programs at the same time as U.S. broadcasters but to substitute their broadcast (complete with advertisements) on both channels.  That policy is the reason programs such as House or Desperate Housewives air simultaneously in the U.S. and Canada, creating an important commercial advantage for Canadian broadcasters.

The broadcasters now wish to expand the simultaneous substitution policy with program deletion. It would provide that when a Canadian broadcaster purchases the rights to a U.S. program, they would have the right to air it whenever they choose within a seven-day window. The hook is cable and satellite companies would be required to block the U.S. broadcast of the same program if it did not air simultaneously.  

The proposal, which would lead to millions of Canadians regularly encountering blank screens instead of expected programs, would perversely increase the attractiveness of U.S. programming.  Moreover, given the increasing expectation of on-demand program viewing, it seemingly would send more Canadians away from broadcast television to the Internet where there are no blackout messages and most programs are readily available in both legal and illegal forms.

The broadcasters also confirmed some Canadian communities will lose their over-the-air signal as part of the transition from analog to digital. For decades, Canadian broadcasters have used spectrum to transmit over-the-air analog broadcast signals; estimates indicate ten percent of Canadians still rely on over-the-air TV signals.

The shift to digital transmission brings several advantages including better image and sound quality and more efficient use of spectrum that will open the door to new telecom services. Yet the broadcasters are not willing to invest in digital transmitters for all communities, leaving residents of Kingston, Sudbury, Thunder Bay, and Kelowna (among others) without over-the-air signals.

Moreover, the broadcasters admit they will not be able to complete the transition by the August 31, 2011 deadline.  Instead, they now target 2013, four years later than their U.S. counterparts.

A delay necessarily will hold up the availability of new spectrum to be freed-up as part of the transition. This spectrum – known as the 700 MHz spectrum – opens up a host of possibilities for new innovation, competitors, and open Internet access.  For Canadians anxious for new entrants into the wireless sector, delayed availability of the spectrum will mean more delays in spectrum auctions, keeping the market at a stand-still and costing taxpayers billions of dollars in lost spectrum revenue.

If the plan is fully adopted, Canadians would be left with blacked out broadcasts, lost spectrum revenue, and delayed telecom competition.  After a week of hearing from broadcasters and cable companies, it is clear that the hearing is about far more than TV taxes and saving local television.


  1. It’s win-win!
    Consumers lose choice and signal, broadcasters piss off consumers and the cable satellite companies, and we all pay more!

    What’s not to love! Perhaps if the CRTC forces coverage for digital services, I can finally ditch cable altogether and go back to over the air. I’ll get less choice in channels, to be sure, but won’t be paying either of them for the privilege of getting less.

  2. End of over-the-air
    Fee-for-carriage will undoubtedly kill over-the-air broadcast as well as internet-based television. Currently, CTV (for example) is somewhat medium-agnostic in that they get advertising dollars based on “eyeballs” watching the program, regardless of the medium. If this goes through, they will make more money for each person watching on cable than other mediums. Why would they continue to invest in broadcast infrastructure if they would rather people just subscribe to cable and thus pay them twice?

  3. It sounds like the networks want to have their cake and eat it too. I’m already of the camp wondering why they need fee-for-carriage when they haven’t primarily. Isn’t their main source of revenue supposed to be advertising? Does the fact that a 1 hour show only last 40 minutes not allow them enough ad revenue?

    If fee-for-carriage does get implemented, will the CRTC even consider allowing us to pick and chose the channels we get as Michael has previously suggested?

    Should we not also be looking into why these companies are not going to replace all their analog transmission towers? Do the people of Kingston, Thunder Bay, Kelowna, etc. not deserve to maintain their free OTA signals?

    Michael, I believe there’s a typo in your third-last paragraph: you’ve indicated that the transition due date is August 31, 2001.

  4. Jerry Golick says:

    Network Consultant
    First, as far as Bell is concerned, they win either way, since they are both a national/local broadcaster, and a cable operator. So much for competition, eh?

    Next, I am completely opposed to losing are “over the air” signal. At what point did the broadcaster forget that we (the audience) are the product they sell to those who want to sell us stuff. We are NOT their customers.

    Finally, who cares about American TV anyways? How about some more investment in Canadian made TV? How about the national broadcasters investing in their local affiliates rather than dropping big bucks to carry a TV show that is freely available to anyone in Canada who would like to watch it.

  5. Well maybe the CRTC should rule in Canada's best interests says:

    Well maybe the CRTC should rule in Canada’s best interests
    Well maybe the CRTC should rule in Canada’s best interests?

    Maybe the CRTC should look at the number of Canadians who would benefit from having local stations, look at who would benefit from having these other shows literally censored, and look at who would benefit if there is or isn’t fee for carriage?

    In just about all cases it is obvious that Canadians want local stations, they don’t want their shows kicked off the air, they want access to all the TV they can get. So if the CRTC screws any of that up they are siding with a tiny minority because rogers,bell,telus,ctv,global,etc. don’t employ enough citizens to outweigh the rest of us!

    Now the fee for carriage issue? If it keeps local TV then maybe Canadians want it, but if it costs them more then they won’t. The fact is that we canadians have GIVEN and GIFTED infrastructure to Rogers (municipal lands), Telus, Bell, etc. Maybe they should listen to us for once, and pony up instead of investing money into infrastructure we don’t want (VDSL, yet more video on demand), while divesting in infrastructure we do want (INTERNET).

  6. A reminder about infrastructure says:

    A reminder about infrastructure
    A. this is Canada, it is our land. We own it. For some upstart to come along and put up cables and poles it’d be very expensive. Impossibly expensive. These cables and poles are on our land.

    B. The air, the electromagnetic spectrum across which we send radio signals is ours. We govern it. We choose who uses it is. WE CANADIANS MAKE THE CHOICE. It is ours. We have cellular service not just because Rogers offers it, we have cellular service because we allowed them to use that part of the spectrum to offer it.

    Why is this important? Because these companies who “own” or “run” the infrastructure do so with our permission. It is about time they listen to us, they are on our land and in our air, we govern them so let’s do so. If we don’t want the cable rates to go up because LPIF and fee for carriage shouldn’t we have a say? If the CRTC says don’t pass LPIF onto the consumer, shouldn’t the cable companies who run wires through our property comply?

    What should happen if these infrastructure companies don’t?

  7. death knell for Big Telco/Cable/Broadcasters
    Dear “Big Cable / Telco / Broadcaster”
    …”never send to know for whom the bells tolls; it tolls for thee.”
    All the involved parties should wake up and smell the coffee. It is plainly obvious that online viewing is going to dramatically impact your business model, if it hasn’t already. Become part of the solution (your CRTC debacles are counter-productive…), or face extinction. Also, understand that many consumers feel you actually DESERVE to be out-of-business, given your apparent inability / unwillingness to allow the consumer to dictate service demands/requests. Change, or it will be forced upon you…likely to your detriment.

  8. Jerry. Bell currently owns 15% of CTVGlobeMedia. So, yes, they are are a local/national broadcaster… sort of. Rogers is probably more so, they own CITY-TV.

    Small market OTA conversion to digital. The CRTC has already allowed them to do this. Canada just isn’t big enough to support producing TVs with analog tuners. It’ll force people into cable/satellite in those communities as they replace TVs. Of course, they are ignoring the fact that a number of smaller outfits have already made the switch… OMNI broadcasts both OMNI-1 and -2 in the Ottawa area on digital, in addition to analog. SunTV is digital only here. The ONLY english language networks that I can’t receive OTA digital on is Global and CTV. Basically, Global and CTV seem to be asking for a delay to reward them for ignoring the upcoming conversion, paying more than top dollar for “assets” to expand their empire and getting burned when the economy hit the crapper. Not to say that the cable providers aren’t exactly angels in this either. They too have sent profits to the share/unit holders rather than re-invest in the company.

    A reminder: “If we don’t want the cable rates…”. We do have a say. It is called canceling the service and getting an antenna. If you want to have a say in what charges they can pass onto you, uh, isn’t that “having the cake and eating it too” as well? After all, why should any fees that any company pays be passed onto the consumer (for instance, vehicle licenses for transportation on public roads, etc)? I realize that I am being a bit abrupt here, but people seem to forget that corporations exist to generate a return for their owners; providing goods and services to their customers is simply one means to that end (I put it this way to account for patent trolls).

  9. I have had an external attenna for the past 10 years..I receive all the canadian plus all the american networks cbs,,…fox…cw. 2 pbs stations with 4 different feeds…….plus the new movie network station THIS all free and most in hi def except for ctv which not even digital but analog..ITs around 20 stations local and US….plus various tv stations over the net….good bye satelite…wake up people don’t be hostage to the cable and sat companies…GK in Montreal

  10. The moment this mess gets passed I’m canceling my $100/mo Cable subscription and busting out my Terk HDTVa antenna.

    This sucker pulls in like 7 US HDTV network channels from my 5th floor apartment. Who needs local Canadian TV when you live near Lake Ontario.

  11. Jerry Golick says:

    Re: Anon-K
    Many years ago my Dad use to sell TV antennas. I remember having many conversations with him about how the cable companies were destroying his business, basically stealing free signals and selling it as if it was their own content.

    As far as I knew, any modern TV set sold in Canada has to have an HD Tuner. Otherwise, why call it a TV set? Without a tuner it is nothing more than a glorified monitor.

    For myself, I agree with Spike. As soon as my satellite contract is over, I will put an antenna on my roof and say good bye to the cable companies for good. I will probably miss not getting TSN, and I do admit to a secret love of the Food network, but I will certainly be able to console myself saving $1200/year.

  12. A few ideas
    The Canadian local broadcast industry is broken, and just plain Fee-For-Carriage is not going to provide a long-term remedy now that the franchise model has been replaced by a large corporate industry focused on serving two or three major urban centres. Our local Ottawa CTV station has been relegated on BellTV to a shared-station status, with only the local newspots being carried. So, no local advertisers can reach their audience during primetime on BellTV, driving down local advertising revenues. Watch the Toronto station during primetime, says BellTV.

    Tossing out some ideas that may not provide a complete solution (if one really exists), how about:
    – implement FFC, but only for stations whose local population is under 250,000, and have converted to digital. Analogue stations are not eligible.
    – require the reverse (Fee-To-Carry?) for stations serving centres with populations over 250,000. This would have the stations from the large urban centres help subsidize rates to reduce impact on subscribers.
    – require 15% of prime-time advertising timeslots be reserved for local advertising, not national accounts. This will help improve revenues associated with smaller stations, and make corporate management actually consider things outside Toronto and Vancouver.
    – completely eliminate “bundling”, and allow subscribers to select the stations that they want to receive. However, only subscribers from within the large urban centres (>250,000) are allowed to select that centre’s local station. Anyone can select from the smaller stations, allowing time-shifting.
    – pricing structure should favour Canadian stations over American, but if subscribers pay the premium to receive the American channels, they should receive them intact (no substitution or deletion).

    Just some thoughts… I’m sure they need to be refined a bunch to make them practical, but maybe the CRTC can work on that… As it stands, the industry that they’ve been regulating/de-regulating for several decades is crumbling.

  13. John Wunderlich says:

    OTA Rocks
    This fight, between competing corporate interests, is a fight over ad dollars and subscription fees and has very little to do with the expressed or implicit desires of Canadians. However, the growing availability of ad supported Internet media suggests that the fight for subscription fees is going to be, in the long run, the equivalent of fighting over buggy whip sales. Canadians, like most consumers are not going to subscribe to something when alternative choices are free. The last ones standing are likely to be the models that can make a profit from ad supported broadcasting. That will be a) Over the air broadcasts that can sell local ads because they have local eyeballs and b) Internet broadcasts because they will be able to sell ads for very targeted audiences.

    As a side note, my HDTV, with ATSC tuner, pulls in a BETTER HD signal than is available through cable or satellite (no compression). If CBC would just broadcast NEWSWORLD along with their regular TV signal, it would be perfect. That being said, not every Canadian will have the same access to OTA channels as those close to major US markets – but most of them will have access to the Internet.

  14. Farrell McGovern says:

    It’s even worse…
    If networks get their fee-for-carriage (ffc), then how long will it take the US networks that broadcast into Canada to ask that cable and sat companies start to pay for *their* content? In the Ottawa area, the PBS station just across the boarder gets nearly *half* of their funding from pledges from Canadians! Don’t you think they would, for example, like to get paid, rather than have to subsist on pledges? TANJ right they would!


  15. @Jerry
    I have an antenna. And a fairly recent TV (about 5 years old). It does not have a digital tuner; I had to purchase that separately. My point, however, was that the US market is all digital; before long TVs sold in North America will sell with ONLY a digital tuner (not necessarily HD)… Thus the folks in the areas which are not being converted will eventually lose the ability to receive the local domestic OTA analog signals.

    What I think did a bigger number on businesses such as your father’s was the places where bylaws were passed which prohibited the installation of antennas. When you factor in the monthly cost of cable vs the one-time cost of an antenna, cable over its lifetime is significantly more expensive, but you do get better signal. I just replaced my tower (not the head or rotator) after 18 years… the one-time cost was about $400 for parts. Over all, with the rotator and head, it would have run, what $650 or $700, or about 2 years of basic cable.

  16. Broadcaster Plan Involves More Than Just Fee-For-Carriage
    Rogers rip off and expect me to pay more their junk
    programming don’t think so.

  17. Serve Canada not your stockholders
    The only TV station I have in my house is over the air CBC, which I enjoy but my area is the one proposed to be axed. Guess I’ll have to get my media from the Internet and bypass broadcasters all together. These big companies seem to forget it is the consumer that is their customer, not their stockholders. Sell the products (services) that Canadians want, not what is best for your bottom line. I may be naive but in the end if you just serve your self interests all that will be left in the end is yourself.

  18. @Crocket
    Agreed, to a point. Publicly traded corporations, unfortunately, are much more prone to the short term thinking. I suspect that it is primarily related to the institutional investors, who often take a shorter term approach where they make money not from dividends, etc, but rather from stock price fluctuations. Executive compensation (and to a lesser extent the line employees compensation) is tied to stock performance, not company performance in the short term (one year or so). For investors such as these, they really don’t care about the long term health of the company, they are interested in the stock/unit price going up in the short term. The shareholders drive the BoD, which sets the overall corporate strategy…

    It gets worse with income trusts; I once saw a forensic accountant describe them as a Ponzi scheme. The unit price is driven by the cash dispensed. A reduction in that drives the price down even if the company is profitable. I’ve seen companies dispense more cash that they’ve had profit in a quarter in order to keep up the unit price, basically reducing their bank accounts to do so (the money that you invested is paid to others as dispensable cash… a legal Ponzi scheme).

    At the end of the day, it’ll take the shareholders going for long term profitability to convince them that serving the interests of the customers is also in their best interests.

  19. Jean Naimard says:

    All this rigmarole can be summarized by only one simple word:

    CAPTCHA: “housewives us”

  20. Kingston won’t be without OTA DTV at the end of this. It already is well-served by local broadcasters like WPBS-TV, WWNY WNYF and WWTI who have sunk millions of US dollars into this transition, all within 60km of Kingston. All that will change is that these Watertown stations will control 100% of the available OTA channels instead of merely 63% now.

  21. It is my understanding that cable companies have to pay for rebroadcast rights for non-local stations. I see no reason why they should not also have to pay for local ones… If people are upset enough about these fees being passed along to customers, they can always just cancel their cable and find an alternative way to spend an evening instead. It’s not like cable television is mandatory… or even television, for that matter.

  22. Jack Robinson says:

    Crap is still crap regardless of who pays for Carriage
    As someone increasingly disenchanted with the sludge and toxic tripe assaulting my neurons both on-line and via cathode… this acrimonious share-grab tempest in a pee pot amongst the various bandwidth bandits strikes me as not only infantile… but provides me with an incentive both to renew my library card and haul out my Uncle Martian antennae to search for actual signs of intelligence Somewhere Out There…

  23. There’s a movement to radically change California government, by getting rid of career politicians and chopping their salaries in half. A group known as Citizens for California Reform wants to make the California legislature a part time time job, just like it was until 1966.

    latest trend

  24. kiramatalishah says:

    There’s a movement to radically change California government, by getting rid of career politicians and chopping their salaries in half. A group known as Citizens for California Reform wants to make the California legislature a part time time job, just like it was until 1966.