Telecom giants disagree over who should pay for local TV

BCE and Rogers Communications debate "local specialty services"

Two of Canada’s biggest telecommunications companies, Bell and Rogers, are clashing over the future of local television and who should pay for it.

In its submissions to the CRTC, Bell said it believes changes should be made by the regulator to allow local TV stations to be reclassified as “local specialty services.”

The move, said Bell, which is owned by telecommunications giant BCE, would allow stations to charge broadcast distributors, such as cable companies and satellite TV firms, wholesale rates subject to existing must-carry rules.

The money generated would be combined with advertising revenues and go towards supporting local television, it said.

However, fellow telecom giant Rogers Communications (which also owns Marketing and MarketingMag.ca) says it won’t support the plan for the new expenses, which it feels would likely filter down to the cable bills of customers.

“We are trying to avoid what some of the other groups are doing, which is loading up consumers with a lot of new fees,” Ken Engelhart, senior vice-president of regulatory for Rogers, said in an interview.

In addition to Bell, BCE owns 30 local television stations including the CTV network as well as 35 speciality channels. The company also provides TV service by satellite and through its Fibe TV offering.

Rogers owns a smaller slate of 11 local TV stations under the City and OMNI banners.

The disagreement came as the CRTC wrapped up a formal interventions process on Friday, part of its public consultations where it has collected comments from Canadians and the industry on the evolution of the broadcasting system.

While the public consultations were designed to take into account various aspects of the future of TV broadcasting, much of the focus has been on the so-called pick-and-pay model for cable television, which would give consumers more choice, rather then being locked into expensive bulk specialty channel packages.

Each telecommunications company highlighted its own concerns in their filings or statements issued Friday afternoon.

Some concerns within the industry were that the pick-and-pay concept could dramatically increase the price of paying for a single channel, basically pushing consumers into buying specialty channel packages they didn’t want in the first place.

Bell said it supports pick-and-pay and believes Canadians “shouldn’t have to pay for channels they don’t want just to get the channels they do.”

Shaw Communications said it wanted the CRTC to ensure that consumers aren’t forced to purchase certain high-cost services, like sports, as part of their basic cable packages.

Telus (TSX:T) said it stands behind consumers having the option to choose which channels they want but that for consumers to benefit “those choices must be reasonably priced.”

“In our submission, we propose some measures to address the spiralling cost of programming services, especially sports services, as well as restrictive requirements from channel owners that we bundle their offerings rather than offering them a la carte,” Telus said.

“We urge the CRTC to ensure all Canadians continue to be able to access the content they want through the provider and technology of their choice.”

In an executive summary on its submission, Telus added there was no link between the wholesale rate sought by sports specialty services and consumer willingness to pay.

“In their continuous attempts to out-bid each other on the acquisition of sports content rights, Canada’s sports services have overestimated the desire of Canadians to pay for their services,” the summary said.

“The commission needs to establish rules to negate the incentive for irrational bidding and thus ensure that sports services in Canada remain affordable and do not subject all Canadian TV subscribers to a sports tax.”

The deadline for submissions was 8 p.m. ET on Friday.

The public voiced its opinions in submissions on the CRTC’s website, highlighting concerns with various issues that could shape how Canadians watch television, including the pick-and-pay model.

“For some this may be a significant savings, for others perhaps not, but any action that allows households choice will get my support,” Jane Harrison of Picton, Ont., said in a comment posted on the CRTC site.

Brian Tychie, an Ottawa resident, posted that he pays for hundreds of TV channels yet he can never find anything worth watching.

“I think that if a specialty channel cannot attract enough viewers to financially survive, then they should fail,” he wrote.

Other issues that could shape the future of Canadian television were highlighted in the comments, including the presence of the CBC.

“Please see the value in keeping the CBC as it is. It is my tax dollars well spent,” said Bernetta Starkey of Elmvale, Ont. “To hear what the Albertans are thinking about the fisheries and Quebecers about the gas line is important to maintaining a sense of nation.”

Some comments emphasized support for U.S. public broadcasters remaining outside of the pick-and-pay model.

“As a contributor to these stations … I feel they provide a much needed, well-balanced alternative,” said Frances Thompson.

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