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The debate about the financial future of Canada's television industry has come down to a key point - whether the industry should do away with conventional TV and convert the country's big networks, such as CTV and Global, into specialty channels.

That idea was raised yesterday during the first day of hearings before the Canadian Radio-television and Telecommunications Commission, where the major networks are seeking renewal of their broadcast licences.

CTV and Global have been pushing for two years for the regulator to let them charge cable and satellite companies for their signals, arguing that they should not have to give them away free. That proposal, which has been turned down twice by the CRTC, is controversial because the cable and satellite carriers have vowed to pass on the charges - about 50 cents a month per network - to consumers' bills.

At 50 cents per subscriber, the proposal would bring in more than $352-million to the broadcasting sector, the CRTC estimates in documents made public at the hearings.

The networks have argued that the health of Canada's TV sector may depend on making the big networks less dependent on fluctuating advertising dollars, which have fallen during the recession. Only cable channels, including dozens owned by CTV and Global, charge such fees and now command the lion's share of profit growth in the industry.

"What this really amounts to is a specialty channel called conventional TV," Konrad von Finckenstein, the head of the CRTC, told executives with CTV who were appearing on the first day of the 11-day hearings. CTVglobemedia Inc. chief executive officer Ivan Fecan agreed, saying if the networks were successful in their fight to be compensated for their signals, "it would be what it is today, but with two revenue streams."

However, Mr. von Finckenstein asked CTV whether it would be willing to accept the obligations that go with being a specialty channel. Those cable channels, which include Showcase and TSN, must spend a significant portion of their revenue to produce programming each year, sometimes as much as 50 per cent or more.

Unlike the local conventional CTV and Global stations across the country, which are required to produce a certain number of hours of local programming a week, the specialty channels are required to spend based on how successful they are. CTV is part of CTVglobemedia Inc., which is also the parent company of The Globe and Mail.

Changing that formula would turn CTV and Global into specialty channels with specific spending requirements, rather than simply a need to produce a certain number of hours of local content. It would be the biggest shift the industry has seen since the proliferation of cable channels began.

"What you really want is a specialty channel," Mr. von Finckenstein suggested to CTV executives.

In response, Mr. Fecan told the CRTC: "We would certainty be interested in looking at the possibility of a revenue expenditure system like specialty has." However, he added that the CRTC would have to acknowledge that operating a network of local stations across the country is more costly than a specialty channel, which has just one central master control.

The CRTC's estimates show the proposal would be worth $56-million in new revenue to CTV, $72-million to CanWest Global Communications Corp. CGS-T and $57-million for Rogers Communications Inc., RCI.B-T which owns the CITY-TV network. They would be the three largest benefactors of about a dozen conventional broadcasters in total, the CRTC estimates.

The proposal would be worth $92-million to the CBC, the regulator estimates. However, it is not clear whether the public broadcaster would be included in the fee regime, if it were approved by the CRTC.

The CRTC has been opposed to the proposal, but the release of the data suggests the regulator has taken a closer look, crunching the numbers in more detail than it has before.

The proposal has been turned down twice in the past two years by the CRTC, in part due to concerns about how the networks would spend the money. The regulator is concerned it would go into general revenues at the broadcasters, or be spent on bidding for Hollywood shows, rather than to support local programming and Canadian productions.