CRTC chairman Konrad von FinckensteinSean Kilpatrick/The Canadian Press
Canada's broadcasting regulator has introduced a new set of controls on how television content can be sold, in a move that will curb BCE Inc.'s plans to use programming to boost its wireless business.
Wireless companies that also own TV channels must offer all their content on fair terms to competing mobile phone providers for their smart phone and tablet devices, and on the Internet, the Canadian Radio-Television and Telecommunications Commission said Wednesday.
The ruling throws a wrench into part of BCE Inc.'s strategy for the media assets it purchased in a massive deal last year. The Montreal-based telecommunications provider said repeatedly it would offer its TV content – from channels CTV, TSN and others – to competitors. But Mirko Bibic, Bell's senior vice-president of regulatory and government affairs, also said on Wednesday that it wanted to "exploit some content exclusively," most likely meaning lucrative sports content that was such a driver of mobile video use for Bell during the Vancouver Olympics
While Shaw Communications Inc. and Rogers Communications Inc. said they were comfortable with the move, Bell Media was calling for the CRTC's head on Wednesday. "I think it's seriously time to take a good, strong, hard look at the CRTC's mandate and its philosophy," said Mr. Bibic. "I don't think [the decision is]good for the industry. The CRTC had been on a slow path to deregulation, and today they reversed course."
The CRTC also introduced a new "code of conduct" to address a tectonic shift in the media industry of late: cable and satellite companies who have bought up TV networks – a trend known as "vertical integration." The regulator wants to prevent integrated companies from abusing their market power.
The code is designed in part to ensure that independently owned channels are not excluded from TV packages to favour channels that integrated companies own. And integrated players cannot demand more than a "fair market value" for their channels to be carried on competing cable or satellite services.
The rules are part of the CRTC's attempt to reckon with major changes in the industry. They come out of a June hearing in Gatineau, Que., which investigated the impact of media integration in Canada. The probe came on the heels of the CRTC approval of BCE Inc.'s purchase of the broadcast assets of CTVglobemedia Inc., including the CTV network and a host of specialty stations. The purchase last year of the former CanWest television assets by Shaw Communications Inc. was also a factor in this shift.
CRTC chairman Konrad von Finckenstein dismissed Mr. Bibic's complaint about the new code of conducts as "absolutely wrong."
"We do not want to get involved in every single decision. Here, you work it out. Don't come to us unless it's a last resort," he said. "These are principles to guide you. The last thing we want is to re-regulate or get more involved. But we cannot stand by while four companies effectively take control of the industry."
At the hearing in June, Telus Corp. was among the most vocal critics of vertical integration, which it said put non-integrated companies – such as Telus, which provides IPTV, mobile phone and Internet services but chose not to invest in media – at risk of abuse by market giants.
"We're very happy," said Telus's senior vice-president of regulatory and government affairs, Michael Hennessy. "It's the most consumer-focused broadcast decision I've ever seen come out of the commission … ensuring there will be no interruptions in service if there is a dispute, and ensuring consumers can access programming on all platforms."
Other integrated players also were comfortable with the new rules as the CRTC attempts to adapt to a new future in broadcasting.
"We spent a lot of time working our way through the tea leaves," said Shaw president Peter Bissonnette. "We recognize that as a vertically-integrated company we have a higher expectation of conduct ... and it's being reflected in these rules."
"It's a massive victory for the consumer," said Rogers vice-chairman Phil Lind. "It outlines a code of conduct that the big guys, the four main integrators, will have to live with. As far as we're concerned, we can live with it with ease."
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A buffet of broadcasting
It's the cable subscriber's eternal lament: What are all these channels, and why am I paying for them?
The CRTC's new guidelines for the media industry, released on Wednesday, could change that. The regulator is demanding that cable and satellite providers offer more so-called "à la carte options" for their customers. By next April, those companies will have to file documents demonstrating how they've given customers a choice of which channels they want to pay for, and which ones they don't.
Vidéotron Ltée already offers choice with a basic package plus packages of 10 or 20 channels of the viewer's choice, said CRTC chairman Konrad von Finckenstein. Bell offers something similar in Quebec, but not in Ontario.
"We heard it loud and clear from consumers … You do not offer consumers the choice they want and deserve," Mr. von Finckenstein said. "They see it on the Internet, they see it on mobile, and they say, 'Why can't I have it here when I buy programming from cable or satellite?' ... Let them make the necessary strides."
Among the major changes announced on Wednesday:
- No exclusivity on mobile and other digital platforms (well, almost none): In March, the CRTC introduced a moratorium on exclusive deals for content on mobile devices. That now becomes permanent. Take the new CITY-TV show New Girl, for example. Rogers owns City, but the broadcaster can’t only offer the saucer-eyed Zooey Deschanel to Rogers wireless customers on their phones or iPads, or online. Bell has to be able to pay to have Zooey on its customers’ phones, too, if it wants her in its mobile TV package. BCE Inc. owns TSN, but it can’t show live games from TSN only on Bell phones without offering them up at a reasonable rate to competitors.
- Here’s the exception: Content produced just for digital platforms, like behind-the-scenes extras at sports events for example, is acceptable if offered on an exclusive basis. So Rogers Sportsnet has Blue Jays baseball. It can’t offer Blue Jays games only on phones for Rogers subscribers. But if it shoots a behind-the-scenes special that it does not air on TV, that is intended just as special content for phones and/or online, that can be exclusive to a Rogers mobile phone account or a Rogers Internet site.
- Room for independent broadcasters: For integrated companies 25 per cent of all the specialty channels they carry must be owned by an independent broadcaster. (Must-carry channels aren’t included in this overall count, because distributors have no control over which of those they pick up, and therefore can’t control the balance of which channels are owned by big companies and which are owned by independents.) So Shaw will carry its own channels, such as Food Network Canada, and those of other big players, such as Rogers Sportsnet and BCE’s The Comedy Network, but it must also reserve space on its cable and satellite services for channels owned by smaller players – such as The Fight Network, for example, or VisionTV.
- A new code of conduct governing integrated companies: This is a broad set of guidelines applying to all companies. Some of the rules: integrated companies cannot demand rates for the channels they own that are higher than “fair market value,” and that they can’t create theme packages on their TV services that include their own channels but push out others. So, for example, Bell satellite can’t offer a sports package that has Bell’s TSN in it but shuffles Rogers Sportsnet or The Score on to less favourable tiers. The question here will be how much luck the regulator will have enforcing this code, since it’s a set of guidelines and not new regulations, per se. But the CRTC says when there are dispute resolution hearings, it will use the new “Code of conduct for commercial arrangements and interactions.” And when disputes occur over the fees paid by a TV provider to carry a channel, neither party is allowed to yank that channel off the air – a measure designed to prevent the kind of signal blackouts that have plagued viewers in the U.S.