I promised myself this year would be different, that I’d write about something other than Bell and Rogers and Shaw. And I’m sure that day will come; just not, alas, this week.
Here’s why: On Tuesday, a cool little TV distribution service known as Aereo announced that it will expand over the next few months from its home base of New York to 22 other cities. Launched last year, Aereo allows subscribers to watch broadcast television anywhere – on a desktop or laptop computer, a conventional TV connected to the Internet, or an Apple mobile device. About 30 channels are currently available for an $8 monthly fee – or, for infrequent viewers, a $1 day pass – including the five U.S. broadcast networks plus PBS, as well as six Spanish-language and four Asian-language channels.
Aereo can charge so little in part because, unlike the cable and satellite companies, it doesn’t pay the networks a retransmission fee for their signals. It argues that, since the signals are freely available, it is merely plucking them out of the air with a tiny dime-sized aerial – one per subscriber, stored in its remote warehouse – and then sending it over the Internet for their personal viewing. Subscribers can either watch live TV or PVR up to 20 hours of programming for later viewing. (For $12 a month, you get 40 hours of recording time.)
The broadcasters, who earn hundreds of millions from those retransmission fees, have spent the past few months in and out of court, arguing that Aereo is guilty of copyright infringement. But so far the startup – which is backed by the media maverick Barry Diller – has withstood the legal challenges. And it just secured an additional $38-million in financing to pay for its national rollout.
Aereo argues that, with cord-cutting on the rise in the United States – as well as its parallel phenomenon: new households never bothering to sign up for cable – it is helping broadcasters expand their potential viewing base, which can then be sold to advertisers. The broadcasters say that if Aereo is allowed to survive, it could mean the end of the TV business as it currently exists: Cable and satellite companies would likely modify their own network operations to allow them to stop paying for programming.
It’s exactly the sort of service you’d think could be a big hit in Canada. Although viewers buzz about shows that air on cable channels such as HBO (Girls, Game of Thrones) and AMC (Mad Men, The Walking Dead ), the top 30 programs up here are still almost always found on broadcast networks: We just can’t seem to get enough of Big Bang Theory and Two and a Half Men on CTV, Survivor on Global, and (soon, again) CBC’s Hockey Night in Canada. And it’s easy to imagine that, with companion services such as Netflix and Apple TV, Aereo subscribers in Canada would miss very little if they were to dump their $100-a-month cable packages.
But it’s not going to happen. More than 10 years ago, a Canadian startup known as iCraveTV tried something similar, grabbing Canadian and U.S. TV signals and distributing them over the Internet. But it attracted the ire of the Hollywood studios and shut down after a few months under legal pressure. Later, Ottawa clarified the Copyright Act to ensure no similar service would rise again.
Yet, as Canadians start to cut the cord, you’d think it would make sense for domestic broadcasters to work with a service like Aereo to ensure their programs continue to reach the widest possible audience. After all, unlike in the U.S., Canadian broadcasters don’t even receive any payment for the retransmission of their signals. (A Supreme Court of Canada decision last month reaffirmed that would continue to be the case.)
But, with the exception of the CBC, all of the Canadian broadcasters have too much to lose if they allow viewers to untether themselves. That’s because they’re all owned by companies with large distribution businesses: CTV is owned by Bell Media, whose parent company has both satellite and IPTV customers; Citytv is owned by Rogers, which has millions of cable subscribers; and Global is owned by Shaw, which also has significant cable interests. (Bell Media has a 15-per-cent interest in the parent company of The Globe and Mail.)
While the U.S. has a handful of vertically integrated companies – Time Warner, for example, has both TV channels and cable distribution operations – none possesses the level of market concentration in the Canadian system.
And so we shall begin the new year as we ended the last one: With our noses pressed up against the glass of our southern border, peering in envy at all of the technological innovations upending the U.S. marketplace, and wondering what we did to deserve this.