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Ottawa moves to block networks' fees Add to ...


The Conservative government is taking steps to block Canada's big television networks from charging for their signals in what could be a serious blow to the hopes of CTV, CBC and Global who want cable and satellite companies to pay up

In a seemingly minor manoeuvre that has big implications for the broadcasters, the federal government yesterday ordered the Canadian Radio-television and Telecommunications Commission to hold new hearings into the proposed fees, an idea that has been debated before.

In an unexpected move, though, the government narrowed the scope of the new hearings considerably - instructing the regulator to look only at the impact of such fees on consumers. The CRTC must then produce a report for the government on the findings.

A source close to the government suggested the Conservatives will use that report - which is expected to show consumers are against paying more fees on cable bills - to order the CRTC to reverse its earlier support for the broadcasters.

In July, the CRTC opened the door for the networks to be compensated by the cable and satellite companies when it announced that it would allow negotiations between the two sides, and enforce an arbitrated solution if a compensation deal could not be reached.

However, the Conservatives are staunchly opposed to the proposal, which could be unpopular with some voters. Though the cable and satellite companies don't have to pass the cost on to customers, the major carriers such as Rogers Communications Inc., Bell Canada, and Shaw Communications Inc. have already said they will.

Yesterday's development stems from a Canadian Heritage parliamentary committee hearing this summer, where the TV networks argued they need new funds to support struggling small market TV stations and to produce local programming.

While the broadcasters drew support on the committee from the Liberal and New Democratic parties, the Conservatives penned a minority report stating that they are vigorously opposed to any new consumer fees.

If approved, it is estimated the fees could be worth $60-million to $90-million a year to each network, depending on the number of stations involved.

Though such hands-on treatment of the regulator is unusual, the Conservatives have stepped in on consumer issues before. Last year, the government blocked a move by cellphone companies to begin charging for individual text messages after a consumer backlash emerged.

At the very least, the commissioning of the report, which would be tabled in the House of Commons and the Senate, would delay the process for many months, at least until after the next federal election.

"The government doesn't have many tools [to stop this] so they're asking for a report," said a source in Ottawa close to the matter. A policy directive would be the next step after that.

The big broadcasters were still optimistic, though, that the issue could go their way. CTV, CBC and Global are arguing their case together, arguing that the cable industry has been misinforming consumers with letters enclosed in bills that inflate the potential impact on their monthly invoices.

CanWest Global Communications Corp. said the hearings in December will be an opportunity to set the record straight on those figures. "I think what they're saying is consistent with what we're saying, which is that this is an important issue for consumers," said Charlotte Bell, senior vice-president of regulatory affairs at CanWest.

"I think it's important that consumers get the right information because this is about the future of local television. And the consumer is right in the middle of it."

An executive at Bell Canada, which owns the country's largest satellite TV service, said he supports the government getting involved, since the company believes the CRTC can't allow such fees to be implemented on its own.

"We think the government made the correct decision because [the fees]are going to have a direct impact on consumers," said Mirko Bibic, head of regulatory affairs for Bell Canada. "Something as significant as this, which is tantamount to a tax, needs to be considered as a matter of government policy and can't be decided by unelected regulators."

Sources say there is considerable animosity between the CRTC and the federal government now, not unlike the tension that exists between the broadcasters and the TV distributors.

In a sign of how divisive this debate has become, Bell finds itself debating CTV, the TV network in which it owns a 15-per-cent stake. Bell holds that share though its minority ownership of CTVglobemedia, which is the parent company of CTV and The Globe and Mail.

CBC's involvement in the debate has been a controversial one, since the public broadcaster also receives federal funding, and is not solely reliant on advertising dollars. However, the broadcaster said any compensation would be used to support local programming.

"We have and continue to hear from Canadians across the country about the importance and value of local television," said Steven Guiton, CBC's chief regulatory officer.


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