When Bell Canada parent BCE Inc. goes before the federal broadcast regulator Tuesday to ask for approval to buy CTV Inc., it will argue there's no problem with owning both TV content and the cable "pipes" it travels through. But some of its competitors have a plan to use Bell's own words against it.
They believe a ruling by the Canadian Radio-television and Telecommunications Commission (CRTC) last week bolsters their case that such a business structure is potentially unfair to competitors. Ironically, Bell was one of the companies whose complaints sparked that ruling.
On Wednesday, the regulator said Quebecor Inc. must offer to competitors video content it owns through its TVA network. The company, which also owns an online video-on-demand service through a subsidiary, had been keeping the content for its own exclusive use.
Now Telus Corp. which joined Bell in that complaint, says it will use the ruling as a precedent to argue that more safeguards are needed in the deal struck in September for BCE to buy CTV.
"I think the Bell hearing just became a lot easier," said Telus's senior vice-president for government and regulatory affairs, Michael Hennessy.
At issue is the control of TV content on emerging platforms. Canadians are watching more video online than ever before, and content on mobile devices such as tablets and smart phones is becoming more important to the industry.
Bell has been an early player in mobile video. It bought exclusive rights for the Vancouver Olympics for its wireless devices, and also has exclusive deals with the NHL and NFL for mobile content.
Telus argues that Bell's complaint against Quebecor goes against Bell's own strategy for exclusive content.
"The commission essentially said that it is an undue preference to grant yourself exclusivity, particularly when it's coming because it's your affiliated programming," said Mr. Hennessy.
Last year, the CRTC approved Shaw Communications Inc.'s deal to buy the CanWest television assets. In that deal, the regulator said it expects Shaw to give competitors access to the TV programming it owns, including on mobile and on the Web, "on commercial terms." Telus had asked for such a condition at the hearing.
Telus, and another competitor Cogeco Cable Inc., will now ask the regulator to make the same demands of BCE.
"Preferential access to content on one of the non-traditional platforms would allow BCE to strengthen its position in the market for bundled services," Cogeco stated in documents filed with the CRTC on Jan. 11, calling for further safeguards.
In a call with analysts to discuss the CTV deal in September, BCE chief executive officer George Cope said that it would not necessarily keep content from CTV or its specialty channels off competitors' mobile phones. But he didn't rule it out. "We don't have to offer anything to our competitors, in the mobile or in the sports genre, in the news genre, or on any of the technologies," he said.
Bell disagrees with its competitors' arguments against such a strategy. "I think Telus is making a great leap by saying this automatically proves you can't do an exclusive deal on wireless," said Mirko Bibic, Bell's senior vice-president for regulatory affairs. Bell offers the NHL and the NFL because it negotiated mobile rights directly with the leagues, he said, which is different from Quebecor using the broadcaster it owns to restrict its competitors on the TV side. "The NFL went out to [the]market, shopping its wireless broadcast rights. Everybody in Canada, all the wireless players, had a chance to bid for those rights."
Bell has made use of the rights it won. In November, it aired a reality show giving an "insider" look following different players for the Montreal Canadiens. The show was available first on Bell phones through the exclusive Canadiens app, and on Bell TV. Viewers who did not have these services had to wait until this month, when the show was broadcast on TSN, RDS and V.
Telus has its own mobile deal, for CFL games, but the video content is not exclusive to its phones.
Though Quebecor declined to comment, in a submission to the CRTC this month the company raised "grave concerns" over the "undue preference" that could arise out of BCE holding a stake in the Montreal Canadiens, in a satellite TV service, and a major broadcaster. However, unlike Telus and Cogeco its concerns were focused largely on sports content on television.
Quebecor argued that because of the "monopoly" BCE has over hockey content that is of particular interest in the Quebec market, broadcast rights to Canadiens games should be divided into lots that could be bought by other distributors, to prevent exclusivity. Bell has argued that Vidéotron cable has access to the programming on CTV, TSN and RDS, and dismissed the proposal as an "attempt to obtain a competitive advantage for itself through regulation."
So far, the CRTC has been reluctant to regulate video on new platforms such as the Internet. However, it does prohibit companies from using content they own to give themselves an unfair advantage as a cable or satellite provider. And that "undue preference" rule applies to the Web and mobile as well: The challenge for the regulator will be to decide how much preference is too much, said Sheridan Scott, a regulatory expert and a partner with Bennett Jones LLP in Ottawa.
"We seem to think everyone has to have all the same content, but that's not such an interesting competitive model," she said. "If it's just a small subset of the content, maybe one provider could do one deal and another one gets other content … They could make the argument, 'We're trying to distinguish ourselves.' "
That's certainly Bell's position.
"… It's critically important that people understand that issue here, that mobile is deregulated and we have access to clearly the best media assets in Canada," Mr. Cope said in September, " … and the world will probably over time recognize the leverage that we've got through that ownership today."
Editor's note: This online story has been clarified from an earlier online and print version
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