Competing television providers are arguing that Shaw Communications Inc. and Rogers Communications Inc. did not play fair when they launched their streaming video service and offered it only to their own Internet and TV customers.
In filings with the Canadian Radio-television and Telecommunications Commission (CRTC) this week, Telus Corp. and Eastlink object to the way Rogers and Shaw have handled the "beta" testing phase of their joint venture Shomi, arguing it gave the owners an unfair head start.
Shomi launched in November, offering access to a catalogue of television programming and movies for a monthly rate, and the Public Interest Advocacy Centre (PIAC) complained in April to the commission that the service is unfairly restricted to customers of Rogers and Shaw and prevents a broader range of consumers from viewing content to which Shomi controls the exclusive rights.
Rogers and Shaw filed a response on behalf of the Shomi Partnership on Monday, noting that they announced just last week that Shomi will soon be available directly over the Internet to anyone who wants to subscribe, similar to the model used by Netflix Inc.
They argued that the test period has been necessary to work out technology issues and develop an independent billing system for Shomi and said the service is already available to third-party TV distributors that could offer it to their customers once they negotiate access.
"There is absolutely no head-start advantage conferred on Rogers and Shaw during this period. The fact that Shomi has not concluded a distribution agreement with any other [television distributors] … does not change the fact that it is being made available and discussions with potential distribution partners are ongoing," the Shomi partners said in their response.
But Telus – which sells satellite TV and also offers Internet protocol television (IPTV) service in British Columbia, Alberta and parts of Quebec – and Atlantic Canada cable company Eastlink suggest in their filings that Rogers did not make sincere attempts to negotiate with them.
Telus said that in the case of competing video-streaming service CraveTV, owner Bell Media gave television distributors enough notice to complete commercial negotiations and include the content on their video-on-demand platforms in time for a common launch date. In contrast, Telus said, Rogers and Shaw "provided extremely limited notice" of Shomi's launch. (Bell Media is owned by BCE Inc., which also owns 15 per cent of The Globe and Mail.)
"It therefore is clear to Telus that Rogers and Shaw had every intention of leveraging their content ownership to grant themselves an anti-competitive temporary exclusive by making it next to impossible for other [television distributors] to negotiate a commercial agreement and operationalize the Shomi service to launch simultaneously with Rogers and Shaw," Telus said.
"While the Shomi Partnership did send Eastlink a preliminary rate card, it has consistently indicated to us that it is not yet in a position to provide full contract terms. Even with the recent announcement, Rogers and Shaw have still not provided a distribution agreement to us for review," Eastlink stated. "Accordingly, it is clear that Rogers and Shaw had no intention of making Shomi available to independent [television distributors or Internet service providers], and their customers, in a timely manner."
Eastlink went on to argue that Canadian consumers who do not live in an area served by Rogers or Shaw or who simply choose to subscribe to television or Internet services from an alternative provider "are being wholly denied access to this content," noting that some of the programming is not available on any other platform in Canada.
Shomi also said in its filing that it plans to take advantage of a proposed new regime for streaming video services, which the CRTC announced in March. Once the rules are finalized, the owners of video-streaming services would be able to offer exclusive content, avoid a requirement that they contribute to Canadian programming costs and deliver their offerings over television set-top boxes as long as they also make the services available over the Internet.
After announcing those rules, the CRTC "returned" an earlier complaint PIAC filed against Shomi and PIAC revised its arguments and brought the second application in April. The CRTC said last week that the new application will continue despite the announcement that Shomi will be available to anyone at an unspecified date this summer.