#41 – Making sense of the broadcaster vs. cable/satellite wars.

The following material is intervention # 114054 to the Canadian Radio-Television and Telecommunications Commission (CRTC) for its hearing No. 2009-614 beginning December 7, 2009 in Gatineau, Quebec:

The CRTC has asked for comments on a) affordability of cable and satellite services, b) availability of local television services, c) adapting to a digital communication environment and d) evolving business models facilitating access to local television stations. This paper will briefly deal with the four requested topics and then provide some additional comments.

a) AFFORDABILITY

In looking at the affordability of cable and satellite services, the only comment is that the constantly rising costs of services from broadcasting distribution undertakings (BDUs) and their complex packages of channels are denying many seniors on fixed incomes and younger adults working at retail and/or part-time wages, access to these services. Another mandated charge on cable and satellite bills such as the Local Programming Improvement Fund will just engender further resentment and more cut-backs in services. One solution to this is to require that BDUs price their service at a base cost that includes a specified number of channels, of the customer’s choice, and the balance of channels be available individually, cafeteria style, at listed prices. The CRTC can hardly mandate that certain broadcast channels be carried on basic BDU service if the broadcasters want to charge, through the BDUs for receiving those channels. Private enterprise has the right to charge for its services. That is their choice. The Canadian consumer must also have the right to decline to receive them without having to forego other BDU services.

b) AVAILABILITY

In discussing the availability of local television services, it is assumed that ‘local’ is defined politically, not geographically. Municipalities, with their elected councils, community programs and services and often professional sports teams, create a viable base for local communication needs. Television broadcast contours do not conform to this ‘local’ definition while cable can more easily pinpoint delivery to specific municipal boundaries. Local needs can be better met by improved cable and microwave production capabilities than by today’s broadcasters.

c) ADAPTING TO DIGITAL

In a sense, digital broadcasting capabilities have reversed the roles of broadcasters and BDUs. While digital broadcasting cannot provide the extended coverage, it does solve the poor signal quality problems that encouraged the broad deployment of cable distribution 40 to 50 years ago. Why should the consumer pay a BDU an additional monthly amount to receive geographically local stations that can provide a much better quality high-definition picture with improved sound through an inexpensive digital antenna than the compressed signal carried on satellite or cable? If broadcasters really believe local TV matters, they would be promoting the use of over-the-air antennae to their local viewers.

d) EVOLVING BUSINESS MODELS

Evolving business models are a serious problem for both broadcasters and BDUs. These corporations have become too big and too heavily invested in the past. If the ability to send live or recorded pictures and sound (at today’s standards) was invented last year and there was no government regulation involved, it is most likely the family entertainment centre model that has been with us since the 1950s would be fighting it out for audiences with hand-held personal communication devices. The television networks would be as they were originally intended—smaller, independent sources of news, sports and/or entertainment programs. The world of advertising would be learning to deal with consumers as individuals and not just as gross rating points. The main distribution mechanisms would probably be a combination of cellular-based multicasting and satellite.

DISCUSSION

In the current, quite vehement but little understood advertising tirades between BDUs and broadcasters, there is very little light being shed on the issue of compensation for local television. The broadcasting networks say, for example, that, for years, cable and satellite companies have been charging their customers for local programming that the stations provide. The inference is that the BDUs are selling something that does not belong to them.

This is not true. In its inception, cable television and later satellite television services were modelled on community antenna services. Community antenna services were the solution for apartment buildings that did not have room on their roofs for individual antenna required by residents to receive television signals. Community antenna distributed the signals through coaxial cable. This is how cable became and still is very much a delivery service for television. Simply put, they are there to deliver the pizza, not make it. The charges are for delivery.

The rapid success of community antenna service was not just the elimination of individual household antennae. In the beginning, it was broadcasters who benefitted the most from the relationship. Cable companies went deeper and deeper into debt running cable everywhere, while providing expanded signal coverage for television broadcasters. Broadcasters gained larger audiences, with what, at the time, were enhanced analogue signals. And since advertisers want to buy large audiences, the broadcasters enjoyed many very fat years.

But over the next 50 years, that original model has changed. It should be noted that many of the changes have been promoted by the CRTC. Today there are broadcast channels, high-definition channels, super channels, news channels, movie channels, sports channels, foreign language channels, shopping channels, time-shifting channels, local cable channels and specialty channels available through BDUs. There is broadcast and cable delivery and satellite delivery and microwave delivery and delivery of television entertainment on compact discs. At any given time, day or night, the consumer has many hundreds of choices of channels and entertainment material.

Today’s broadcasters are the people who seriously need to rethink their business model. They complain to us that “the environment has changed, advertising is down, program expenses are up, and audiences are fragmenting, along with the economic downturn.” Yet who made the rule that they do not have to change, to adapt, to be meaningful in today’s environment? In a digital world, does ‘broadcasting’ of a single channel even make sense? Digital broadcasting has opened up new broadcast spectrum, new quality standards and new broadcasting opportunities. To ask the consumer to pay for their last century ‘local’ channels can only be considered a callow act by people bereft of creativity and business acumen.

And surely there was no Moses who promised the TV networks they would never have any lean years. Today there are more than 30 million Canadians facing tough times. Are television networks high on the list of those deserving of a hand out? While Canwest Global is drowning in debt of its own creation and the CBC always cries poormouth, there is absolutely no excuse for CTVglobemedia to be standing in front of this commission with a tin cup.

The broadcast networks tell us that local TV matters but do not explain: what is ‘local’ TV? They have no reason to care about local television. CBC/Radio Canada used to have wonderful local/regional news across Canada. The politicians starved the public broadcaster out of that idea. The private networks are not interested in anything ‘local.’ They provide regional news because it is the only way to justify the costs. I live in Barrie, Ontario and I find that Rogers Cable does a better job covering what you need to know about that city than the television station located there—that is owned by CTVglobemedia.

Before anyone thinks I am carrying a brief for the BDUs, let me assure you that they also have buckets of sins on their backs. You would not believe the numbers of times I have wanted to call a Rogers executive and give him a heads up on his company’s poor quality service and the unconscionable prices charged for it.

But all you ever get if you call Rogers Cable’s listed numbers is ignorant, poorly trained and underpaid call centre employees who have to follow foolish scripts instead of providing intelligent answers. They call me regularly to use their voice-over-Internet-protocol telephones but they cannot run decent quality cable to my apartment suite. And Bell Canada is no better. Every year Bell service continues to deteriorate as more employees leave the company to be replaced by cheaper and cheaper call centres.

If local TV meant anything, I would use an inexpensive digital receiver to get the signal from the CKVR tower that is a few kilometers away. I would get a far better quality, high definition picture with a digital signal than Rogers Cable can currently deliver to my television set.

But I forget. The CRTC has exempted CTV from converting CKVR to digital!

CONCLUSION

The most serious concern we should all have is that despite the many discussions about the question of compensation for local television signals, the Prime Minister’s Office (PMO) has announced that the Cabinet will make the decision and not the CRTC. One does not need psychic powers to connect the dots as to why parties involved do not trust the CRTC to make the decision they want.

This Commission was created 31-years ago with the honest intent to forestall political interference such as this. Despite the very clear statement by the Conservative members of the Commons Standing Committee on Canadian Heritage, earlier this year, of their “most fervent and rigorous opposition to any potential fee-for-carriage system, either negotiated or imposed,” we can make a very good guess at what the Cabinet wants to do.

Never in world history has a government had the opportunity to win the hearts, minds and editorial approval of so much of the country’s news media without having to use troops.

The anger of Canadians who will pay for this will be ignored by the broadcasters and the newspapers they own as they will be much too busy counting their profits.

I do hope though that when the Cabinet announces its decision, this Commission will have the grace to resign. The CRTC will have lost all authority to do its job.

Respectfully submitted, October 2009,

Peter Lowry

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