15 topics for debate in the CRTC’s “Let’s Talk TV” policy review

It’s hard to overstate how much is at stake in the CRTC’s wide-ranging review of television policy that’s currently going on. The commission has put everything on the table, from the very nature of specialty channels to simultaneous substitution. Anything within its mandate is up for discussion and possible amendment.

With a day to go until the deadline for comments (it was originally Wednesday, but the commission gave a two-day extension), almost 2,000 comments have been put on the public file. This number will increase as the big media and telecom companies file their submissions, which usually happens at the last minute. (The CRTC has taken the unusual step of asking these companies to file comments in both French and English, and in an accessible format — Microsoft Word, text files or HTML files.)

The process began last year with a sort of informal consultation with regular Canadians, highlights of which are posted here, followed by a phase of asking those people who commented to make decisions based on a limited number of choices. The results of that survey are posted here.

The third phase of the process is the formal one, where the serious policy discussion happens. The commission launched that phase in April, and it will lead to a public hearing in Gatineau in September. Anyone wanting to be part of this discussion officially can join in until the deadline for comments, Friday June 27 at 8pm ET.

The announcement sets a framework for the policy discussion, which in turn gives us an idea what types of changes we could see as a result of the hearing. They are:

1. TV packaging

This is the one thing that everyone has seen coming: allowing television subscribers to choose what channels they want and pay for only those channels. It’s the one thing the Canadian government asked the CRTC to act on, even requiring it to submit a report on the issue (the report is posted here). But it’s also very complicated.

For one thing, there’s the question of what exactly we want. There’s “pick and pay” in which each channel has a set price and consumers pay for each one individually. But few people actually get their television that way, partly because it would be so expensive.

One a compromise between large packages and consumer choice is called “pick a pack”, in which consumers buy a package of a certain number of channels, and choose which channels go in that package. Videotron’s custom package system is an example of this, allowing subscribers to benefit from volume discounts while also having choice in channels.

But there are limitations to this. The pick-a-pack system works well if every channel costs about the same. But some channels are a lot more expensive than the average. TSN ($30.79 per year per subscriber on average), RDS ($35.15) and Sportsnet ($20.78), for example, are much more expensive than a channel like DéjàView ($3.32) or National Geographic Channel ($1.90). Add in premium pay TV channels like The Movie Network ($108.11), Movie Central ($95.25) or Super Channel ($80.62), and the difference becomes much larger.

High wholesale subscription fees are why channels like FX Canada, Oasis HD and third-language channels are either excluded from the pick-a-pack system or come with extra fees.

Another limitation is U.S. channels like A&E, Spike TV and CNN. Other than approving their distribution in Canada, the CRTC has no jurisdiction over them. Most distribution contracts signed between broadcasters and distributors cover things like packaging and marketing, and often they outright forbid distributors from offering those channels individually. (The CRTC asked major distributors to give details about their contracts with such U.S. channels. Most of the responses are redacted to protect commercially sensitive information, but some providers said that they were either practically or explicitly prevented from offering these channels à la carte, while Videotron said its contracts do allow it to offer these channels in that way.)

Finally, there’s the issue of services that have more than one channel. The Movie Network is a series of channels — The Movie Network, MFun, MFest, MExcess and HBO Canada — that counts as one pay TV service. Lots of people would love to “just” pay for HBO Canada, assuming that, if separated out, the price for each would be 1/5 of the $15 or so a month they pay for the whole package. But it won’t happen that way.

The challenges have led some industry experts to argue that increased consumer choice in channel selection is actually a bad idea, that channels would cost more that way and people would get less bang for their buck. This is true, but also beside the point. No one is suggesting forbidding distributors from offering large preselected packages that give volume discounts. Videotron, for example, offers custom channel packages, but also theme packs and large all-inclusive packages for those who want as many channels as possible and don’t care what’s on them.

Related to this issue is what’s called “skinny basic“, the idea that the basic package that a distributor gives to all subscribers must only include those channels that the CRTC requires be distributed to everyone (or channels that do not come with a per-subscriber wholesale fee). The purpose is to reduce the cost of getting basic subscription television service and, again, give people more choice.

Many distributors, particularly smaller ones, are receptive to the idea, but they again point to the contracts they have signed with broadcasters (both Canadian and foreign), which include various terms that would prevent them from taking those channels out of the basic package. They include:

  • A provision that the packaging of a channel not be changed without the broadcaster’s permission (so if it’s on basic now, they can’t take it out of basic)
  • A provision requiring that the channel be distributed to a minimum number or percentage of customers, with that number being so high that only putting a channel in the basic package would satisfy the requirement
  • A provision that sets a much higher per-subscriber wholesale fee when a channel is not distributed as part of the basic package

The CRTC is also looking at how consumers are informed about changes in channel packaging by their distributor. Should there be minimum standards? Should the CRTC intervene or establish rules that prevent or regulate unilateral changes to channel packages?

In addition to the report to the government, the CRTC also published this report, which tries to quantitatively compare consumer choice within Canada and between Canada and the U.S.

What will happen: More consumer choice is coming. There’s political force behind it and overwhelming public support. Large distributors have already been slowly moving in the direction of custom packages, and the CRTC will create rules if the industry doesn’t move fast enough on its own.

But that choice will not be absolute. The commission has made clear that the channels that have been granted mandatory distribution (so-called “9(1)h” status, after the paragraph of the Broadcasting Act that gives the CRTC the authority to impose this requirement) will retain that status. The commission just went through a review of channels that have this status and isn’t going to reopen that can of worms again. The commission will also likely keep in place a rule that at least half of all channels that each subscriber’s total package must be Canadian. (In practice, because of the mandatory channels and the large number of popular Canadian channels, it’s pretty rare that this becomes an issue even with custom packages.)

Skinny basic will probably also be imposed, perhaps with a grace period. While U.S. broadcasters like CNN won’t like it (because it would encourage the same thing to happen in the U.S.), if the CRTC makes it illegal to distribute CNN on basic, they won’t have much of a choice.

2. Allowing more foreign channels

Most specialty channels in Canada (at least those in English and French) are Canadian. But the CRTC also allows some foreign channels to be distributed into the country. Under the current system, a request is made to add a foreign channel to a list of channels authorized for distribution in Canada. Once that happens, the Canadian distributor can add that channel if it has come to an agreement with the broadcaster and that that broadcaster has ensured it has the rights to distribute its programming in Canada.

Generally, the CRTC adds a channel to that list if it does not compete directly with a Canadian specialty channel. So channels like CNN, MSNBC, Fox News, Al Jazeera, CNBC, Bloomberg TV, MLB Network, NFL Network, Speed, Spike and Golf Channel are allowed here. But HBO, Showtime, ESPN, SyFy and others aren’t. (A lot of channels in the U.S. have Canadian versions owned by Canadian companies, which have the same branding and the same programs, but also some Canadian content to meet CRTC requirements. These include Discovery, History, FX, HBO, HGTV, Food Network, E! and OWN.)

The system seems to have more to do with the age of a channel than what it offers. A&E and TLC, for example, are allowed in Canada, even though entertainment and reality shows are all over Canadian cable channels. But the CRTC isn’t going to take those channels away and risk the wrath of the Canadian viewing public.

There’s a somewhat different system for third-language foreign channels. Generally, these are allowed in Canada if they don’t directly compete with a Canadian channel in the same language. Some general-interest Canadian third-language channels also benefit from a rule that requires all subscribers to add it if they subscribe to a foreign channel in the same language.

The CRTC is looking at removing “barriers” for more non-Canadian channels to enter into Canada, by allowing everything except for those channels whose distribution would harm a Canadian channel by competing directly with it.

What will happen: Not much, at least for English and French-language channels. The CRTC might change how it approves foreign channels, but the current system will probably remain about as it is now: Most U.S. specialty programming will be acquired by Canadian channels run by the big telecom companies here, who will share branding with the U.S. version but still be considered a Canadian channel.

And there’s not much of a public outcry for a change. And the channels that people do want access to directly — HBO, ESPN, Showtime — won’t be approved so long as Canadian channels have the rights to their most popular programs.

3. Simultaneous substitution

Ah, simsub. That thing that most Canadians only really care about on Super Bowl Sunday when they want to watch the American ads.

For those unfamiliar, simultaneous substitution is a rule whereby a Canadian television station can force a cable company to replace a U.S. signal with its own when the two are running the same programming. This ensures that Canadian viewers are seeing Canadian ads, and protects the rights of the Canadian station, which has paid good money to get the Canadian rights to a program.

The most common use for this is U.S. primetime programming on CTV, Global and City. The Canadian channels buy the Canadian rights to a major show, air it simultaneously (“simulcast”) with the U.S. network (ABC, CBS, NBC or Fox) and force cable companies to substitute the U.S. channel for the Canadian one in areas where the Canadian network has a local station.

Normally, it’s pretty seamless for Canadian audiences who, other than on Super Bowl Sunday, have no interest in watching ads for DirecTV, Verizon or the 11pm newscast on WPTZ. But often it runs into problems, particularly during live programs. The Super Bowl, for example, is timed to end around 10pm, with some hit primetime show following it. But it rarely does so. And worse, the Canadian network that buys the Super Bowl might not be the same that buys the program that follows it.

More importantly, a big argument against it is that it handcuffs Canadian networks, forcing them to schedule their acquired programming at the same time as the U.S. networks. This often means that original Canadian shows get unfavourable time slots (like Friday and Saturday nights) or get shifted around the schedule.

But the main argument in its favour remains that it helps Canadian broadcasters and keeps Canadian ad money from flowing across the border. The Canadian broadcasters use that money to support original programming and local news. Killing simsub would probably kill a lot of jobs.

The CRTC is exploring alternatives to simultaneous substitution. One of these would be non-simultaneous substitution, which would allow the Canadian networks to air their U.S. shows whenever they want, but still put their ads on the U.S. channels. This is complex, because it would require distributors to store programs with Canadian ads on a server, or get some special simsub feed, instead of just hitting a button that replaces channel X with a copy of channel Y.

Despite its complexity, the big Canadian media companies like this idea, because they would have more scheduling freedom, which includes giving their original shows more prominent time slots.

Another alternative could be program deletion, or blackouts of the U.S. channels when Canadian stations have the Canadian rights to a program. I think we can all agree that there’s no advantage to this over the current system.

Or there could be some other option, like paying extra for U.S. channels to compensate Canadian broadcasters for lost ad revenue. Survey respondents liked this idea more than blackouts but slightly less than the current simsub model.

What will happen: The TV universe is changing, but signal substitution is still very important to Canadian broadcasters’ bottom lines. Killing it without an alternative would take away money from them without giving any tangible benefit to the broadcasting system or the consumer. Some form of non-simultaneous substitution might be in our future, which would end the scheduling nightmares Canadians go through, and we might see some creative solutions to the Super Bowl problem (like a feed of U.S. ads that costs extra) or some improved quality assurance standards, but don’t expect it to just be dropped.

4. Local television

Local TV stations used to be our primary way of getting television programming, back when televisions had actual knobs and were hooked up to antennas. Those stations had captive audiences and employed hundreds of people because of all the technical work required to get programming on the air.

But everything has changed, even the very idea of a local television station. Most local TV stations in Canada are owned by major networks, who have the same programming nationwide except for local news, which even then is sent to a single national master control and then fed back to transmitters. Newscasts are technically automated, reducing the number of technical staff required. And there’s so much competition from specialty channels, video-on-demand or Internet streaming that the audience no longer has to tolerate sub-par programs.

Among the questions the CRTC is asking:

  • Should we still be requiring local stations to provide local programming? If so, should it continue to be based on number of hours per week, or some other metric?
  • Should we still be requiring local stations to have over-the-air transmitters? Or should we allow stations to benefit from the advantages of being a local station (such as simultaneous substitution) without one?
  • Should independent stations like CHEK, CHCH, NTV and ICI be treated differently from the major networks? If so, how?

The local television station model is clearly broken. Aside from ICI, there hasn’t been a new local television station Canada in years. Bell Media has made keeping some existing stations running part of a promise it made to the CRTC, because those stations aren’t profitable. Canwest shut down its secondary CH/E! network before it went under, selling off CHEK, CHCH and CJNT and shutting down CHCA-TV in Red Deer, Alta.

The CRTC has been looking at ways to financially support local stations. One was allowing local stations to charge distributors to carry their signals, but the Supreme Court ruled that this was outside the authority of the CRTC. Another was the Local Programming Improvement Fund, a tax on distributors that was put into a fund to help small-market stations with their local programming. But the distributors passed along the tax to the consumer, adding a 1.5% LPIF contribution directly to their bills. After the recession, the commission decided it was no longer necessary and began phasing it out. As of Sept. 1, the charge will disappear.

There’s a separate small-market local programming fund, supported by satellite companies, but otherwise local stations have to rely on advertising alone to support themselves.

Without financial help, how do we ensure that local television remains a viable business model? Or do we care?

Right now, the CRTC imposes local programming requirements on television stations with a quota, generally 14 hours a week for stations in large markets and 7 hours a week in small markets. (The numbers are smaller for French-language stations.) But it doesn’t require that all these hours be original, which means many stations can meet these requirements by repeating their evening newscasts at 6am. Is that what we want?

The idea of getting rid of over-the-air transmitters will no doubt outrage that cult of Canadians who seem to believe there’s a constitutional right to free TV and that people who pay for TV subscriptions are crazy or stupid. But few people receive TV in this way, and the cost of such transmitters is expensive. CBC, Radio-Canada and TVO shut down hundreds of transmitters in 2012 because the cost was no longer justified. In many cases, stations remain over the air mainly to benefit from simultaneous substitution rules and guaranteed carriage. Otherwise, they would be subscription TV services like Global’s BC1 or Bell’s CP24.

That said, the stations currently transmitting in digital paid a lot for their transmitters, and probably won’t be shutting them down soon. And in bigger cities like Montreal and Toronto, the business model might still work for now.

But OTA television’s days are numbered. The auction of 68 MHz of bandwidth in the 700 MHz band vacated by television during the digital transition gave the government $5.72 billion. Auctioning off the other 50 channels, which take up 300 MHz of bandwidth, would generate $25 billion in revenue if it went for the same price. More importantly, it would greatly increase the speed at which wireless devices communicate, and deliver information much more efficiently. It’s just a question of time before the demand for these frequencies for wireless is so high, and the demand for TV broadcasting so low, that the government will repurpose those frequencies.

What will happen: Probably not much. The CRTC might open the door to local stations not needing over-the-air transmitters. It might also decide to move local programming from a quota based on hours per week to a quota based on a percentage of revenue. But this isn’t a main focus of this hearing.

5. Financing of Canadian programming

Expect this item to get most attention from interest and trade groups who want to (a) ensure their continued existence and (b) get more money or keep the money they already have.

The CRTC’s questions on this matter are vague, which opens up a lot of things to discussion. Among the CRTC rules that could be reviewed:

  • Canadian content exhibition requirements (i.e. rules that say a certain percentage of a TV service’s schedule must be Canadian)
  • Canadian content funding requirements (i.e. rules that say a certain percentage of expenses must be on Canadian programming)
  • Mandatory contributions from distributors to Canadian programming (some of which can be redirected to community channels)
  • Rules supporting “programs of national interest” — original scripted dramas and comedies, documentaries and awards shows — by imposing minimum expenditure requirements for these on major broadcasters

What will happen: Lots of talk, definitely. There’s a lot of money involved. Expect an evolution of the current system that takes into account changes in technology. In a PVR world, it matters less whether a Canadian show is in primetime, but matters more whether that show is promoted well enough so Canadians know of its existence. Everyone will argue they need to pay less or get more, and in the end it will be about the same.

6. Services for minority-language, aboriginal and third-language communities

The CRTC wants to make sure that anglophones in Quebec, francophones outside Quebec, and people who speak other languages across the country get better service.

It has already moved to improve the situation by: authorizing a new mandatory service — TV5 Unis — to serve francophones outside Quebec; holding Rogers to a promise to source a minimum amount of English-language programming from producers in Quebec; approving an English-language community TV service for Bell Fibe customers in Quebec (a community TV channel for Videotron is being held up by a complaint); increasing funding to the Aboriginal Peoples’ Television Network; and renewing mandatory carriage for AMI (and approving the new service AMI télé, set to launch later this year), which provides programming for the blind. It imposes 100% closed-captioning requirements on most broadcasters and imposes quotas on video description.

What will happen: Because of the steps the commission has already taken, it seems unlikely we’ll see something change significantly. We might see higher quotas for video description, or various encouragements to provide better services to minorities of various types.

7. The balance between vertically-integrated giants and independents

The CRTC has a series of rules that prevent the large vertically-integrated companies, which own a lot of our media, from abusing their power to benefit themselves at the expense of their competitors or independents. There are rules that require distributors to include independent TV channels in their packages, or that prevent the big companies from making channels or content exclusive to their subscribers. A general “undue preference” provision prevents anyone from treating a related company better than a competitor when it comes to advertising, carriage or other business arrangements.

But is this enough? Even with these rules, it’s clear that vertically integrated companies are using their positions to benefit related services. FX Canada is on Rogers cable but not Bell TV because it’s owned by Rogers. Sun News had a long free preview on Videotron and a carriage dispute with Bell because Sun News is owned by Quebecor. TSN’s special Canadiens feed for regional games was available to Bell customers but not Videotron customers because TSN is owned by Bell. Even if in none of these cases was the channel in question actually denied to a competitor, the effect is the same.

What will happen: The CRTC moved in the direction of closer regulation in the Bell-Astral deal, forcing Bell to file its carriage agreements with the commission, and imposing tougher rules to prevent anti-competitive actions. We could see some of this proposed as industry-wide standards, or other new rules that reduce the advantage vertically integrated companies have over independents. Promotion is a big deal. The Movie Network started getting lots of promotion on CTV after Bell acquired the pay TV service through the Astral deal. Space, Discovery and other channels also benefit from lots of cross-promotion with CTV. The CRTC could set rules that mitigate this practice.

8. Set-top data ratings

This one might not matter too much to the general public, but the CRTC is looking at having digital cable and satellite companies provide data to broadcasters on ratings by getting that information directly from set-top boxes.

Currently, ratings are done by BBM Canada (recently rebranded Numeris), who send out surveys and portable meters to random samples and make estimates based on the data they receive. But with set-top box data, the sample size would be almost everyone with a digital television subscription, taking information about exactly what people are watching.

There are obvious privacy concerns about this, and some accuracy issues (the set-top box has no way of knowing if it has been left on but the TV turned off), but the main concern is ensuring that the cable and satellite companies that own broadcasters don’t give themselves a competitive advantage by giving themselves more information than they give out. If we adopt this system, it would need to be open to everyone, with everyone getting the same data. Hence the need for the CRTC to get involved.

What will happen: The commission hasn’t said definitively that it will set up such a system, or even that it would run it if it did. But if we do move to set-top box ratings, it would need to ensure the system was fair and respected subscribers’ privacy by limiting the data collected and who has access to it. How interested the major broadcasters are in getting this data will be a major factor in whether this goes anywhere.

9. Genre exclusivity for specialty channels

Aside from packaging rules, nothing is likely to change the face of specialty television in Canada more than changes to genre exclusivity and channel categories.

Under the current system, specialty channels are divided into three categories:

  • Category A channels are protected from direct competition by preventing other channels from having the same format, and they have higher Canadian content requirements, in exchange for requirements that they be distributed by all digital cable and satellite providers, and in popular packages. Most channels launched before 2000 are in this category, since the CRTC stopped approving new channels under this category after then. They include channels like MuchMusic, Discovery Channel, YTV, Canal Vie, Vrak.tv, Mystery and Documentary.
  • Category B channels have no protection from direct competition and are free to compete with each other (but not Category A channels directly). There are no carriage requirements, so distributors can decide whether or not to distribute them and at what price. Most channels launched after 2000 are in this category, including channels like Discovery Science, ABC Spark, DIY Network, FX Canada, MuchRetro and NHL Network.
  • Category C channels are mainstream news and sports channels that compete directly with each other and have common conditions of licence to ensure an even playing field.

The big issue is with those Category A channels, which enjoy de facto grandfathered special privileges, including wider distribution, genre protection and mandatory carriage (meaning distributors must have it on their systems, but not necessarily impose it on all subscribers). Because the most popular Category A channels have been scooped up by the big media companies, this gives them another advantage over independents. Space is owned by Bell, and you can’t launch your own science fiction channel because Space is protected from direct competition.

The notion of “direct competition” is confusing. You aren’t considered competing directly if you narrow your niche. So you can’t launch a movie channel (because it would compete with The Movie Network/Movie Central), but you can launch a channel that airs just action/adventure films.

The result of this scheme is that channels that shouldn’t be competing with each other in theory are in practice. And many channels whose genre is protected are moving away from that very genre. Much doesn’t want to air music videos anymore, for example.

Among the channels with this protection that have essentially abandoned their format with rebranding:

  • CMT (Corus), approved as a channel broadcasting country music videos. Now airs reality shows and sitcoms in primetime.
  • Discovery Channel (Bell), which is supposed to air science and technology programming, but puts out mainly reality shows
  • DTour (Shaw; formerly Prime/TVtropolis), approved as a channel for baby boomers, now airs reality shows and travel programs
  • History (Shaw), approved as, well, a history channel, now airs mainly reality shows about people who find or fix old things (that and M*A*S*H reruns)
  • M3 (Bell; formerly MuchMoreMusic), approved as an adult alternative to MuchMusic, but now airs sitcoms and dramas in primetime
  • Oprah Winfrey Network (Corus; formerly Canadian Learning Television/Viva), approved as a formal education channel, but now airs reality shows. (Its deviation from its purpose was so severe the CRTC slapped a mandatory order requiring it to stop. It didn’t.)
  • Sportsnet 360 (Rogers; formerly The Score), approved as a 24-hour sports news and highlights channel, but now airs live sporting events, including wrestling, MMA and collegiate sports
  • Vision (independent), approved as a religion and faith channel, but now airs acquired British shows, reruns of old dramas with mild religious themes, and brands itself as a network for baby boomers (and those slightly younger)
  • BookTelevision (Bell), approved as a channel devoted to books and authors, but now airs just about anything scripted that was once based on a book
  • H2 (Shaw, formerly mentv/The Cave), approved as a channel for men’s lifestyle programs, now airing mainly programs about science and history
  • TwistTV (Shaw, formerly Discovery Health), approved as a health and wellness channel, now airing lifestyle reality shows and this fall will rebrand to FYI, which will carry lifestyle shows about health but also fashion and food.

The problem is that natures of service, the sentence-long descriptions of what a specialty channel is about, are so vague that a lifestyle channel, a health channel and a women’s channel could have identical programming but not be considered competing directly with each other.

Clearly this needs to change, but the question is how.

The commission is looking at eliminating genre exclusivity, which would allow everyone to compete freely with each other. It commissioned a discussion paper on the topic, which looks at various options, including having more broad “buckets” like arts, lifestyle and music. Broadcasters could have flexibility instead of pretending they’re something they’re not. But independent niche channels that do need protection could still keep them.

What will happen: Expect the commission to relax genre exclusivity rules, particularly for popular entertainment channels owned by the big vertically integrated companies. These channels have profit margins in the 50% range and obviously no longer need this protection. In 2012, the CRTC looked at the possibility of opening up music channels to direct competition, much like it had news and sports. While Much and MusiquePlus aren’t as profitable as other channels, relaxing the rules could allow them to go after more popular programming while allowing others to experiment with all-music channels.

The question of what to do with the categories is more complex. Without genre protection, is there a reason to keep them separate? If so, should the CRTC end its moratorium on new licences? The commission gives a hint on what it’s thinking in the next item.

10. Simplified licensing

The CRTC is looking at reducing the number of categories of services. It’s also considering expanding exemptions from licensing. Currently the commission does not require a licence from some specialty channels with a low number of subscribers, particularly ethnic third-language channels. It’s looking at expanding this.

What will happen: Expect more small services to get exemption orders, but the big popular channels will still require licenses from the commission.

11. Standards for all-news channels

During the mandatory distribution hearing for Sun News Network, and the subsequent proceeding that led to the compromise decision to force all news channels onto all digital cable systems, many intervenors complained that Sun fails to meet basic standards for what would be considered an all-news network, and giving it mandatory carriage or mandatory distribution would give people an incentive to start an all-news channel with little to no resources that would automatically get carriage everywhere even if people don’t want it and it contributes little or nothing.

The CRTC said that wasn’t an immediate issue because no licence has been issued for another mainstream national news channel that would benefit from this. But it is looking at what minimum standards might be necessary in this hearing.

What will happen: Expect some basic standards. But expect those standards to be more about hours devoted to pure news programming, and not standards that relate to political bias or accuracy of reporting.

We might also see some discussion of whether to bring regional news channels like CP24 and BC1, or specialty news channels like BNN, into this category.

12. Parental controls

Since the advent of the V-chip in the 1990s, parents wanting to prevent their kids from seeing too much violence, sex or discussion of either has been with us. The CRTC is looking at whether there should be any change to how the system operates currently, including how programming information is delivered to subscribers.

What will happen: Probably nothing beyond some encouragements. I’m not aware of any public outcry on this issue, aside from my frustration that I can’t program my set-top box to just skip over the pay-per-view channels.

13. Competition among distributors

Most Canadians are still stuck with few choices when it comes to their TV service: either their local cable company or Bell or Shaw satellite. The emergence of IPTV companies, that distribute television through Internet connections instead of cable, is helping, but other than the big ones like Bell Fibe, their services are in their infancy, their service areas are small and their channel selection is poor. Meanwhile, cable companies are still hesitant to encroach on each other’s territory. Cogeco Cable has repeatedly said it has no intention of expanding into Montreal and taking on Videotron, for example.

Is there something the CRTC could do to help this process along? One idea is to allow small new distributors competing with existing ones to operate without a licence until they reach 20,000 subscribers.

What will happen: A new exemption order makes sense, but for competition to really happen in this country, what we need is someone with a lot of money and a desire to invest it for the long term and take on cable monopolies. So far the only companies doing that are Telus, out west, and Bell, in Quebec and Ontario.

14. Complaints about distributors

The CRTC notes that it gets more than a thousand complaints a year about billing issues with distributors, and wants to know if it should be more involved in such disputes. Should it establish an ombudsman and/or rules that establish consumers’ rights, similar to what it did for wireless companies? (Long contracts are also an issue in TV, with its users getting new set-top boxes instead of new phones.)

What will happen: Cable and satellite companies won’t be happy about this, and will argue that existing government agencies are better equipped to deal with disputes. But it’s hard to argue that when it comes to things like billing issues, TV distributors should be dealt differently from Internet providers.

15. Anything else

This list is non-exclusive. The CRTC is open to discussing other subjects about TV regulation under its mandate. If you have a suggestion, send it along.

The CRTC is accepting comments on the Let’s Talk TV proceeding until June 27 at 8pm ET. Comments can be filed online here. Note that all information submitted, including contact information, becomes part of the public record.

24 thoughts on “15 topics for debate in the CRTC’s “Let’s Talk TV” policy review

  1. Dilbert

    Much of it ends up to not very much, because it’s pretty much all window dressing on the bigger issue, which is:

    Concentration in the media industry, and vertical integration in those companies.

    Until the CRTC takes dramatic action to break up the big media gloms that either own or control almost everything and every step in the process, any step will be at best window dressing.

    I will say that the most interesting one for me is the question of local programming (and by extension, OTA programming as a whole). Local stations exist to serve a very small percentage of the population of receive OTA programming, but mostly to claim rights to sim-sub. Having a transmitter is pretty much a necessary evil to get a seat in the simsub game. Take that off the table as a requirement to simsub (or better yet, lose simsub altogether) and the remaining transmitters will likely quickly be turned off.

    Since it is truly doubtful that the CRTC will have the power or desire to address either the issue of simsub or media concentration in a meaningful matter, much of the rest of it will be for naught – the big companies will still be the ultimate gate keepers and will always assure that the same is played to their satisfaction.

    Reply
    1. Fagstein Post author

      Until the CRTC takes dramatic action to break up the big media gloms that either own or control almost everything and every step in the process, any step will be at best window dressing.

      The CRTC has rules restricting the power of vertically integrated companies, but doesn’t consider them inherently evil. If it wasn’t for Shaw, we might no longer have Global. If it wasn’t for Bell, we wouldn’t have local TV stations in places like Windsor and Victoria. And if it wasn’t for Rogers, City TV would probably have gone under years ago.

      There are big disadvantages to this vertical integration, but there are big advantages to it too.

      Since it is truly doubtful that the CRTC will have the power or desire to address either the issue of simsub or media concentration in a meaningful matter

      Vertical integration isn’t on the agenda here. The CRTC isn’t going to break up companies whose structure it has already approved. But simultaneous substitution is on the agenda, and the commission is asking if it should be scrapped. But it’s not going to do that if the advantages of it outweigh the disadvantages.

      Reply
      1. Dilbert

        “The CRTC has rules restricting the power of vertically integrated companies,”

        They are certainly working well, the small players are all disappearing and most Canadians get their programming from a small quadopoly of companies that control literally hundreds of outlets under various brand names. Can you imagine a shopping mall where every store is owned by Wal-Mart in some fashion? We wouldn’t tolerate it.

        “if it wasn’t for Rogers, City TV would probably have gone under years ago.”

        Would that have been a bad thing? Making space for new players in the game (such as City was when it started) is perhaps the better way to go. Saving these stations by adding them into the ‘gloms only creates an even bigger barrier for the next ones trying to get in.

        “Vertical integration isn’t on the agenda here. ”

        A failure to look at this is, in my mind, something that dooms the entire process. Distribution is key to the business of television, and with a small group of companies holding the keys to that castle, there is no room for growth, expansion, or change. Moreover, the big companies are generally making their biggest profits (percentage wise) in operating the specialty channels… you know, the ones that they put into expensive packages or use to fill out Canadian requirement for people to get US channels. They will have no interest in changing the rules that see the near mandatory distribution of their low rated filler channels dropped out.

        The system is pretty much gamed to support the “too big to fail” Quadopoly of Canadian broadcasting. Simsub, 40% profitability specialty channels, and low levels of competition in distribution pretty much make it a slam dunk. The end game has been played, the pie mostly divided by a few companies, and everyone else plays for the table scraps. Do you honestly think any of them are going to suggest or support ideas that might hurt their bottom lines, even if it’s good for Canadians?

        Didn’t think so.

        Reply
        1. Fagstein Post author

          Can you imagine a shopping mall where every store is owned by Wal-Mart in some fashion? We wouldn’t tolerate it.

          Wouldn’t that just be a Walmart? But yeah, I suppose there would be riots in the streets if we ever had a situation where hundreds of consumer product brands were actually owned by only a handful of companies.

          “if it wasn’t for Rogers, City TV would probably have gone under years ago.” Would that have been a bad thing?

          It would have for all the employees of City TV, as well as everyone who produces programming for it.

          Making space for new players in the game (such as City was when it started) is perhaps the better way to go.

          There isn’t a lack of space for local television. There’s a lack of interest. No one is applying for new local stations.

          Reply
          1. Dilbert

            “I suppose there would be riots in the streets if we ever had a situation where hundreds of consumer product brands were actually owned by only a handful of companies.”

            Oh look, snark. How nice. Actually, there is already plenty of consumer kickback to this sort of concentration. There is also generally no regulatory restriction to new players in the game, and these companies are not generally vertical market in a manner that dominates an industry. Perhaps one of the few places you might see it is what cola beverage is offered in a certain chain store. However, you don’t have Del Monte owning the only licensed grocery stores and only stocking their own products, so you don’t have the same issues that faces broadcasting.

            “There isn’t a lack of space for local television. There’s a lack of interest. No one is applying for new local stations.”

            Of course not. They would have to compete against mega funded ‘gloms, which makes for a pretty unfair fight. TV isn’t cheap to produce, and the lack of a true level playing field is certainly something that holds people back.

            Then again, Montreal has how many new stations on the air in the last 5 years?

            Reply
            1. Fagstein Post author

              There is also generally no regulatory restriction to new players in the game

              What regulatory restrictions are there to new players in TV? The CRTC is looking at a proposal to exempt new specialty channels from licensing until they reach a minimum number of subscribers. Would that make a difference?

              I would argue the difficulties in launching new services have more to do with the marketplace than regulation.

              Then again, Montreal has how many new stations on the air in the last 5 years?

              Exactly one (ICI). Five years ago there were nine television stations in Montreal. Now there are 10.

              Reply
              1. Dilbert

                “Exactly one (ICI). Five years ago there were nine television stations in Montreal. Now there are 10.”

                Not entirely true. Two stations have had to go through the approval process, ICI and City.

                “I would argue the difficulties in launching new services have more to do with the marketplace than regulation.”

                With less regulation, more people would be likely to want to try. It would be especially interesting if sub-channel transmission was considered a normal way of doing things, I could picture a CITY or an ICI providing a second channel for an upstart, particularly if it was non-competitive to them. It would certainly change the costs to getting on the air and staying there. Being able to sub out the transmission end to others would certainly change things for many.

                Regulation gets in the way. You cannot open a new TV station in Montreal if the others argue you might take away their income. Competition is basically not permitted unless there is enough pie for everyone. There is just no simple way to propose a new commercial channel in the Montreal market.

              2. Fagstein Post author

                Not entirely true. Two stations have had to go through the approval process, ICI and City.

                City was an ownership change and licence amendments. The station has been on the air since 1997. Regardless, the point remains: There’s no race to fill the airwaves with new television transmitters.

                It would be especially interesting if sub-channel transmission was considered a normal way of doing things, I could picture a CITY or an ICI providing a second channel for an upstart, particularly if it was non-competitive to them.

                Maybe. It certainly makes sense for ICI to provide subchannels that can provide programming 24/7 in its most popular languages. But for whatever reason, there haven’t been many requests to use multicasting, despite repeated suggestions from the commission that this might be a good way to solve various problems.

                You cannot open a new TV station in Montreal if the others argue you might take away their income.

                If that was true we wouldn’t have Global or City in Montreal. The CRTC won’t deny a new station if it takes away income from existing ones. Rather, they’ll deny a new station if it takes away so much income from the incumbent that it risks making that station no longer financially viable.

                There is just no simple way to propose a new commercial channel in the Montreal market.

                Sure there is, just fill out an application. I’m unaware of anyone who has applied for one in the past decade and been denied.

  2. Bert

    The role and treatment of American TV stations in the package line up is going to be an issue, will they be discretionary, mandatory, consent, no consent, local, distant?? It will be interesting to see if the bid US networks comment…

    Reply
  3. @MontrealOTA

    “The idea of getting rid of over-the-air transmitters will no doubt outrage that cult of Canadians who seem to believe there’s a constitutional right to free TV and that people who pay for TV subscriptions are crazy or stupid. But few people receive TV in this way, and the cost of such transmitters is expensive.”

    I disagree with this statement on many levels:

    “Cult of Canadians who seem to believe there’s a constitutional right to free TV and that people who pay for TV subscriptions are crazy or stupid”

    I don’t think anyone believes this is a constitutional right except in the case of the CBC, which I can sort of understand if I’m a rural taxpayer who funded the CBC for many years only to have my transmitter shut off with no option. (At least if CBC unencrypted its FTA satellite feed people probably wouldn’t have clamored as much)

    I believe the point here is that (a) not everyone can afford TV (b) most people put a budget on their entertainment and choose not to subscribe to TV to spend elsewhere (c) some people don’t like dealing with BDUs for whatever reason (d) some people don’t watch enough TV to justify entering into a subscription contract (would you agree to a year-long subscription to a magazine and only glance at a few pages per year?)

    I’m not broke. I have money to spend if I desire. Every workday I drive in to my usual Metro station and listen to the radio (for free). If I really like an artist I am more than happy to buy their song on iTunes (a one-time purchase). As a consumer, why should my only option for music be subscribing monthly to a service like Sirius/XM radio?

    In the Metro, I pick up the free daily newspaper that goes by the same name to read while going into work. Sometimes I will make a one-time purchase of the Saturday Gazette to read over the weekend, but sometimes I will simply catch up on The Suburban and Chronicle that are delivered to my door once a week for free. As a consumer, why should my only option for print media be a subscription to a big city newspaper?

    At home, I catch over 20 channels via an OTA antenna. I record my favorite shows using an antenna DVR from ChannelMaster. I occasionally buy BluRays of new movies and HBO/A&E series to complement my OTA feed. When I’m done, I usually resell them or lend them/swap with friends. Maybe one day I’ll sign up to Netflix. Why should a subscription to Bell or Videotron be my only option?

    If there is a significant audience that watch TV via OTA, then OTA TV won’t be going anywhere anywhere soon. The key word here is “significant”, as the CRTC and most BDUs seem to think it’s zero.

    We don’t think people who pay for TV are stupid. But in the same breath, not everyone who pays for TV should think it’s the only option out there.

    “But few people receive TV in this way”

    True, but that number had not decreased to nil and is actually starting to increase as internet streamers look to fill the gaps for network programs and local TV. Evidence includes a surprising jump in home antenna sales since the digital transition (Antennas Direct, Winegard) and a plethora of new products that have flooded the market (with large success in the US and now entering into Canada) that allow OTA TV signals to be added to WiFi networks for PVR capabilities and viewing from smart TVs (Simple.TV, HD HomeRun, Mohu Channels, Channel Master’s DVR+ and Ottawa’s very own TabloTV). People are now streaming network shows from their antennas free of charge and streaming the more premium content from the internet. Doesn’t sound like a dying technology to me.

    “the cost of such transmitters is expensive”

    Since its inception, DTV technology has supported multicasting: that is broadcasting two or more digital ATSC TV channels from one transmitter. The current technology has enough bandwidth (about 19Mbps) to allow two 720p streams to run with very good quality. Issues arise when multiple 1080i streams are done or many 480i subchannels are added (kind of like what Vermont PBS is discovering now after adding PBS+ on 33.2) In the States, many cities have stations sharing these transmitters. In Canada, CBC and SRC each paid to put up their own transmitters rather than combining both stations on one and multicasting; effectively doubling setup and maintenance costs, and then proceeded to complain about financial problems shortly thereafter.

    So don’t blame broadcasting; the technology was there from day one but no one was bright enough to use it here north of the border.

    Reply
    1. Dilbert

      “effectively doubling setup and maintenance costs, and then proceeded to complain about financial problems shortly thereafter.”

      It’s the nature of the Canadian system – insanely wasteful, conservative, and the bill of course always comes back to the consumer in some manner or another.

      You get to see the difference between the relatively freewheeling US system and the tied down, locked up, overly regulated Canadian system. Outside of one case that I can think of, any subchannel operations are limited by the CRTC – basically, they want to license each new use as a completely new application, so it’s not easy to leverage the transmitter resources. The majors like it that way, because it keeps there from being a cheaper way to get stations on the air.

      Reply
      1. Fagstein Post author

        any subchannel operations are limited by the CRTC – basically, they want to license each new use as a completely new application

        I have seen no policy or decision from the CRTC that supports this interpretation. In fact, all uses of multiplexing for over-the-air television are handled through licence amendments rather than new licenses. But there have been very few applications because there’s not much of a business case anymore for television services that receive no subscription revenue.

        Reply
        1. @MontrealOTA

          Hi Dilbert,

          the author is correct – the only hurdle we’ve seen to date that CRTC regulation has presented to subchannels is the number of stations in a single market that can be owned by the same parent company. For example, CTV2 could be a subchannel of CTV CFCF-12, but both are owned by Bell.

          As for the business case, it will only make sense if more people cut the cord and use antennas for local channels. If the audience is large enough, the business case to reach out to that audience will be somewhat restored. What’s odd is the cost of pay TV increased faster in the past year than food and shelter; yet people do not cut back on their packages and keep paying higher prices for some bizarre reason. Digital fees, timeshifting fees, HD fees and basic sports packages all increased in price, yet the BDUs only lost a minimal amount of subscribers. Obviously there is no way to beat that business case unless consumers show the BDUs that there is a limit to what they can charge.

          In most Canadian urban areas, an OTA antenna setup for local channels and a streaming setup for on-demand content is becoming increasingly popular, especially with DVR solutions being offered that consolidate both (TabloTV, DVR+, etc) . But it will take years for those numbers to show in CRTC reports, so hopefully free OTA signals will still be around by then.

          Reply
          1. Fagstein Post author

            the only hurdle we’ve seen to date that CRTC regulation has presented to subchannels is the number of stations in a single market that can be owned by the same parent company.

            It’s not clear that this would prevent a station from having multiple signals. There simply haven’t been enough applications to set a precedent on this yet.

            Reply
            1. Dilbert

              The point is Steve that if each new channel has to pass through an approval process similar to what happened with City or Global, then it is unlikely that we will ever see sub-carrier operations that bring new services into the market.

              As an example (hypothetical) what happens if Global decides that in order to have the biggest footprint for it’s news channel that it will use subchannels on all of it’s current Global stations to distribute it for free? Under current rules, they would have to justify in each marketplace the total viability of the station and also at the same time it’s impacts on other broadcasters by adding the service into the marketplace. Yet, if they make it available on cable, they don’t have to do that – even if the cable company puts it as part of it’s default, basic tier.

              In the US, once the transmitter itself is approved, the uses for it are generally not limited. In Canada, any use of the sub-channels would be considered as a completely new application (minus perhaps some of the technical considerations of channel and antenna placement).

              So without a change in the basic approach to licensing, it’s unlikely to see CBC newsworld or CTV news (or CTV 2) or even TSN or Sportsnet OTA – quite simply, the process to license them would be off the charts.

              Reply
              1. Fagstein Post author

                The point is Steve that if each new channel has to pass through an approval process similar to what happened with City or Global, then it is unlikely that we will ever see sub-carrier operations that bring new services into the market.

                Why not? Licence amendments happen all the time. And depending on the nature of the amendment, it can require a full hearing or be approved without a public process. The CRTC could even establish a standard licence condition related to the use of subchannels. But there’s no demand for it.

                what happens if Global decides that in order to have the biggest footprint for it’s news channel that it will use subchannels on all of it’s current Global stations to distribute it for free?

                That won’t happen for the same reason CTV, CBC, Radio-Canada and TVA don’t distribute their news channels in this way: It would deprive the channel of subscription revenue, which is vital to its business model.

                In Canada, any use of the sub-channels would be considered as a completely new application

                Actually, it would be considered a licence amendment. That’s how all the cases for using subchannels so far have been handled.

                So without a change in the basic approach to licensing, it’s unlikely to see CBC newsworld or CTV news (or CTV 2) or even TSN or Sportsnet OTA – quite simply, the process to license them would be off the charts.

                The reason TSN isn’t available over the air isn’t because the regulatory process is too onerous (Bell Media has a very well equipped regulatory department). It’s because TSN receives $280 million a year in subscription revenue, which it isn’t about to give up. Same thing for all other specialty channels.

                As for CTV Two, there might be a business case for making that channel available in other cities over the air if Bell could get around the diversity of voices policy and ensure it could also implement simultaneous substitution. If Bell wants to make that case, it’s welcome to try.

              2. Dilbert

                “he CRTC could even establish a standard licence condition related to the use of subchannels. But there’s no demand for it.”

                There could be demand, but a new service in the market would not be an amendment, it would be a new license. The only sub-carrier cases so far have been amendments because they have essentially been adding a cropped channel that duplicated an existing service.

                The best example case is http://en.wikipedia.org/wiki/CFTV-DT – but as a non-profit, they were treated a bit differently. it shows that technically there is no problem (it is pretty easy to do) but the regulations get in the way of doing it. Otherwise, it would be a pretty simple deal for CBC to use subchannels to offer french and english service across the country with much fewer transmitters.

                What’s funny is you say it’s not regulation, and then you highlight that CTV2 isn’t like to make it because of regulation. Which is it?

              3. Fagstein Post author

                There could be demand, but a new service in the market would not be an amendment, it would be a new license.

                Again, the CRTC has not set a regulatory framework for digital subchannels. There’s no reason to believe a proposal for a new subchannel would require a separate licence, and all the cases so far have indicated otherwise. The application form for new television stations also includes a section on multicasting.

                Otherwise, it would be a pretty simple deal for CBC to use subchannels to offer french and english service across the country with much fewer transmitters.

                It is a pretty simple deal. In fact, the CRTC has already suggested it. But the CBC is against it, because it would mean degrading the main signal. It’s a ridiculous argument, but it’s the one they’ve made. The CBC has never suggested that regulations are preventing it from multicasting.

                What’s funny is you say it’s not regulation, and then you highlight that CTV2 isn’t like to make it because of regulation. Which is it?

                Multicast channels would still be regulated. It’s unclear if adding CTV Two as a subchannel to CTV would be allowed under the CRTC’s common ownership policy. But there’s not much of a business case for CTV Two unless it could get simultaneous substitution from cable providers here.

                Maybe stations like CFCF might want to add CTV Two even without that, so the small number of over-the-air viewers who can’t get American stations would be able to see some of its programming. And maybe the CRTC would be okay with that. The point is that nobody has tried this. And it’s silly to blame the CRTC for that because it hasn’t done anything to discourage these kinds of applications.

              4. Dilbert

                “The application form for new television stations also includes a section on multicasting.”

                Yes it does. However, you don’t have to read far to understand that multicasting does not exempt the additional channels from the normal process of getting approved as a broadcast channel, unless they are replicating services (such as a letterbox or square version that some use). Nothing in the regulations says that you can slap anything you want on a multicast without the regular process.

                “Multicast channels would still be regulated.”

                Exactly the point. Not only would they have to prove the technical feasibility of putting the channel up, but they would also have to pass the standard regulatory issues in regards to adding a new broadcast channel into the marketplace. By regulation and CRTC standards, it would be all but impossible to get a new broadcast channel in English on the air in Montreal, as an example – even if it was an existing cable channel converted.

                “he CBC is against it, because it would mean degrading the main signal. It’s a ridiculous argument, ”

                Not only ridiculous, but easily shown to be not true. Unless someone at the CBC is looking way into the future to 4K tv broadcasting, they have missed the boat here. If the CRTC accepted such a lame excuse, shame on them. There is absolutely no reason for such wasteful use of the public spectrum, nor any reason to deny francophones outside of Quebec or Anglos inside Quebec access to both language channels, and at a significantly reduced cost.

                Where is the CRTC’s leadership on this?

              5. @MontrealOTA

                I agree 100%. The signal only gets degraded when you try to cram too much in there but there are several options:

                – Running two 720p feeds work great with the current bit rate so this should never have been an issue. Considering CBC downgraded their original 1080i signal to 720p to appease the cable providers, this excuse holds even less water. CBC and SRC could have shared transmitted and still broadcast in the same HD quality they have now, and would probably still be better than what you see after compression on cable.

                – Running two 1080i feeds has been proven possible and the kinks mostly worked out by US stations years ago. Some use a method (called “MUX” for short) which adjusts and “borrows” bandwidth for feeds that require higher refresh rates, like fast-moving action movies or sports. For example, if CBC were running at 1080i on the primary channel, it could borrow bandwith from an SRC subchannel showing the local news. The difference would be negligible for people watching the news while the refresh rate on the hockey would be more fluid.

                – As for your comment on 4K, I doubt CBC was intelligent enough to look that far ahead. If they did, they would have seen that the upcoming new ATSC 3.0 standard (we’re at 2.0 currently) has already looked into this and was already demo’ed earlier this year at CES (I believe by Hearst broadcasting which used their local station and setup an antenna on the roof of the Las Vegas Convention Center)

                So you are correct, there was no technical hurdle presented by DTV broadcast technology to the CBC.

  4. Joe Clark

    You know what an unordered list is, but not what an ordered list is. OL LI H2 or just OL LI STRONG is the way to mark up a numbered list, never ever by pretending you are using a typewriter and writing out every number.

    Reply
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  7. NaBUru38

    Genre exclusivity equals monopoly. Why on earth would a government give a monopoly to Discovery Channel, MTV or The Movie Network?

    Reply

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