The latest CRTC announcements Cheryl Binning
Industry Centre > Blogs > Articles > The latest CRTC announcements | Cheryl Binning
Posted by Cheryl Binning
on Thursday, July 16, 2009.
Categories: Television, Legal, NSI, Articles
There has been a flurry of announcements coming out of the Canadian Radio-television and Telecommunications Commission (CRTC) in the last month – the majority of which are making conventional broadcasters smile and cable companies scowl.
As for whether the TV viewer at home will see any positives out of these decisions remains to be seen – although it looks like current levels of local programming (news and magazine shows) and a heftier cable bill is the likely outcome.
Last fall the Canadian broadcast regulator announced a new fund to support local television programming in markets with a population of less than 1 million.
Recently, the CRTC decided – as a temporary measure -to increase the money available in the Local Programming Improvement Fund for the 2009/10 year from $68 million to over $100 million. The money must be used for local news and magazine programming.
This is good news for cash-strapped conventional broadcasters, which will now have the money to invest in smaller market stations, which they have said are becoming less viable to run due to the economic downturn; the large infrastructure and money required to make local news and magazine programming; and shrinking ad revenues in these markets.
In fact, in recent months, broadcasters have indicated they can no longer afford to run smaller market stations – and may even have to close some stations – unless they received additional funding. Apparently, the CRTC took their threat to shut stations seriously.
However, the increase to the Local Programming Improvement Fund is not making the cable and satellite companies happy as they are the ones stuck paying for the fund. The CRTC has mandated that they contribute 1.5% of their gross broadcasting revenues to this local programming initiative.
Rogers Communications, for example, has stated in the press, that ultimately they will have to pass on this fee to subscribers – which means you and I will be paying more on our cable bill to support local programming at smaller stations across Canada. If you live in a small market community and watch local TV, perhaps you won’t mind if your cable bill increases. If you live in a major centre you might not be quite as impressed to pay for something you aren’t getting any value out of.
Interestingly, at the same time as the regulator offered more money for local television, another CRTC decision could actually decrease programming at some local stations.
The CRTC awarded broadcasters more flexibility to reduce local programming hours in small markets. In metropolitan markets, all English-speaking stations will now be required to air a minimum of 14 hours of local programming a week and in smaller markets 7 hours per week. (Previously the requirements ranged from 4 hours to over 30 hours a week depending on the station, so some outlets will see their local programming commitments decrease).
So now if a local show isn’t performing, broadcasters can axe the program if the station is already surpassing the new minimums. Before, they often had to keep a show on the air just to live up to their local programming commitments.
New regulatory framework for conventional television broadcasters
The Commission also launched a public proceeding to develop a new regulatory framework for conventional television broadcasters. The hearings will take place this fall.
The CRTC noted that with all the rapid changes in the industry there is a need to rethink the model for conventional television and give broadcasting ownership groups the flexibility to adapt to this changing environment.
But there is another nugget within the CRTC public hearing announcement that has the entire Canadian industry talking.
Fee-for-carriage
After twice denying conventional broadcasters the right to charge cable companies fees for carrying their signal, the CRTC has changed its mind and opened the doors to fee-for-carriage, stating that the fall hearings will look at “establishing through negotiation the fair market value of these signals.”
If you aren’t aware of the fee-for-carriage issue, here’s a quick summary. Specialty channels charge cable and satellite companies a fee to carry their signal and distribute it to their subscribers. However conventional over-the-air TV stations – like local Global and CTV – are not allowed to charge this fee. Cable and satellite companies are mandated to distribute these local stations for free.
Over the past year conventional broadcasters have argued that they need to start charging cable companies to carry their signal in order to stay afloat. They say they incur losses on their large Canadian programming commitments mandated by the CRTC and they are losing audiences to specialty channels and the Internet, so ad revenue is falling.
So the fact that the CRTC is now allowing negotiations for carriage fees is a huge victory for conventional broadcasters. And it’s a huge loss for the cable companies.
Not surprisingly the cable companies are stomping mad. They argue that fee-for-carriage is just a cash-grab by big companies like CTV and Global to get extra money to subsidize their bad business decisions. In recent years these media companies have gone on huge spending sprees, buying up specialty channels at high prices, and now face huge debt loads.
Cable companies also point out these conventional broadcasters aren’t that poor – after all they spend millions of dollars buying American programming, and own specialty channels that receive carriage fees. Plus, the cost of paying for Canadian programming is already subsidized by taxpayers through the Canadian Television Fund.
Naturally, it’s the consumer that will pay the price when cable companies start paying fees to conventional broadcasters. Cableco’s are indicating that the new charges they incur will be passed on to subscribers, although how much this will add to cable bills remains to be seen.
If subscriber fees rise due to fee-for-carriage and the local programming fund, it’s likely that an increasing number of people will cancel their cable or satellite subscription, opting instead to watch programming over the Internet.
So, in fact, the ultimate impact of these CRTC decisions may just quicken the pace towards what is already happening – the demise of the traditional TV system and the move towards online and digital platforms as the main source of program viewing.
And on the subject of the Internet and digital platforms, a couple other recent CRTC decisions are also important to note. The CRTC has announced that, at this point, it has no plans to regulate new media broadcasting services.
Many industry organizations were calling for some sort of regulatory policy surrounding new media broadcasting, but the CRTC has decided to monitor this environment but not set any ground rules.
The Commission also vetoed a proposal that financial support is required for the creation and presentation of Canadian new media content.
Internet traffic-shaping
Staying with the Internet, the CRTC is looking now at ‘traffic shaping’, a practice whereby Internet providers let certain types of data travel faster and more unimpeded through their networks than other data. They’re looking to see if companies should be allowed to do this.
Some providers say they need to be able to manage their traffic to maximize service for their customers - but critics worry they could use this as a tactic to stifle competition from smaller providers who rent bandwidth from them; give preference to the content they provide over others’ content; and choke things like the legitimate use of BitTorrent and pay-per-download movie rentals.
Some fear if Internet providers have the ability to make your content download slower than another’s content, that’s as bad for business as a cable company sticking your channel way up at the top of the dial where no-one will look for it.
The CRTC has also announced the ground rules for digital transmission.
Digital transmission
The U.S. broadcasting system has just completed a switchover from an analog to digital broadcast system. Canadian broadcasters have to make the conversion in just over two years.
Canadian broadcasters have argued that investing in new digital transmitters for local over-the air stations is very expensive, especially since most Canadians use cable and satellite providers and don’t rely on over-the-air signals. They say it is only economically viable to do the switchover in major cities.
In another victory for the broadcasters, the CRTC has agreed and announced conversion to digital transmitters must take place only in major markets (national capital and all provincial and territorial capital cities) and markets with populations greater than 3,000 people.
As a result some small communities will lose their free over-the-air signal (that they could actually still get with old-fashioned bunny ear antennas). This means that to watch local channels in small towns, people will have to subscribe to a cable or satellite service. If they can’t afford to do so, their TV set will fade to black.
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Views expressed here are the views of the author and do not necessarily reflect the views of the National Screen Institute - Canada (NSI).
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The views expressed here are the views of the author and do not necessarily reflect the views of the National Screen Institute - Canada (NSI).