What the Broadcasters Really Want

In the weeks leading to the Canadian Radio-television and Telecommunications Commission hearing on broadcasting licences, Canadians were inundated with splashy advertising campaigns claiming that new fees for local signals were either a TV tax or would save local television. With all of the major broadcasters and cable companies appearing before the commission, the fee-for-carriage (or value-for-signal) issue unsurprisingly took centre stage at last week's hearing.

Yet those convinced that the broadcaster plan was limited to a new fee were in for a rude awakening. Fee-for-carriage is only part of the story, as broadcasters are also seeking to block U.S. signals, leave some Canadian communities without over-the-air television, and delay the transition to digital television transmission until 2013.

The prospect of blocking U.S. television signals will come as a shock to many, but both CTV and Canwest, Canada's two largest private broadcasters, have asked the CRTC to establish a new program deletion policy.

For many years, Canadian broadcasters have benefited from simultaneous substitution, which allows them to air U.S. programs at the same time as U.S. broadcasters but to substitute their broadcast (complete with advertisements) on both channels. That policy is the reason programs such as House or Desperate Housewives air simultaneously in the U.S. and Canada, creating an important commercial advantage for Canadian broadcasters.

The broadcasters now wish to expand the simultaneous substitution policy with program deletion. It would provide that when a Canadian broadcaster purchases the rights to a U.S. program, they would have the right to air it whenever they choose within a seven-day window. The hook is cable and satellite companies would be required to block the U.S. broadcast of the same program if it did not air simultaneously.

Mom, why is the screen blank?

The proposal, which would lead to millions of Canadians regularly encountering blank screens instead of expected programs, would perversely increase the attractiveness of U.S. programming. Moreover, given the increasing expectation of on-demand program viewing, it seemingly would send more Canadians away from broadcast television to the Internet where there are no blackout messages and most programs are readily available in both legal and illegal forms.

The broadcasters also confirmed some Canadian communities will lose their over-the-air signal as part of the transition from analog to digital. For decades, Canadian broadcasters have used spectrum to transmit over-the-air analog broadcast signals; estimates indicate ten per cent of Canadians still rely on over-the-air TV signals.

The shift to digital transmission brings several advantages including better image and sound quality and more efficient use of spectrum that will open the door to new telecom services. Yet the broadcasters are not willing to invest in digital transmitters for all communities, leaving residents of Kingston, Sudbury, Thunder Bay, and Kelowna (among others) without over-the-air signals.

Moreover, the broadcasters admit they will not be able to complete the transition by the Aug. 31, 2001 deadline. Instead, they now target 2013, four years later than their U.S. counterparts.

A spectrum yearning to be free

A delay necessarily will hold up the availability of new spectrum to be freed-up as part of the transition. This spectrum -- known as the 700 MHz spectrum -- opens up a host of possibilities for new innovation, competitors, and open Internet access. For Canadians anxious for new entrants into the wireless sector, delayed availability of the spectrum will mean more delays in spectrum auctions, keeping the market at a stand-still and costing taxpayers billions of dollars in lost spectrum revenue.

If the plan is fully adopted, Canadians would be left with blacked out broadcasts, lost spectrum revenue, and delayed telecom competition. After a week of hearing from broadcasters and cable companies, it is clear that the hearing is about far more than TV taxes and saving local television.