Mediacheck

Those TV Ads Where TV Companies Bash TV Companies

What's that about? Welcome to the 'fee for carriage' fight, and how to solve it.

By Michael Geist 3 Nov 2009 | TheTyee.ca

Michael Geist holds the Canada Research Chair in Internet and E-commerce Law at the University of Ottawa, Faculty of Law. His column on digital media runs every Tuesday in The Tyee. He can reached at mgeist@uottawa.ca or online at www.michaelgeist.ca.

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Settle it by giving consumers a choice.

For the past two months, Canadians have been subjected to a non-stop marketing campaign pitting two deep-pocketed industries -- broadcasters and broadcast distributors -- against each other. Television and radio commercials, full-page newspaper advertisements, websites and Twitter posts all seek to convince the public that new fees for local television signals are, depending on your perspective, either a TV tax or crucial funding to save local television.

Broadcasters claim some local TV stations will close if they do not receive millions in additional fees from cable and satellite companies as compensation for distributing their signal. Cable and satellite companies leave little doubt they will pass along any new fees -- possibly as much as $10 per month per subscriber -- to their customers. The additional fees inevitably will not come from the bottom lines of cable and satellite companies, but rather from the pockets of consumers.

While the reaction for many Canadians might be sensibly to tune out the entire mess (yesterday was the deadline for comments), politicians and regulators will still be left seeking a solution. In fact, some politicians have pledged to support local television, but also promised to avoid new consumer costs. Can these two positions be reconciled?

Perhaps.

Consumer choice is key

The answer may lie in giving consumers more choice, by allowing them to pay only for the channels they want -- regardless of whether they are local, foreign, or specialty (such as CNN or movie networks).

A full "a la carte" model would require three steps. First, exclude public broadcasters from the issue altogether. The CBC argues it is also entitled to fee-for-carriage compensation, yet that runs counter to the very notion of a public broadcaster. The public has already paid for the broadcasts and should not be asked to pay again. Public broadcasters should instead form a new basic tier for cable and satellite providers that would be considerably cheaper since it would only include channels for which no fees are attached.

Second, make all remaining channels -- local, foreign, and specialty -- optional for consumers. Groups of channels can still be packaged to offer better value (sports, movie, local channel, or U.S. channel packages), but the crucial difference from the current system would be that Canadian consumers would get to decide what channels they want to pay for.

Third, institute a fee-for-carriage system so private broadcasters are compensated for their local signals where consumers choose to subscribe. If Canadians are really concerned with their local television, they will subscribe and the broadcasters will be the beneficiaries. If the Canadian broadcasters are wrong, however, they lose both compensation and mandatory carriage.

More Canadian stuff from Canadian broadcasters

Such a system should meet everyone's needs. Politicians succeed in getting local television stations fees for their signal without forcing consumers who don't want the channels to pay for them. Consumers gain much-needed control over their cable bills so that they are not forced to pay new fees for signals they don't want. Broadcasters get their long sought-after fee-for-carriage model.

Moreover, this approach fosters incentives for broadcasters to invest in local news and original programming. Strategies based on simply licensing popular U.S. content will become less effective as consumers anxious to view those programs subscribe to the U.S. channels rather than the Canadian simulcast.

Adopting a genuine choice model would undoubtedly represent a dramatic shift in Canadian broadcast policy that has long featured must-carry obligations for Canadian broadcasters. Yet it is the broadcasters themselves that argue for a new paradigm. A system that matches fee-for-carriage with consumer choice may best reflect the needs of a television universe scarcely imagined when the Broadcasting Act was first drafted.  [Tyee]

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