Mr. Robert A. Morin
Secretary General
Canadian Radio-television and
Telecommunications Commission
Ottawa, Ontario
K1A 0N2

Dear Mr. Morin:

During our presentation to the Commission on May 6, 2009, Vice-Chair Arpin asked me to file comments regarding the Bell Television "FreeSat" proposal.

At the outset, we wish to congratulate the Commission for providing leadership on the issue of Canada's conversion to over-the-air digital television. In contrast, we note with regret that the Government of Canada has yet to respond to the Digital Task Force report which was submitted to the Department of Canadian Heritage in 1997. Canada is required by treaty to abandon broadcasting transmission on the relevant VHF and UHF television spectrum by 2011. Thus far, the government has announced no subsidy to assist analog households to acquire converters. Nor has the government offered to assist broadcasters with the substantial cost of digital conversion.

If the FreeSat proposal were to be launched, Bell representatives have estimated that consumers would need to purchase a satellite dish and converter equipment at a cost in the order of $350-400 per household (plus installation). We ask the Commission to bear in mind that one reason why almost 10% of Canadians receive their signals over the air is because they cannot afford to subscribe to a cable or satellite distributor. The FreeSat proposal needs to be examined in this context.

In our submission, FRIENDS advocated on behalf of the three million Canadians who rely on OTA reception. Canadian Media Research Inc. has found that "given the slowing trend in the past 4‐5 years, it seems unlikely that the OTA segment will decline by much in coming years" and the CMRI study also indicates that 26% of OTA viewers cannot afford the BDU charges. In other words, OTA viewing by millions of Canadians will continue to be a feature of our audio‐visual system well into the future.

Cities with OTA viewing exceeding the Canadian average include: Windsor (27%), Saskatoon (15%), Montreal (14%), Quebec and Sherbrooke (13%). Even in cities with a lower proportion of OTA viewing, the number of viewers is substantial, for example: Toronto (477,000), Vancouver (138,000), Edmonton (113,000), and Ottawa (111,000). CMRI also reports that, even in households subscribing to a BDU service, not all television sets are hooked up to the cable/satellite service. OTA viewing accounted for 25% of TVO's audience in 2006, 16% for CBC‐TV, 14% for CTV and 8% for Global.

We understand that the proposed FreeSat service would provide a minimum of five local and regionally relevant stations to communities across Canada which would otherwise no longer receive over-the-air television signals after the conversion to digital transmission had been completed and where local broadcasters have chosen not to build an OTA digital transmitter.

Reception of these standard definition digital signals would be provided free to consumers who spent $500 to replace their OTA antenna with a KA band satellite dish and a set top box, which would be authorized to receive the FreeSat service. Customers would also be responsible for the cost of installation, if required. Bell would utilize a specifically designed FreeSat dish but the set-top box would come from Bell's existing stock.

While FreeSat customers would not be required to subscribe to any of Bell Television's services, the FreeSat dish would be capable of receiving many Bell Television services. These would be available to the FreeSat customer at additional cost should the customer choose to subscriber to these services. Conversely, if existing Bell Television customers wished to downgrade to the FreeSat service, they would be able to do so by replacing their current equipment with the FreeSat equipment, also at their expense.

Assuming timely acceptance of all terms of the FreeSat proposal, it is estimated that the service could be up and running by the end of September 2010, well in advance of the Commission's target digital completion date of August 31, 2011.

The cost of back hauling the local signals to the Bell Television uplink facility in Toronto would be borne by the individual station group or, where applicable, the independent station.

Bell Television would operate the FreeSat service on a cost recovery basis¹ only, with the following costs recouped from monies that Bell would otherwise have paid to the Local Programming Improvement Fund (LPIF) including:

• Start-up costs for FreeSat
• $1 million for bandwidth costs annually
• Customer care
• Cost of software for the dishes
• Annual maintenance costs
• Warranty repairs to boxes and equipment
• Cost and maintenance of the head end equipment and security system
• Broadcasters would be expected to give up their rights to distant signal revenue

Bell Television has estimated that, other than startup and bandwidth costs, all other costs would equal $50 per household per year, or $4 million per year based on the 80,000 subscribers that Bell projects for FreeSat. The offer to implement FreeSat service is contingent on Bell Television's overall contribution to Canadian programming (Canadian Television Fund, Bell Fund, small market programming fund and the LPIF) not exceeding 6% in the aggregate, as well as successful resolution of the distant signal negotiations with the station groups.

Maintaining a conduit by which current over-the-air homes can continue to receive their local signals is an important public policy issue, and FRIENDS applauds Bell Television's initiative in proposing FreeSat. In many communities we consider that the introduction of FreeSat could result in many homes getting an even better selection of television choice than they currently enjoy.

We note, with regret, however, that in many cases Bell Television does not seem to envisage including regional services such as TV Ontario or comparable educational broadcasters, apparently because their signals are regional, rather than local. We believe that provincial educational broadcasters' signals are already delivered to the Bell uplink facility. We recommend that Bell Television amend its proposal to include the provincial educational broadcaster, where it exists, as part of the FreeSat package of channels.

FRIENDS' primary concern is for the 3,000,000 Canadians who now receive their television signals over-the-air, as well as the overall impact that acceptance of this proposal would have on resources in the LPIF.

Considering that approximately 900,000 households' access to television reception may be curtailed by digital conversion, we recognize that many are located in urban areas where they have access to cable monopoly services but choose not to subscribe. FreeSat will probably not appeal to those households, including residents of large apartment and condominium buildings (multiple unit dwellings). Rather, we consider that FreeSat will be an attractive option to some residents of rural communities who can afford the initial capital outlay.

Analog households in most larger urban communities will have access to OTA digital signals, and therefore will be able to utilize a simple digital convertor box to watch television. As I mentioned to Vice Chair Arpin on May 6, FreeSat is a misnomer, as it would cost $500 to install. And, while it has promise in rural and smaller urban areas to help relatively affluent families, it does not address the issue of the other 90% of Canadians who currently receive analog signals over the air.

Yours sincerely,

Ian Morrison
Spokesperson

cc: Bell Video Group

¹ Bell Television has offered the Commission full audit rights for the FreeSat service.