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Fair treatment for American TV stations good for Canada by Francis Schiller

Feb 10, 2014

As the CRTC completes the ongoing review of the Canadian TV system and prepares its report back to the government on pick-and-pay channel options for consumers, now is the time to provide fair treatment and due process for American TV stations in Canada’s retransmission processes.

Source: The Hill Times

OTTAWA—In the run-up to last week’s NFL Super Bowl, Jean-Pierre Blais, chairman and CEO of the Canadian Radio-television and Telecommunications Commission (CRTC), dropped a penalty flag and called Rogers Communications offside for telling customers that the CRTC is to blame for the irritating practice of inserting Canadian commercials over U.S. television broadcasts.

This commercial swapping, called ‘simultaneous substitution’ in regulatory jargon, is not only disruptive for football-loving Canadian TV subscribers. It is a side effect of a much deeper problem that’s undermining Canada’s TV system.  This is detrimental for Canadian broadcasters, businesses and consumers alike. 

The larger problem, of course, is rooted in the basic unfairness that underlies the way the CRTC ‘authorizes’ Canadian cable and satellite TV services to take broadcast signals from American television stations and sell them to Canadian TV subscribers.

Under the current regime, American stations have no say and they have few rights in this uniquely Canadian administrative process.  

Canadian cable and satellite TV services simply take and import multiple sets of American TV signals, including from ABC, CBS, CW, NBC, Fox, and PBS affiliates, without any requirements for consent, agreement or fair remuneration.

The appropriated U.S. signals are then packaged in channel bundles and sold to Canadian TV subscribers at huge markups for near pure profit.

While American TV stations have no say in the retransmission process, Canadian consumers have no choice. 

Consumers are forced to pay premium rates for TV channel bundles that are stuffed with duplicate American network programming available on multiple sets of both U.S. and Canadian channels.

This is the genesis of simultaneous substitution. The policy was introduced as a workaround to mitigate damages to Canadian broadcasters from the harm caused by the CRTC facilitating the wholesale importation and retransmission of U.S. signals.

The distribution of American TV signals itself serves as a subsidy for Canada’s cable and satellite services. This is openly acknowledged in CRTC rulings and in statements from senior Canadian cable and satellite industry executives. 

Initially, retransmitted and relayed TV signals from distant U.S. stations served as an incentive to grow demand and generate new customers for Canada’s embryonic cable and satellite services.  Now, Canada’s established TV services rely on the retransmission of U.S. TV signals to strengthen their profitability.

While CRTC regulations mitigate damages for Canadian broadcasters and subsidize Canadian TV distributors, no benefits pass through to Canadian TV subscribers who pay the price. 

Canadians pay approximately 80 per cent more for basic cable than do Americans. Since the CRTC deregulated cable rates in 2002, cable bills spiked by 70 per cent for Canadians.

The unfair Canadian TV regulations that deny voice to American stations and deny choice to Canadian consumers have turned Canada’s TV services into economic rent-seekers, who oversupply U.S. signals and extract maximum prices from Canadian consumers.

A funny thing happened along the way, too. As the number of U.S. channels increased on the Canadian TV dial, as monthly TV bills escalated for Canadian subscribers, and as profits soared for TV distributors, Canada emerged with the highest degree of media concentration among G8 countries.

It is called “vertical integration,” be it Bell’s takeover of CTV, Shaw’s purchase of Global, or Rogers’ acquisition of CityTV.  For Canadian consumers, it means paying more for fewer independent Canadian broadcasting choices and more duplicate American programming.

To correct the imbalance tipping the Canadian TV system, the CRTC and the Government of Canada must address the unfairness underlying the system, including the unfair treatment of American TV stations distributed in Canada.

By giving U.S. stations a voice in the CRTC authorization and retransmission approval processes, including due process such as basic notice, consultation and consent requirements, fairness will be established, and a checks and balances system will be introduced to the regime, as well.   

The impact will be an increase in transparency for all, encouraging dialogues between Canadian TV distributors and U.S. station owners, and between Canadian TV services and Canadian consumers.  This in turn will ensure greater accountability in TV pricing.

Canada is not a nation of signal pirates.  We are free and fair traders. Most importantly, we’re good neighbours.

As the CRTC completes the ongoing review of the Canadian TV system and prepares its report back to the government on pick-and-pay channel options for consumers, now is the time to provide fair treatment and due process for American TV stations in Canada’s retransmission processes.

It is only fair and Canada’s broadcasting system will become more affordable for consumers, more conducive for independent broadcasting, better for Canadian culture and enhance Canada’s international reputation. 

Francis Schiller serves as secretary to the U.S. Television Coalition, a working group of American TV station owners seeking fair treatment under Canada’s retransmission regime.

© The Hill Times