Media

Executives outline CRTC challenges

The blurring of the lines between media and telecommunications is creating a formidable problem for Ottawa.

And that convergence challenge will dominate the agenda of the Canadian Radio-television and Telecommunications Commission as the federal government looks for a permanent replacement for former chairman Konrad von Finckenstein, whose term expired this week.

Acting chairman Leonard Katz, who assumed that role Wednesday, says the commission’s top priorities involve follow-up work on two recent decisions. The first provided a new framework for regulating “vertically-integrated” companies, which distribute television and own broadcasting licenses, such as Shaw Communications Inc. (SJR.B-T19.76-0.14-0.70%) and BCE Inc. (BCE-T40.39-0.56-1.37%) The second introduced new rules for fees that smaller Internet providers are charged to lease space on the networks of larger providers.

“I think we are going to continue on that road and try and provide as much clarity and transparency as quickly as possible,” said Mr. Katz, who has served as the CRTC’s vice-chairman of telecommunications since October 2007.

His current term as commissioner expires in October. For time being, he is remaining mum on whether he is harbouring ambitions to become the next full-time chairman.

While his plate as interim chairman already appears quite full, companies in both the media and telecommunications sectors say a slew of other challenges also lie ahead for the commission.

Here is a sampling of what industry executives had to say:

Corus Entertainment Inc.

Corus (CJR.B-T20.850.060.29%) chief executive officer John Cassaday says the CRTC should play a key role in fostering a Canadian-owned, but globally competitive, broadcasting industry.

“We need to stop loading up Canadian players with new rules, as these unregulated players come in and compete directly with us,” he said.

“We certainly take the view that we can compete effectively with them, as incumbents we have huge competitive advantages, but we need to have the freedom to meet the needs of our viewers and listeners without the additional regulation that continues to be imposed.”

One example, he said, are the rules that put limits on the number of movies that broadcasters can offer in a week.

“Our basic view is that within the genre that we’re appealing to we should be allowed … to put the programs on that viewers want to watch.”

Telus Corp.

Michael Hennessy, Telus (T-T56.280.020.04%)’ senior vice-president for regulatory and government affairs, agrees the CRTC will face the enormous task of defining the future of broadcasting in a converged world.

While the broadcasting industry is heavily protected to fund the production of Canadian content, it is facing sharper competition due to over-the-top television, like Netflix, and video-on-demand.

At the same time, the CRTC wants cable and satellite providers to offer customers more à la carte programming options. “You have to have more flexible (TV) packaging or people are going to abandon the system,” says Mr. Hennessy.

But that could fuel tension between TV providers and specialty broadcasters that have traditionally counted on bundling of channels to gain subscribers and revenues.

Rogers Communications Inc.

The CRTC’s big challenge on the broadcasting side is going to be fostering Canadian content in a way that doesn’t drive consumers off the regulated system and on to the Internet, said Ken Engelhart, senior vice-president for regulatory affairs at Rogers Communications Inc. (RCI.B-T39.20-0.01-0.03%)

In particular, Rogers wants the commission to be more flexible with its regulations to ensure that companies can put content on all platforms, including its regulated video-on-demand service.

Rogers has faced restrictions on programming on its on-demand service, but faces no such constraints on putting that same content online or on cellphones.

Mr. Engelhart argues that disparity makes no sense in an age when consumers are able to obtain and view programming on multiple screens.

“We need a Canadian content system but the regulations have to be careful and thoughtful – and not restrict customer choice,” said Mr. Engelhart.

BCE Inc.

While the CRTC gets “top marks” for improving the timeliness of its decisions and the transparency of its processes, its record on providing a predictable business environment has been “extremely weak,” says Mirko Bibic, senior vice-president of regulatory and government affairs at BCE Inc. “If there is one thing a new chair needs to improve, it is the record of predictability,” he said. “It is so, so important because businesses need to know what the rules are going to be and have faith that the rules are going to be the rules.”

The commission’s regulatory “flip-flops” have created uncertainty in the industry, he said. For example, its 2011 vertical integration decision reversed a previously stated goal of deregulating mainstream news and sports channels, along with a 2009 decision to maintain a hands-off approach to new media, he said.

“Now with the vertical integration decision, I mean there is no doubt that the CRTC regulates new media content – absolutely no doubt.”

In December, the CRTC decided that BCE had given itself an unfair competitive advantage by striking deals with the National Football League and National Hockey League to offer their game content exclusively on Bell’s mobile network. Those deals, however, preceded its 2011 vertical integration decision and were expected to be grandfathered. BCE plans to issue its response at the end of this month.

Score Media

Score Media (SCR-T0.74----%), however, takes a strikingly different view about the CRTC’s approach to new media.

“The big decision for us has already been made – when they decided not to touch the Internet. It was a pretty ballsy move for them, quite honestly, given the history,” says chief executive John Levy.

“Keeping hands off the Internet just means more Canadians have an opportunity to express themselves in an even playing field. I think the CRTC can be very proud of what has been accomplished in the last 40 years. It has allowed, in a very unbalanced North American market, Canadian broadcasters and talent to have the opportunity to move forward.”

Manitoba Telecom Services Inc.

On the wireless side, there is growing concern among industry players that provinces like Ontario and Manitoba are stepping into the regulatory vacuum left by the CRTC with proposed consumer protection legislation.

Those bills aim to tackle growing consumer grievances around issues like data notification on wireless devices, opaque contract language and the unlocking of mobile phones.

The industry, however, would prefer that the CRTC set national standards, so that businesses are not grappling with different rules in different provinces. Failing to do so would create a “patchwork approach” that would drive up compliance costs, said Chris Peirce, chief corporate officer for MTS Allstream Inc.