Cooperative, not combative, approach better for all

To state the obvious, there is some bad blood right now between the federal government and telecommunications companies.

While both have made efforts to get the public (and in some cases, the courts) on their side, a more cooperative approach — while making a consumers a full partner in decisions on how the industry proceeds — is the best way for Canada to get the communications system it needs and deserves in this information age.

On the surface, it might appear — and not by accident — that the government and its various branches, like the CRTC, are trying to protect Canadian consumers from the mighty telecom firms that control more than a fair share of the marketplace, particularly in the area of wireless services.

Just this week, the CRTC announced it will look into how roaming fees (subscribers only) are set domestically, and will consult — again — on the state of competition in the wireless market.

That follows a fact-finding mission announced in August and then a task force announced in October, both dealing with roaming rates, which seemed to be lockstep with the government’s throne speech in October that took aim at domestic roaming costs.

And we can’t forget the government’s perceived lobbying to get U.S. giant Verizon Communications Inc. into the Canadian wireless market and the resulting public relations campaign waged against the government by Canadian carriers BCE Inc., Telus Corp. and Rogers Communications Inc.

Not only have they been fighting for the hearts and minds of the public, but Telus has been in court challenging the industry minster’s right to, for one thing, restrict the incumbents from buying smaller wireless firms after five-year moratoriums on buying their spectrum licences expire, and also to set the rules on what companies can bid on what spectrum in the 700 MHz auction in January.

I’ve talked to a few executives from incumbent wireless firms lately who feel they’ve become an easy and convenient political target for the Conservative government, which they say is actually the Goliath in this fight but trying to play the role of David.

Perhaps there could be more competition in the wireless market. Still, some wonder how the government came up with this idea there should be four major players in every region, as opposed to three. Some will say when you look at the troubles encountered by Wind Mobile, Mobilicity and Public Mobile since the 2008 spectrum auction gave them life, the market itself has shown how many major wireless carriers it can support.

The government, however, would say that they must be vigilant to ensure that incumbent wireless companies are not using their inherent advantages unfairly to protect their turf.

One of the industry players I talked to about this matter said that for all the bluster coming from the government on wireless issues, there is next to no communication between the two sides, and that’s not because the telecoms aren’t interested in talking.

On the other hand, one has to wonder whether going to court, just weeks ahead of the spectrum auction — as Telus has done — to argue that only a full cabinet, not just one minister, can make decisions about limiting the spectrum certain wireless firms can buy gets anyone anywhere. Even if this legal argument is sound, the best Telus can hope for is some kind of a delay in the auction process, which would not only hurt Telus itself, since it needs more spectrum to satisfy consumer demands, but also aggravate the tech-hungry public it needs to make its business viable.

There’s been a lot of bickering between government and industry on wireless issues. It’s time for everyone to take a step back, consider the objectives of other players while not categorizing them as adversaries by default, and compromise in a way that’s best for the industry and the country as a whole.

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CBC to lose NHL games in four years? Don’t bet on it

CBC/Radio-Canada will lose its 60-year hold on NHL hockey rights next year, but don’t expect to see a hockey-free public broadcaster any time soon.

As hockey-mad Canadians have heard and read about extensively over the past 11 days, Rogers Communications Inc.’s scored a potential coup last week when it wrestled the rights to nationally televised NHL games away from CBC through a 12-year, $5.2-billion deal with the NHL that was designed to boost Rogers’ Sportsnet specialty channels, among some of its other assets.

Under a separate deal, CBC — which has held those rights since the early 1950s — will still carry some of those games on its national network of over-the-air television stations for at least the next four years. During that time, CBC will continue its Hockey Night in Canada broadcasts during the regular season, on Saturday nights, and throughout the playoffs.

Since the announcement, newspapers and other media outlets across the country have spent considerable time discussing what this means for CBC, and whether we will soon see the end of NHL hockey on the public broadcaster’s airwaves after its four-year deal with Rogers expires.

The smart money says CBC will still be airing hockey for the next dozen years because it offers a wider audience than any of the Rogers-owned stations, resulting in better potential advertising revenues for Rogers, which gets to keep those revenues under its deal with CBC.

With 14 English-language conventional TV stations spread out across the country and with CRTC rules that ensure those channels’ presence on every basic TV package, CBC reaches into the home of every single Canadian with a paid television service, and the majority of those that rely on free, over-the-air TV.

Rogers’ over-the-air Citytv network, which has local channels in six major cities plus a regional channel in Saskatchewan, can’t claim as wide a distribution base as the public broadcaster. Neither can the company’s main Sportsnet specialty channel, which had 8.8 million subscribers in 2012, according to CRTC data.

Those additional eyeballs can mean a lot of extra money for Rogers from advertisers who are willing to pay a premium to reach a wider, national audience.

This, of course, can help explain why CBC’s English-language TV stations had $245 million in national ad revenues in the 2012 broadcast year — more than half of which came from NHL broadcasts, sources say — while Sportsnet had $68.7 million in ad revenues over the same period of time.

Scott Moore, president of broadcasting for Rogers’ media division, spoke to the significance of CBC’s audience reach in an interview with The Wire Report last week, telling us that the only reason the company’s deal with the Crown corporation was limited to an initial four-year term is due to the changing broadcast environment.

“In the current broadcast environment, CBC has the largest reach of any television network in Canada,” said Moore, himself a former CBC Sports executive. “The only reason why it’s four years is that we have no idea if that television environment is going to be the same in two years, much less 12.”

Part of that uncertainty relates to the CRTC’s current consultation on the future of Canada’s broadcast industry, and the government’s stated desire to see broadcast distributors offer Canadians more flexibility to pay for the individual channels they want, as opposed to larger bundles of packages.

After two months of frequent conversations with industry insiders about both of these policy pursuits, I have yet to hear from a single source who believes CBC will no longer be forced onto basic TV subscription packages following the CRTC’s review, or the move to a pick-and-pay TV model.

Sportsnet, on the other hand, could see its subscriber numbers fall if distributors are no longer allowed to force it onto a basic TV package or in a package with other popular channels. In turn, its appeal to advertisers could slip as well.

All of this, of course, assumes that CBC will still be interested in carrying hockey four years from now. No longer permitted to claim ad revenues from NHL games, starting next year the public broadcaster will only see fringe benefits from continuing to carry those Saturday night matches, such as promoting its other programming and saving costs on acquiring other content.

In hockey-mad Canada though, it may be hard for the public broadcaster to turn down an extension that allows it to continue its Hockey Night in Canada tradition. It may be just as hard for Rogers to turn down the CBC.

CLARIFICATION: An earlier version of this post reported the combined total of CBC TV’s ad revenues for the English- and French-language markets. Ad revenues for just the English-language stations is a better comparison.

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