Cable, satellite providers oppose TV networks' fee proposal

A proposal by Canada's broadcasting networksto charge cable and satellite companiesfeesto carry their signals is one of the more contentious items on the agenda as the CRTC begins a major TV policy review Monday.

The broadcast regulator is hearing submissions on what the networks call "subscription fees." The cable and satellite industry has another name for them—a "tax" on TV signals that Canadians now get for free.

So-called carriage fees, if approved,would see Canadians pay several dollars more a monthon their cable or satellite bills for local channels from such broadcasters as CTV,CanWest, CBC and CHUMCity.

In its submission to the CRTC,CanWest proposes a 50-cent-a-month fee per subscriber for each private,local or regional over-the-air TV station, when their signals are carried by satellite or cable systems.

"In the face of increasing and accelerating fragmentation from regulated and unregulatedcompetitors, reliance on a single revenue source is proving to be a diminishing business model," CanWest said.

CanWest says its surveys show that subscription fees would not cause much change inCanadians' cable or satellitehabits.

The CBC — which also supports the idea of subscription fees — says conventional broadcasters face tough times as audiences fragment and advertising growth slows.

"The weakening advertising market will make it impossible for conventional broadcasters to advance the commission's goals for original Canadian programming, including local programming, HD programming, drama, etc.," CBC CEO Robert Rabinovitch said in remarks tothe CRTC.

"We're proposing an approach that would allow conventional broadcasters to operate on the same financial footing as specialty services, " he said.

Unlike conventional broadcasters, specialtychannels such as HGTV and MuchMusicenjoy two revenue streams — advertising and fees for carriage fromsatellite and cable companies. Those fees end up being paid by consumers.

Carriage fees for over-the-air TV stations could add $3 to $7 to monthly bills, by some estimates.

'Moving viewers to alternatives'

The cable and satellite industries say a survey they commissioned shows that these new charges could cause 20 per cent of respondents todrop their cable or satellite service and another 37 per cent would subscribe to fewer services.

"A tax of the nature proposed by the over-the-air broadcasters would lead Canadians to alter their current viewing habits, likely resulting in decreased viewership for Canadian over-the-air and specialty channels and potentially moving viewers to alternatives outside the broadcasting system," said Rogers Communications vice-chair Phil Lind.

Rogers vice president of regulatory affairs, Ken Englehart,said monthly rate increases of $3 or $5 "with no additional value will annoy a lot of people."

The CRTC's review of over-the-air TV will also look at whether broadcasters should be allowed to increase the amount ofadvertising they can carry. Cable and satellite providers say that's the best way of funnelling more money to conventional broadcasters.

CTV is also calling on the CRTC to require that satellite direct-to-home distribution systems carry local stations. It points out that in Prince Albert and Yorkton, Sask., 60 per cent of the population gets its TV by satellite, but the local CTV affiliate is not available via satellite.

The hearings run until Dec. 6 in Gatineau, Que.