Innovation spurred by exclusive deals, Bell says

A temporary ban imposed on BCE (TSX:BCE) on exclusive deals for TV programs carried on mobile devices should not become the law of the land, the company told the federal broadcast regulator Tuesday.

The corporate parent to Bell Canada told a CRTC hearing that exclusive deals encourage innovation and without an exclusivity deal it would not have been able to stream the 2010 Winter Olympics to its mobile customers.

Kevin Crull, president of Bell Media, told the hearing into ownership of television channels by the big cable and satellite companies, that the company needed to build a wireless network capable of delivering the service.

"It was not money making in its initial incarnation," Crull told the commission. "So the ability to be exclusive and differentiate your product is what stimulated the investment and development."

'The ability to be exclusive and differentiate your product is what stimulated the investment and development.' —Kevin Crull, Bell

The CRTC imposed the moratorium on exclusive deals after BCE bought the rest of the CTV television network that it didn't already own for $1.3 billion earlier this year and Shaw Communications Inc.'s (TSX:SJR.B) $2-billion deal last year to buy 11 former CanWest TV stations and some specialty channels.

"Despite no evidence of anti-competitive behaviour after a decade of vertical integration, some interveners want the commission to impose heavy-handed regulation to prevent us from maximizing the opportunities from our chosen business strategy," said Mirko Bibic, senior vice-president of regulatory and government affairs at BCE.

Echoing the argument Quebecor made to the regulator Monday, BCE called for less CRTC regulation when it came to content on devices like smartphones and tablets like the iPad.

"Competition is what's delivering value," said Bibic. "Let market forces work."

Rogers Communications (TSX:RCI.B) took the opposite stance in testimony Monday, when it kicked off the hearings by telling the regulator it should not allow exclusive deals for wireless when it comes to shows broadcast on television.

If companies are allowed to sign exclusive deals for content on smartphones and other devices, it could mean customers would need multiple subscriptions and multiple gadgets to see all the shows they want.

However Bibic said it is "preposterous" to think Canadians should be able to access whatever content they wanted on whatever device and whatever carrier they were using.

Telus, Rogers oppose exclusives

Phone company Telus (TSX:T), which does not own any major media assets, backed Rogers' approach in its presentation Tuesday and said there should not be any exclusives for content in any format or platform.

Michael Hennessy, senior vice-president of regulatory and government affairs at Telus, said competition is what drives innovation, not exclusivity.   

Hennessy noted that Bell has made some of its content available, but not its popular NHL and NFL material.

"A dispute regarding the exclusivity of this content continues without resolution," Hennessy said.

"And while other CTV content such as TSN mobile has been offered to competitors, it has been excessively priced and is therefore not available on any other carrier than Bell at this time."

As more TV content goes online and to mobile devices like smartphones and tablets, consumers want to see as much of it as possible from whatever provider they choose — no matter who owns it.

In recent years, much of Canada's private broadcasting sector has been swallowed up by a handful of big communications companies.

CRTC chairman Konrad von Finckenstein has said independent distribution and programming services have raised concerns that rules are needed to prevent anti-competitive behaviour.

"The commission will only consider new or improved measures if convinced they are needed to maintain a competitive market and necessary to achieve the objectives of the Broadcasting Act," von Finckenstein said when the hearings opened.