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The Era of Free TV Coming to an End

By Michael Geist

Since the debut of broadcast television in this country more than 50 years ago, millions of Canadians have grown to expect free access to local television signals.  While the mechanism for accessing those ad or taxpayer supported broadcasts has evolved from rooftop antennae to cable and satellite distribution, access has consistently been free (cable obviously charges for access but it does not pay for carriage of local signals). My technology law column this week (Toronto Star version, Ottawa Citizen version, homepage version) noted that Canada's broadcast regulator has issued a decision that will bring the era of free local television to an end for many Canadians. Whether through the elimination of local over-the-air broadcasts or via additional cable or satellite charges to cover a new fee-for-carriage system, free is out and new fees are in.

The changes are the result of two policy decisions by the Canadian Radio-television and Telecommunications Commission.  First, the CRTC set the ground rules for the digital transition of Canadian broadcasting by determining that many Canadian communities are likely to lose their over-the-air signal as part of the change.

In just over two years, Canada is scheduled to bring its television broadcast system into the digital world with a mandated conversion from analog to digital.  The move is long overdue (the United States completed its transition last month) and will bring considerable benefits by introducing greater broadcast efficiencies and freeing up valuable spectrum that can be used for new wireless services.

Canadian broadcasters have resisted investing in the new digital transmitters, however, claiming that the additional costs are difficult to justify given the shrinking market share of over-the-air broadcasting.  With less than 10 percent of Canadians still relying on over-the-air signals (most use a broadcast distributor such as a cable or satellite provider), the broadcasters argued that the digital transition was economically viable only in major markets.

The CRTC largely agreed, ruling that broadcasters are expected to convert to digital transmitters only in major markets, which it defined as "the national capital and all provincial and territorial capital cities, as well as markets either served by multiple originating stations (including CBC stations) or with populations greater than 300,000."

In Ontario, that covers Toronto, Hamilton, Barrie, Ottawa, London, Windsor, and Kitchener.  It excludes several important communities such as Kingston, Sudbury, and Thunder Bay.  Moreover, nationally every province has its share of exclusions, including Kelowna, Abbotsford, Red Deer, and Brandon.

As some communities face the prospect of losing their over-the-air signal, cable and satellite subscribers should prepare for paying for local signals.  After twice rejecting requests for a fee-for-carriage system for local broadcasts, last week the CRTC reversed course. Cable companies and their subscribers pay for premium channels such as TSN or CNN, but local signals are carried without compensation, resulting in a broadcaster-led campaign in support of the imposition of new fees for carrying the local signal.

The Commission did not set a fee, but it did order both the broadcasters and broadcast distributors to negotiate a settlement.  If the two sides are unable to do so, it promised to arbitrate a solution. The policy reversal - coming just days after a House of Commons committee declined to establish fee-for-carriage - is sure to set off a battle between broadcasters who argue that the fees are needed for their long-term sustainability and the cable and satellite providers, who view it as a cash-grab that could add $6 per month onto many cable bills.

As that fight unfolds, it is Canadian consumers who find themselves stuck in the middle, with some paying more for the same services and others about to lose access to broadcasts altogether.

Full post as published by Michael Geist on July 17, 2009 (boomark / email).