More than 333 companies and individuals with an interest in the regulatory environment governing the Canadian direct-to-home satellite industry have filed submissions and rebuttals to the federal dth task force. Now the panel, appointed by the Ministries of Industry and Heritage, must sort through a myriad of issues that go to the heart of the conflict between protecting Canadian content and open competition.

For the potential dth service providers, what’s at stake are revenues projected in the $30 million range in year one. Expressvu estimates 100,000 subscribers in the first year at big-city cable rates, building 100,000 each year after to a number less clear now than before the fury surrounding the launch of the new specialty services.

People may be fed up with cable and that could skew Expressvu’s subscriber projections, says newly-elected president Ted Boyle.

Power DirecTv is using a more aggressive estimate of one million subscribers over five years, with revenues capping at $300 million.

For its part, the production industry is fighting against what it believes will be the erosion of the Canadian programming distribution network if Power is able to broadcast its pay-per-view service.

Groups that include Astral Communications, the Directors Guild of Canada and the Canadian Film and Television Production Association argue in their submissions that allowing Power’s u.s. sister company, DirecTv, to purchase program rights for a North American marketplace would put Canadian distributors and the entire Canadian broadcasting system in jeopardy.

The controversy that will play itself out over the next few weeks has its roots in a dth exemption order passed last August by the crtc. In that decision, the crtc gave the go-ahead to dth services to set up without regulation, but with certain conditions attached.

Those conditions – that Canadian satellites be used exclusively to deliver programming, and only licensed services be broadcast – effectively shut the door to Power, which was preparing to launch in Canada, and cleared the market for Expressvu, a Canadian-owned service set to beam down this September.

According to Joel Bell, Power chairman, the issue has come down to this: ‘Do we want competition for satellite programming and distribution systems and services in Canada, or do we not.’

Boyle admits that everyone in Canada who wants to be in the Canadian satellite service business is doing so through Expressvu. But the issue at hand isn’t whether there should be competition for satellite services, but if that competition should come from a supplier incorporating an unlicensed pay per view service into its package, he says.

In the satellite wars, ppv is the sticking point. Its variety, immediate access and flexibility are the primary selling features for dth satellite services. Power intends to offer 60 channels of ppv service as part of its package. Expressvu will offer 22 channels until mid-1996 when capacity is cleared on the Anik E1 satellite, allowing it a similar channel capacity.

The opposition to Power’s ppv may be long, but Bell argues that the advantages for the Canadian production industry will be twofold if Power is allowed to compete.

First, the service – in both Canada and the u.s. – would adhere to the Canadian content quota imposed by the crtc. Canadian programs could reach the u.s. market on an unprecedented scale, with marketing support from DirecTv that would be higher than dictated by box office receipts, he says.

‘The video market has zero Canadian-content regulations and contributes zero to the system. Why not have competition from dth services to channel those consumer funds into an area where you can attach content requirements and financial contributions to the revenue dollar?’

Bell is unfazed by the suggestion that Canadian productions have little chance against American blockbusters like The Mask and True Lies. Canadian programs can compete in this market and even if subscribers don’t choose a large number of Canadian productions, ‘our revenue will still go up and we will willingly pay a percentage of that revenue to Canadian production,’ he says.

But the Canadian contingent counters that the long-term effects of a powerful u.s. buyer purchasing product for North American distribution will render Canadian distributors powerless.

In its submission titled, ‘Now is Not the Time to Surrender,’ Astral says Canadian networks that want to purchase rights for Canada alone would lose out to a powerful bidder like DirecTv, owned by General Motors in the u.s.

The paper says the demise of Canadian services like TMN-The Movie Network, Superchannel, Viewer’s Choice Pay Per View and Home Theatre is inevitable with this kind of competition. By gradually preventing Canadian broadcasters from offering the best of foreign programs, Canadians would be robbed of Canadian choices on their television screens, says Astral.

‘Canada would be handing over (its) distinct rights market to the Americans, delivering to the Americans what they have long lusted after: Canada engulfed in one enormous North American ‘domestic market,’ ‘ the submission states.

Lisa de Wilde, president of Viewer’s Choice, argues that not only the Canadian ppv broadcasters but the Canadian broadcasting industry as a whole will be dramatically, negatively affected if Power is able to offer its ppv service.

‘At the end of the day, Canadian broadcasters must be able to buy program rights for the Canadian market only. The authorization of Power DirecTv to operate in Canada would enable them to go into the American market and buy programming for all North American rights. At that point, no one would think it was long-term, sustainable competition,’ says de Wilde.

Like Power, Expressvu will be looking at contributing to some kind of fund for Canadian production, says Boyle. But he questions whether two service providers contributing to the system will add up to more financial support for Canadian productions.

‘I’m not sure the pie’s going to get any bigger just because there are two sets of dth providers. If we end up with 75% of the market and they end up with 25%, it’s still 100%. What we provide is another route to the marketplace. As a producer, you’ll have more than one way into the house and there’s a tumble-down effect. When there’s more money in the system, everybody wins.’

For now, Power is being held at bay by the licensing requirement for ppv services. Viewers Choice and Home Theatre, both of which will be carried by Expressvu, already hold licences for the Canadian market.

Bell says Power isn’t against having a licence but he’s advocating a process by which Power would be held to the criteria imposed by a licence from the crtc, without having to go through the process itself. With the launch of Expressvu this September, time is a concern, he says. ‘If I have to wait a year to go into business, I don’t have a business.’

Bell makes is clear that he is suggesting this approach to policy for all would-be entrants.

For its part, the Canadian Cable Television Association isn’t opposing Power’s petitioning to use the u.s. ppv service, on the condition that cable companies are also allowed to use the same. Currently, cable must carry one of the two licensed Canadian services.

‘Internally, we debated opposing the pay-per-view service because it would be giving dth something we don’t have, but ultimately we decided not to take a position against it,’ says Jay Thomson, vice-president, legal and regulatory affairs for the ccta. ‘However, we’ve never accepted that a dth service should be able to provide anything more than cable services. If they allow them that freedom, we should be given the same.’

The other issue the task force will grapple with is the gray market. A group of Canadians – estimated at anywhere from 5,000 to 20,000 – is using a loophole in the Broadcasting Act to receive Los Angeles-based DirecTv. The Act regulates broadcasting services but not the equipment used to receive them. The service is illegal; the dishes and set-top box aren’t.

Legalities aside, the bottom line is that there is no money from this service flowing into the Canadian broadcasting and production industry.

If Power is allowed to have a business in Canada, it’s promising to suss out gray-market subscribers. ‘If the task force rejects Power, the gray market is only going to get bigger and nobody is going to police it. The only way that market is going to be tapped and turned onto Canadian content is if we go in,’ says Bell.

For his part, Expressvu’s Boyle questions what he calls a ‘gun-to-the-head’ way of doing business, but he’s even more skeptical that Power will be able to weed out subscribers if it enters the market.

‘People are going to carry their service equipment home from The Bay or Sears, and then they’re going to have a decision to make: if they call this 1-800 number, they’ll get eight channels of Nickelodeon and Disney and the rest. If they call the Canadian number, they’ll have fewer broadcasting services, outside of the pay per view. It’s the Achilles heel of Power’s argument.’

While believing Power’s strategy to take over the gray market has holes, Boyle isn’t convinced the task force will send the company packing. The most likely outcome from the task force inquiry, he says, is that the issue will go back to the crtc where Power will be asked to re-examine the exemption criteria.

Power’s race against time may be thwarted by the lengthy process the panel expects to undergo. According to Joanne Kennedy, a broadcast policy analyst for Canadian Heritage, the task force will not make recommendations to the ministries until June. Astral has also urged the panel to undertake a public hearing.