The age of talking about the Internet revolution – at least as it impacts content distribution in Canada – is over, but the age of dealing with it is well underway, according to the Canadian Cable Television Association.

Innovative digital technologies such as personal video recorders, video-on-demand, high-definition television and voice-over IP are poised to take off with consumers in 2004, according to the CCTA’s 2003/04 annual report titled Remember Convergence? Today, 2.3 million Canadians have access to the digital world through high-speed cable.

However, the report suggests outdated public policy continues to inhibit the business fortunes of Canadian cable companies, which have seen their subscriber base eroded to 7.8 million in 2003, off 5% from 2001.

‘We need more choice, more popular U.S. services,’ says Michael Hennessy, CCTA president. ‘Blanket restrictions in policy are not acceptable. We’re not saying open skies. We want a system where you get the best in Canada and the best in the world. The status quo is no longer an option.’

The 54% increase in subscribers for direct-to-home satellite services between 2001 and 2003, along with the increasing services from telephone companies and the problem of satellite theft by up to one million Canadians have contributed to the declining cable television user base, says Hennessy.

Cable television still controls 77.5% of the subscription TV market.

With the subscriber base apparently having peaked, though, the current strategy is to build revenue in existing operating lines while the industry lobbies for new business – such as telephone service.

The annual report proposes a five-point plan for an improved business environment, including:

* Removing restrictions to allow for more non-Canadian cable services such as HBO, Fox News and third-language signals such as RAI for Italian Canadians.

* Relaxing regulations for cable companies in smaller markets that will increase choice, build revenues and allow them to innovate faster.

* Encouraging open investment rules and foreign ownership such as those available to competing telephone companies.

* Maintaining regulation on telephone company phone service until the market opens to other suppliers.

* Stepping up the fight against satellite signal theft, which costs Canadian broadcasting more than $450 million a year, according to the CCTA.

‘Promoting choice and enforcement go hand-in-hand,’ says Hennessy. ‘Nationality is not the issue. The faster you can invest in broadband IP technology, the more capacity you have for content.’

Statistically, Rogers has 2.4 million customers (30.6% share), while Shaw has 2.2 million customers (27.8% share), Cogeco has 874,000 customers (11.2% share), EastLink has 249,000 subscribers (3.2% share) and Access has 78,000 subscribers (1% share).

Pre-tax earnings for the industry were $107.3 million on revenues of $4.2 billion in 2002. Compared to 2000, earnings are off 15% while revenues are up 15%.

In 2003, U.S. specialty channels captured 14% of the English-language market and U.S. mainstream broadcasters saw their share continue to dwindle to 12%. Canadian mainstream broadcasters control 39% of the market, down significantly from 56% in 1993.

With a 35% share in 2003, Canadian pay and specialties are neck and neck with the mainstream broadcasters.

Among specialty channels, most services report a decline in overall subscribers between 2001 and 2003. However, services with marked increases in viewers include: Weather/Meteomedia, up 19% in the three-year period to 12.2 million monthly customers; VisionTV (up 11% to 8.4 million monthly customers); Canadian Learning Television (up 17% to 3.6 million monthly customers); RDI (up 11% to 9.1 million monthly customers); and TalkTV (up 11% to 4.7 million monthly customers). Among the services with the greatest declines are Canal Evasion, Canal Z, Historia and Series +, which are all down about 30% between 2001 and 2003, to one million monthly users.

Cable has the best market penetration in the Atlantic provinces, with 73.1% of the market in both Nova Scotia and New Brunswick and 69.6% of Prince Edward Island.

-www.ccta.ca