Issues of access to broadcast distribution undertakings will be the hot buttons in Hull as the licensing hearings on five video-on-demand services begins March 17 and it may be the Alliance Communications/Shaw Communications application that takes the heat.

Five applications for vod have been submitted: Canal Indigo, a French-language service from Astral Communications, Viewer’s Choice, the Alliance/Shaw partnership and two entries from WIC Western International Communications – Electronic Digital Delivery and one through Allarcom Pay Television.

All the services except edd will rely on set-top boxes that allow for communication over a two-way cable plant. Compressed movies are stored on a large server. A viewer accesses a menu through his set-top box and orders a movie, which then sets up a session where the video is streamed to the set-top box and is ready for viewing.

The technology involved in the edd application is ‘Burst’ technology, which doesn’t require a set-top box, but relies on a future generation of digital vcrs which will have built-in vod capacity. A customer orders the film and the vcr records the ‘burst’ of the movie – a 100-minute film takes about five minutes to download.

The issue of access stems from three of the five applicants’ affiliations with cable companies. The heaviest cable affiliation is the Alliance/Shaw partnership, which gives Shaw a 50% stake in the vod service. The Viewer’s Choice application has the backing of Rogers Communications and Canal Indigo has the backing of several Quebec cable companies. wic’s two entries – edd and apt – have no affiliation with cable companies.

All applicants, other than Alliance/Shaw, submitted interventions citing their concern over the Shaw ownership, related to potential barriers to bdu access.

In its 60-page intervention, wic has gone as far as to urge the crtc to exclude Shaw/Alliance from contention. One reason stated in the wic intervention is that ‘there would be very strong incentive for a cable company to carry only one of the vod services (i. e. that in which it holds an ownership interest) to the exclusion of the competition.’

Luther Haave, vp and gm of Allarcom Pay Television, echoes these concerns. ‘How do you get your service carried? These are discretionary services that don’t benefit from any priority carriage rules – you have to arrive at business relationships, and if people have conflicts because they own or have an interest in something, it makes it more difficult. And it’s tied to capacity. There is still a capacity crunch. If we get a licence, there shouldn’t be some other gatekeeper who says, ‘Well, I’ve got my own service coming up here and there’s only so much room, so I guess I’ll put my own on.’ ‘

Phyllis Yaffe, president of Alliance Broadcasting, says, however, that the edd and apt services would have access to bdus of their own through wic’s alliances with ExpressVu and Cellular Vision, although wic’s stake in the as-yet unoperational ExpressVu is only 10% and has no licence with Cellular Vision.

‘I am confident that the other applicants have relationships with distributors,’ says Yaffe. ‘Our model is a competitive model and we are prepared to compete on the market that we gain. We are the only applicant, besides edd, which is something completely different, that has positioned an end-to-end delivery system. The other applicants don’t have that delivery system in place, it’s all very hypothetical. They’re relying on the bdus to figure out how to get them into homes.’

Yaffe and Ken Stein, senior vp, corporate and regulatory affairs for Shaw, sent a reply in early March to the many interventions filed to the crtc. It proposes an access commitment that would require a bdu, such as Shaw, to carry at least one unaffiliated vod licensee, a recommendation made by the Directors Guild of Canada, and others, in their interventions.

The Shaw/Alliance access commitment states that a bdu with an ownership of 15% or more in a licensed vod service that it distributes, must also provide access to at least one other licensed vod service, provided that the alternate vod licensee ‘makes its vod service available at the head end of the bdu in a manner compatible with the bdu’s vod distribution control system.’

wic, Channel Indigo and Viewer’s Choice have also spoken out against the Alliance/Shaw application, saying it is not a true vod service, because the technology involved distributes programming on pooled channels, that may result in a 15-minute lag time in receiving video and because it doesn’t have vcr functionality, which would allow a viewer to use pause or other vcr features.

‘What it really is is a replacement for our existing pay-per-view, near-vod service,’ says Haave. ‘We do nvod in the West right now. They would be in a position to drop our existing ppv service and replace it with their own.’

Alliance/Shaw defend these charges in their reply to the crtc by saying that ‘this suggestion is without merit’ and that their programs would be received only after a minimum delay. ‘Unlike the other applicants that have only theorized about the possible distribution of services,’ says Yaffe, ‘we have established that vod programming can be a reality and not simply an possibility.’

Although the Alliance/Shaw application states that the vod undertaking ‘will not give either Alliance or Shaw any preference or advantage in respect to program acquisitions or distribution arrangements,’ several interventions urge the commission to deal with the possibility of self-dealing between Alliance and the Alliance/Shaw vod service.

‘It’s an access-to-market issue,’ says Elizabeth McDonald, president of the cftpa. ‘When a producer has involvement with a broadcasting undertaking, we will want to make sure that their ownership of that programming undertaking does not preclude or limit access by other producers.’

In their interventions, the cab, cftpa, the cbc and Cinema Libre, among others, urge the crtc to be cautious in licensing vod services for other than feature film programming proposed by some applicants.

‘We don’t have a problem with non-feature programming, but the applicants aren’t all clear about what they would be offering,’ says McDonald. ‘We need clarification on how it will all fit in, how it will be programmed and how it will be paid for.’

Michael McCabe at the cab takes a harder line. ‘We caution the commission not to allow any of these services, if approved, to broaden their programming focus beyond feature films and some long-form drama,’ he says. ‘These vod applicants are proposing new types of services for the marketplace, and the competitive implications and impacts are not yet fully understood.’

The cafde’s strongest recommendation was that the crtc require all non-proprietary product be licensed or acquired by vod broadcasters from bona fide Canadian film distributors.

All applicants state they are prepared to make contributions to a Canadian production fund at 5% or more of gross revenues, projected by different applicants to be anywhere from $1.2 million to $121 million over the seven-year lincensing period.

The applicants also say they will make Canadian programming easily accessible and prominent through its navigational systems and offer a ratio of Canadian to foreign productions of 1:20, except Canal Indigo, which is proposing a ratio of 1:12.