Discernible amid the cacophony of opinion raised in more than 260 interventions filed to the crtc in advance of the Oct. 30 public hearings on direct-to-home licensing were a number of requests for the provision of a level playing field for established and new competitors.

A number of interventions, including those from the cable industry, producers, distributors, broadcasters consumers groups and dth applicants, put forth concerns that proposed dth satellite distribution undertakings bear the same regulatory and financial responsibilities as existing suppliers, and that the Canadian broadcasting industry be safeguarded.

Within this framework, a number of issues surfaced repeatedly including: levels of contribution to a Canadian programming fund, access, linkage and distribution requirements, and costs related to the use of non-conforming digital video compression standards.

The intervention filed by Rogers Cablesystems states that both Power and ExpressVu propose new and/or modified rules in their application for dth licensing, while dth applicant Homestar has stated that it would operate under the same rules that apply to cable licensees.

According to the intervention, Rogers considers that ‘there is no policy reason for the Commission to impose less regulation on the dth industry than it does on the cable tv industry.’

The intervention of the Canadian Cable Television Association opposes the proposals by ExpressVu and Power, which are intended to relieve them of the same obligations to support Canadian programming as those borne by the cable television industry.

For its part, Power filed five interventions, which also call for symmetrical regulation.

A government directive on dth to the crtc had previously outlined that the minimum contribution by a dth undertaking to Canadian programming production be more than 5% of gross annual revenues.

Proposals in ExpressVu and Power licence applications suggest limitations on the base upon which the 5% levy be calculated.

‘We welcome competition,’ says Richard Stursberg, president and ceo of the ccta. ‘But everyone has to make a comparable contribution to the broadcasting system, whether that’s with respect to support for broadcasters themselves or support for the production fund, they should contribute at least as much as we do.’

Producers damaged

Stursberg says if the same rules aren’t applied to everyone, ‘the only people who will be damaged are the broadcasters and the producers.’

Michael D’Avella, vp planning at Shaw Communications, part of the consortium that comprises Homestar, says Power and ExpressVu are hedging on their commitment to Canadian programming. Shaw has intervened primarily against Power and to a lesser extent, against ExpressVu.

‘Homestar’s has been the only application that has been clear and unequivocal on the issue of funding,’ says D’Avella.

Power supports the ExpressVu position that if dth operators are obliged to contribute 5% of gross revenues, ‘it would lead to inequities between dth and cable’ as large cable operators pay 5% only on the base portion of its revenues while small companies pay nothing.

‘Cable does not contribute 5% of gross revenues; it pays 5% of gross revenues on core basic services,’ says Bell (ExpressVu’s application states that core basic equals about 60%-65% of cable’s gross revenues). ‘We think there should be competitive parity in that.’

Bell suggests there also be recognition of the fact that the dth applicants are start-up businesses and as such should not have to pay a greater burden prematurely.

Telefilm Canada proposes that a part of the production fund be earmarked for theatrical feature film production. Francois Macerola, head of Telefilm, says many of the established production funds are devoted to tv and that contributions to theatrical feature films would encourage increased feature production.

The Canadian Independent Film and Video Fund expressed support for ExpressVu’s financial commitment to Canadian programmers, saying that it was the largest of any single licensed entity.

The submission of the Directors Guild of Canada, on behalf of actra, the Canadian Conference of the Arts, sardec and the Writer’s Guild of Canada calls for minimum contributions by all distribution systems of 10% of annual gross revenues.

The dgc submission also deals extensively with access issues, wherein it states that all distributors should be subject to similar rules and obligations with respect to fair and equitable access for Canadian programming services. The dgc expresses concern that licensing hearings are taking place prior to access rules hearings scheduled for February.

‘Missed framework’

Elizabeth McDonald, president of the cftpa, echoes this concern. ‘It’s unusual that policy is going to be decided at the licensing hearing,’ she says. ‘Because of all the pressure to get dth going, we’ve missed the policy framework. Government direction provides it to a certain degree, but now the crtc has to transform it into regulations.’

Addressing issues related to pay-per-view services, the ccta submission recommends that dth undertakings adhere to the current crtc regulations concerning distribution and linkage.

Linkage rules, says Stursberg, were put in place to assist Canadian ppv and specialty services by allowing them to be linked to or packaged with u.s. services.

The ccta opposes the proposals by Power and ExpressVu to bypass linkage rules in favor of preponderance, where they would simply have to have a greater number of Canadian services.

‘A simple preponderance test would diminish the amount of support offered to pay operators because it would remove assistance provided by linkage,’ says Stursberg.

A number of the submissions from cable concerns, including the ccta, Rogers and Shaw, opposed the proposal put forth by Power and to some extent by ExpressVu that the cable industry finance their particular digital compression technologies. Both undertakings have chosen a different digital compression standard than the absoc standard widely used by the cable industry.

‘In the case of Power, they are suggesting costs should be borne by the cable industry,’ says a spokesperson for the dgc. ‘That allows them to go in with unduly low retail rates because they won’t carry half the services. Meaningful access to all services means that the distributor should pay for technology costs.’

ExpressVu’s proposal states that it will cover technology costs in the first two years, after which they will ‘negotiate affiliation agreements that create equity distribution undertakings respecting satellite transmission costs.’

‘These companies were the greatest proponents of competition,’ says D’Avella. ‘Now they’re saying they can only be competitive if subsidized by the cable industry.’

The ccta calculates that should the costs be absorbed by the cable industry, the result could be cable rate increases from $0.65 per subscriber per month to $1.14 per subscriber. The submission from Power interventions propose that costs be ‘spread across the entire distribution system through a uniform affiliation fee,’ or be covered through a ‘separate per subscriber charge on each distribution system.’

‘The real world is such that there are three standards,’ says Bell. ‘The market will sort it out over time, but if you don’t operate in the cross-border and North American technologies the gray market will and we won’t have put Canadian content on those services and extracted the benefits from them.’

A cbc intervention opposes the licensing of Homestar on the basis of ownership and control concerns. The intervention points out that Homestar has stated it will procure services from u.s. satellite service Primestar and that control of a subscriber’s access to services is a fundamental requirement to meet Broadcasting Act stipulations regarding Canadian ownership.

Other cbc interventions support, with suggestions regarding technical costs and contributions to production funds, the applications of ExpressVu and Power.

The Canadian Association of Film Distributors and Exporters raised concerns over distribution rights among ppv services. cafde outlined in its submission that all non-proprietary product be licensed or acquired by ppv broadcasters from Canadian distributors.

‘The crtc has historically been pretty good at standing up for Canadian culture,’ says Dan Johnson, president of cafde. ‘We are urging them to stiffen their spines and continue to do so.’

Cancom filed an intervention with the crtc proposing that dth satellite distribution licence applicants ExpressVu, Power and Homestar be required to procure their Canadian distant signals and u.s. 4+1 signals for which Cancom is licensed (abc, cbs, Fox, nbc, and pbs) from Cancom.

Cancom believes allowing dth services to pick signals up off a u.s. bird would damage the Canadian broadcasting system.

Cancom currently delivers 4+1 and various Canadian signals via satellite to remote smaller cable operations. Big providers such as Rogers or Shaw currently get their u.s. signals off microwave or antennae at their head ends.

In its intervention, Cancom proposes delivering the services on their list to the dth providers using Cancom’s ku-band transponder capacity, and with technology of their choice.

Answer challenges

Cancom says this solution will answer challenges it perceived in the dth arena: limited satellite capacity, negative impact on smaller cable operators and maintaining Canadian control of the Canadian broadcasting system. Benefits Cancom claims for its proposal, is the ability to utilize regional corridors for supplying time/region-appropriate signals, and to implement free-of-charge any public policy requirements.

In the current crtc hearings on tv violence, Cancom outlined various methods whereby it could use its digital satellite distribution technology to help control the exhibition of violent programming in Canada.

Cancom proposes to redirect 105% of its dth revenues (derived by a per sub rate per month) to support small cable operators, through lowered rates and technology support, and also 5% of the revenues would go into a production fund, 10% of which would go to music, with 90% earmarked for tv. It would be eligible to indie producers with a broadcast commitment from the Canadian services carried by Cancom.

In the first year this will be a $500,000 fund, and subsequently is expected to hit $1 million. Cancom is discussing the potential fund administration with Telefilm.

Cancom cost analysis for the first two years shows the proposal would have a marginally negative impact on Power and, and a positive impact for Homestar. ExpressVu has agreed to the proposal.

$3 million revenue

Cancom executive vp Claude Lewis expects around $3 million would be contributed to Cancom’s broadcasting revenue from dth, based on the estimated 100,000 subscribers projected by dth applicants.

Joel Bell, chairman of Power, who has three feet of dth-related material to wade through on his desk, had not read the intervention when contacted, however, was aware of its gist.

Bell responds to this proposal that logic dictates Canadian signals be put on Canadian satellites and that u.s. signals, already on u.s. satellites, should be picked up there. Bell opines that Cancom has a good thing going in its cable monopoly for satellite delivery, and ‘they’re seeking to extend that monopoly.’

Cancom’s proposal offers signals originating out of Boston to Power, Detroit to ExpressVu and Seattle to Homestar. The cost of the transponder would be shared relative to the value each gets out of it says Lewis.