On March 6, the crtc will open the Information Highway Public Hearing, a month-long exercise that will hear testimony from the major players in the broadcasting, telecommunications and cable industries. All are fighting for position in a new digitized communications and entertainment environment.

At the forefront is the issue of how to continue protecting Canadian culture and content with the entrance of various new service providers and competition on a potentially global scale. In the most basic sense, the aim is to find a way to balance the opposing forces of open competition and Canadian-content protection regulations.

In the past two months, the crtc has received 650 written submissions from parties with an interest in the structure of the I-way. Written comments were invited until Jan. 16, with responses to the first set of submissions due Feb. 13.

At press time, the crtc had not announced the lineup of speakers. Of the 650 submissions, 80 have requested intervention, says Lise Plousse, senior communications officer for the crtc.

While there’s no official schedule, the list of participants is sure to include the Canadian Association of Broadcasters, Stentor Telecom Policy and the Canadian Cable Television Association. Industry representatives believe culture and content will be the focus during the first week of the hearings, followed by structure and technology.

The details of each party’s submission, some of which are over 200 pages long, cannot be fully outlined in a single story. The following is a sketch of some of the positions of several of the key players, including the cab, Stentor , the ccta, the Canadian Film and Television Production Association and Astral Communications.

The CAB

In its submission, the cab outlines its Canadian Programming Initiative, a four-step plan for ‘building up the quality and quantity of Canadian programming.’ According to the cab, financial support for Canadian programming can be achieved with these regulatory initiatives:

– All carriers should be required to contribute 10% of gross revenue from broadcasting activities to Canadian programming, with reference to their ability to make that contribution relative to the profit levels of other players in the broadcast industry.

For example, based on cable’s 1993 gross revenues of $1.83 billion, the programming contribution would amount to $183 million. The cab has committed to spending all money raised in this way on Canadian programming, for an unspecified length of time.

– The construction of a reduced basic cable package which would allow the services delivering the most Canadian content to be available to consumers at a lower cost.

– Legislation should open up to allow broadcasters and their affiliate producers to own programming rights. ‘Broadcasters expertise in developing, producing and presenting Canadian programming needs to be combined with a financial interest in the success of Canadian programming if we are to sustain an array of popular Canadian choices on the screen,’ the report states.

– On the Broadcasting Act: the cab believes that all service providers must be subjected to the same legal and regulatory framework to ensure a level playing field among competitors. It is advocating a broad definition of broadcasting under the Broadcasting Act, which would subject services like multimedia and video-on-demand to licensing requirements.

Exemption would only be granted those services ‘that do not materially contribute to the objectives of the Act.’

– On access to the marketplace: the cab assumes that the telcos will eventually be a broadcasting service provider, but takes no position with respect to the time frame of the telcos entering the marketplace.

– However, it does not believe that new carriers should be required to carry a cable community channel or provide one of their own. Rather, it advocates contributing a percentage of revenues directly to the public and private broadcasters for Canadian programming.

The CCTA

The cable industry is under immense pressure from the private and public broadcasters to make a greater financial contribution to Canadian programming.

The ccta’s submission makes clear that:

– This year, various cable companies will contribute approximately $40 million to Canadian programming through the Cable Production Fund, projected at $250 million over five years.

– Cable operators already contribute 5% of revenue to funding community channel programming, which is all-Canadian programming. The ccta spent $75 million on community programming in 1993, up $7 million from 1992.

– As an alternative source of funding, the ccta supports the initiative to give broadcasters supplementary channels.

– On the Broadcasting Act: like the cab, and Astral, among others, the ccta is advocating a wide definition of broadcasting services video-on-demand and multimedia under the Broadcasting Act.

– On access to the marketplace: the ccta is requesting a seven-year moratorium on the telcos’ entry into the cable market, claiming cable companies will go bankrupt by 1999 if the telcos are granted immediate entrance.

A Stentor-commissioned RBC Dominion Securities study of the cable television business released mid-month, claimed the cable companies were as profitable as the telecos, based on profit before interest, depreciation and amortization, measured as a percentage of revenue.

But profitability isn’t the short-term issue, says the ccta in its submission. It argues it will not be technically possible for the cable industry to offer telephone services for a number of years because:

– Telephone networks are already a two-way service. It will take years to substantially overhaul the cable systems to provide two-way, interactive services, once the dvc technology has penetrated the commercial market.

– Market surveys indicate that customers will be unwilling to switch to an alternative provider unless they can keep their existing phone number. The technology to facilitate this is three to five years away, the ccta claims.

Stentor

Given the ability to enter the marketplace, Stentor has agreed to follow the rules for Canadian content as they apply to broadcasters. In addition, it is offering:

– A one-time $30 million contribution to Canadian content, including multimedia.

– The provision of a second channel for each conventional broadcaster which could be used to increase subscription revenue.

– Along with the cab, Stentor is advocating fee for carriage, suggesting the current cable contribution of 5% of basic service revenue to Canadian programming be topped up to 5% of broadcast revenues. Using the same 1993 gross revenue figures for the cable industry of $1.83 billion, the contribution would amount to $90 million.

– On the Broadcasting Act: Stentor is calling for a narrowing of the Act’s scope that would exempt alphanumeric and video-on-demand services from requiring a licence. An unnecessarily wide interpretation of the Act will discourage the development of new services, says the report.

The cftpa is one of the parties opposing Stentor’s position. In its submission, it says an unregulated on-demand environment would clearly give the advantage to u.s. entertainment giants. ‘It favors those with deep pockets, since payment tends to be after the fact based on individual sales. For Canadian producers, who face perennial financing problems and depend heavily on broadcast presales, the magnitude of the financing challenge increases exponentially.’

– On access to the marketplace: Stentor is advocating the telcos receive immediate access to the broadcasting business.

– Given that access, it will increase funding in the research and development of dvc technology, deploying digital technology into the commercial market within the next two to three years.

– Stentor maintains that cross-ownership prohibitions and line-of-business restrictions are not required because ‘of the high costs it imposes on the economy and the difficulty in drawing a line between what is competitive and what is monopoly in the changing communications market.’ The ccta challenges that the $2 billion in subsidies for local telephone service derived through long-distance service give the telcos an unfair financial advantage.

Astral

For its part, Montreal-based Astral Communications is urging the government to take a clear position on video-on-demand as a licensable broadcast activity, a natural evolution of pay-per-view services.

In its submission, it spells out that the purpose of the convergence hearings should be to provide a plan for sustaining Canadian culture and content objectives.

‘The creation of the Canadian Information Highway is about designing an intricate web of complex routes that will define the map of Canada’s culture and sovereigntyÉ.It is not about building a one-way road to Competitionville.’

Among the submissions, almost everyone agrees that:

– The regulatory environment must continue to be used to drive resources into Canadian programming.

– Regulatory measures are needed to ensure Canadian programming services have access to audiences on distribution systems and priority carriage over foreign, exempt, and non-programming services.