CRTC Bonanza: Part 2 - Who Wants What?! (and what it means...)

Great, so after reading yesterday's post you know who the major players are and what they do. It’s time to get into the core of the issue which is what the broadcasters want versus what the cable and satellite providers want and what it means for the consumer.

So these two groups have co-existed for years, and the CRTC regulations have been around for years, and we’ve never heard one side slander the other. So what’s the problem NOW?

This all came about because of the transition of over-the-air analogue signals for television to digital transmission which frees up the airways as mandated by the CRTC. The American switchover, as dictated by the Federal Communication Commission took effect February 17, 2009.

Since the inception of cable, the cable and satellite providers were able to carry the signal from Canadian broadcasters at no cost to them because they were transmitted over-the-air and so they simply offered them as part of the basic cable packages. Now, with the switch to digital transmission, the providers can no longer receive those Canadian broadcasts, and the broadcasters as asking for the right to negotiate a fair value for their signals.

It is important to note that the cable and satellite providers have been paying American networks hundreds of millions of dollars annually for the right to carry transmissions and making the American programming available to their cable and satellite consumers. But the cable and satellite providers believe that they’ve not been paying for years, and even a small cost to them would represent an increase of an infinite percentage of what they previously paid and as a result that is unacceptable.

The broadcasters are trying to protect local programming and original content, and the millions and millions of dollars a year the cable and satellite providers pay in carriage fees goes to American networks like ABC, CNN, the CW, and FOX which have no Canadian content regulations. Part of that stems with the fact that people simply aren’t watching enough Canadian content but would rather watch blockbuster TV shows like Lost, Heroes, CSI, CSI:Miami, CSI:New York, and CSI:wherever the hell else there’s a crime that needs to be solved.

It’s a cycle. Broadcasting makes their money through advertising revenue – that’s it. Canadians watch American TV shows and as a result the broadcasters need to pay American networks for the rights to broadcast their shows to increase viewership. They can then use viewership to sell advertizing. If there was more viewership for Canadian content, then they would be less reliant on American networks and wouldn’t be in such a cash crunch.

Now we’re at a crossroads. The CRTC wants the cable and satellite providers to work it out with the broadcasters. In fact the CRTC is exasperated at the fact that the providers do not want to negotiate a value for carriage with the broadcasters. If the providers opt not to negotiate with the broadcasters, the providers can simply blackout (basically choose not to carry the feed) the broadcaster channels on your cable package.

What does that mean for you? Well it means that if you have cable, and 80% of Canadians do (which is one of the highest cable penetration rates in the world) then you will no longer get the bottom channels on your dial like Global, CTV, CBC, A-channel, TVO, etc... Which means you won’t have Canadian content in your cable package, and since you will no longer be able to get those channels over-the-air, you will need a special digital receiver that will work specifically for those bottom local channels.

When I was first explained all of that, I didn’t really know what it meant for me as a consumer and what it meant for the future of Canadian TV. Well this is how it works: If we need a special receiver for those local broadcasters, it will work like when when you have to switch the input on your television to watch a DVD or play your gaming system. So if you want to watch CBC or CTV, you’ll have to switch the input. But even more inconvenient than that is the fact that this isn’t going to happen on its own, a receiver will not miraculously find its way to your home... there will be an upfront cost to consumers, and it’s likely to be in the low hundreds.

This is where the downward spiral of CanCon begins. It’s unlikely that there will be enough supporters due to the cost and overall inconvenience that the Canadian broadcasters will lose viewership and thus any leverage they had for the much needed advertizing dollars. And without advertizing dollars, broadcasters will not be able to produce newscasts or original programming. Goodnight Canadian Content.

Hopefully you’re saying to yourself “that’s a lot of great information and I think I get it now and can form my own opinion, but what do you think?” Well thanks for asking, and let me tell you, I have an opinion, it’s pretty strong, and I will let you know what it is in my next instalment... And I promise it won't be this long! :)