POLITICS
09/21/2011 01:00 EDT | Updated 11/21/2011 05:12 EST

CRTC report coming on ownership of TV channels by broadcasters and content deals

OTTAWA - The CRTC is blocking companies from offering television programs exclusively to their mobile or Internet subscribers in new rules for cable and telecom operators that also own TV networks.

The regulator said Wednesday any program broadcast on television, including hockey games and other live events, must be made available to competitors under fair and reasonable terms.

"Given the size of the Canadian market, there are benefits to integrating television programming and distribution services under the same corporate umbrella," CRTC chairman Konrad von Finckenstein said in statement.

"At the same time, we felt that some safeguards were needed to prevent anti-competitive behaviour. In particular, Canadians shouldn't be forced to buy a mobile device from a specific company or subscribe to its Internet service simply to access their favourite television programs."

However, the CRTC will allow companies to offer exclusive programming to their Internet or mobile customers if it is produced specifically for the Internet or a mobile device.

This includes supplementary programming such as behind-the-scenes video clips of a television program, as well as original content.

As Canadians turn to online sources and mobile devices like smartphones and tablets to watch television, availability is becoming an issue as consumers want to see the content using whatever device they have, regardless of who holds the rights.

Telus and Rogers Communications, which had each opposed exclusive deals, both called the CRTC decision a win for consumers.

Michael Hennessy, senior vice-president of regulatory and government affairs at Telus, said the ruling will mean more choice.

"They're really affirming a consumer's right to access content on any screen whether it is traditional TV, online or mobile without being forced to switch to a more costly service to get that," he said.

"I think we're going to see a lot more choice and innovation in the system and that's going to revitalize the system."

Phil Lind, vice-chairman at Rogers, said if the CRTC had allowed exclusive deals for TV shows consumers could have been forced into having multiple devices to watch different shows offered by different companies.

"That is hardly efficient for the customer," he said.

Peter Bissonette, president of Calgary-based Shaw Communications (TSX:SJR.B), also praised the ruling.

"Focusing on customer choice and encouraging customer choice is a good thing," he said.

Cogeco Cable (TSX:CCA), the second-largest cable operator in Ontario and Quebec, said it was also pleased with the CRTC decision.

"Today, freedom of choice, content richness and fair and equitable competition have won," said CEO Louis Audet in a statement.

"We believe that the new safeguards implemented by the CRTC will help ensure that the Canadian broadcasting and telecommunications market remains competitive, much to the benefit of Canadian consumers."

The regulator held six days of hearings in June during which it heard from all of the major cable and telecom companies.

During the hearings, both BCE (TSX:BCE) and Quebecor (TSX:QBR.B), Quebec's largest cable TV operator and owner of the TVA French-language network, called for fewer rules and for the regulator to allow exclusive deals for content on new devices like smartphones and tablets.

Mirko Bibic, senior vice-president of regulatory and government affairs at BCE, said the decision will stifle innovation.

"The ability in certain cases to test things out in the marketplace or to differentiate yourself with consumers is what competition is all about," he said.

Its exclusive rights to the 2010 Winter Olympics allowed Bell to test streaming video to Bell mobile devices before the company started offering it widely including to rival wireless providers, Bibic said.

"That shows the power of being able to try things out on an exclusive basis and then innovate and offer it to everybody and that opportunity is now gone," he said.

On Tuesday, BCE chief executive George Cope said real-time programming of sports and TV shows on mobile devices like smartphones and tablets will provide new revenue from consumers and other wireless providers.

BCE owns the CTV broadcaster and a host of websites, specialty channels and sports and entertainment properties as well as Bell Canada and the Bell TV satellite TV provider.

The Bell Media division said this week it will provide real-time content including prime time hits like Grey's Anatomy, The Amazing Race, Criminal Minds and Desperate Housewives.

The new framework released Wednesday also adopted a code of conduct to prevent anti-competitive behaviour and ensure all distributors, broadcasters and online programming services negotiate in good faith as well as measures to protect independent distributors and broadcasters.

At least 25 per cent of specialty services distributed by a large integrated company must be owned by an independent broadcaster.

The CRTC also strongly encourages television distribution companies to give Canadians more flexibility in choosing the individual services they want as part of their packages.

The regulator has called on Bell, Quebecor, Rogers and Shaw to submit a report by April 1 detailing the steps they have undertaken to respond to consumer demands.

The inquiry was called after Shaw Communications bought 11 local Global TV stations across Canada and a group of specialty stations such as HGTV and Showcase for $2 billion.

The regulator also imposed a moratorium on BCE using its dominant position as both broadcaster and carrier to discriminate against competitors until the conclusion of hearings.