J. Sturgeon | Vancouver Sun | 03.24.10
TORONTO - Cable subscribers have shrugged at rate increases in the past and may be willing to do so again if new fees are passed on to them, the national broadcast regulator suggested yesterday.
In a report submitted to the federal Cabinet, the Canadian Radio-television and Telecommunications Commission said it does not believe "significant affordability issues would be created" for consumers if a new compensation regime were introduced as early as 2011.
Called "value for signal" or "fee for carriage," the new system would see big cable firms such as Rogers Communications Inc. and Shaw Communications Inc. for the first time pay conventional TV networks such as Global and CTV Inc. a fee for station signals.
On Monday, the CRTC moved to adopt the controversial measure to help offset declining revenue at network TV stations and preserve the Canadian content they produce.
Yesterday's report stems from a rare order-in-council from Heritage Canada in September and a subsequent public hearing in December. The Harper Conservatives have been cautious to support a CRTC ruling that would raise consumer costs and create a potential voter backlash.
The regulator's recommendation would almost certainly do just that, causing "modest price increases" for cable.
But Canadians may be willing to eat the charge, the CRTC's submission suggests.
The average cable rate was $53.22 a month last year, CRTC figures show. That's up almost 50% since 2002 when rates were deregulated, representing an annual rise of 5.6% to the average bill.
"Such results do not seem to suggest a significant withdrawal of demand for [cable or satellite] television services when consumers are faced with rate increases," the CRTC said.
The rise has help lift revenue and profit at the major cable firms. Now, with the fortunes of networks dimming, the CRTC aims to buoy the entire system with a new negotiation regime similar to one that exists in the United States.
The CRTC has put the decision to the Federal Court of Appeal, which is to determine whether it has the jurisdiction to impose what some term a new "TV tax."
The move opens a new battleground on which the broadcast and cable-satellite consortiums will continue the years-long fight over fees for over-the-air station signals.
Mirko Bibic, senior vice-president of regulatory affairs at BCE Inc., which operates satellite service Bell TV, said the telecommunications giant is preparing its case. Phil Lind, vice-chairman of Rogers Communications Inc., the largest cable company in the country, also said the company would fight the decision in court.
CTV or Global could not be reached for comment. (Global is owned by Canwest Global Communications Corp., parent of the National Post.)
The most critical scrutiny, however, could come from the federal government, which has the option of overturning Monday's decision.
Prime Minister Stephen Harper reiterated his party's position during Question Period yesterday. The government, he said, is "concerned about anything that imposes fees on consumers without their consent."
The price tag on an individual station signal is anyone's guess. Specialty channels such as TSN and HGTV command upwards of $1 or more a month, a fee lumped into a customer's cable bill.
In previous proceedings, the CRTC has used a price of 50¢ per subscriber for local station signals. All in, estimates received by the commission during hearings last year ranged from as low as $1 per subscriber per month to as high as $10.
But "since any fee charged would be the result of a negotiation, there is no way to accurately predict what the ultimate charges would be for consumers," the CRTC admitted.
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