Fee-for-carriage
Encyclopedia
Fee-for-carriage, value-for-signal, negotiation for value, or the "TV tax" all refer to a proposed Canadian
television
regulatory policy which would require cable
and satellite
television companies to compensate conventional, over-the-air television
station
s for the right to carry their local signals. Such a system has long existed in the United States
, under the name of retransmission consent
.
Various versions of the scheme are supported by most major conventional broadcasters, and all are opposed by virtually all cable
, satellite
, and IPTV
(telephone company) service providers. These efforts have been promoted through a variety of means, including supporting ads on many conventional TV stations and their affiliated specialty channels, and opposing ads on local stations and during the local ad avails of U.S. cable channels (which are inserted by individual service providers).
In July 2009, the CRTC indicated it was "now of the view that a negotiated solution for compensation for the free market value of local conventional television signals is also appropriate", and would begin setting a process to determine appropriate value for signal at hearings in the fall. However, following a court challenge by Bell Canada
arguing it had endorsed fee-for-carriage without giving carriers a chance to provide input, the CRTC said it would look at the concept de novo
at those same hearings.
At the same time as the original announcement, as an interim measure, the commission also announced a temporary one-year increase, from 1% to 1.5%, of the fee levied on cable and satellite companies to fund the Local Programming Improvement Fund (LPIF), which supports local programming at stations in smaller markets. The LPIF has been in place since 2008 and is a separate matter from the various signal compensation proposals; however, many cable companies used the increase as an opportunity to introduce the fee as a separate line item on customers' bills.
The CRTC later announced that it had received an order-in-council
from the Harper cabinet requesting a separate set of hearings in early December 2009 to specifically consider the views of consumers on the matter, and will submit a report containing recommendations to cabinet shortly thereafter. This means that cabinet will ultimately decide whether or not to allow such fees.
(owner of the CBC Television
and Radio-Canada
networks), CTVglobemedia
(owner of CTV
and A), Canwest (owner of Global
), Remstar (owner of V), and the independently-owned CHEK
and NTV
. The current campaign, which started in mid-2009, is an outgrowth of CTVglobemedia's "Save Local TV" campaign which started earlier that year.
The private broadcasters within this coalition support a mechanism under which each station would receive the option of either:
In the latter case, stations would be able to withhold their signals, and potentially force blackouts of U.S. stations during programs that would otherwise be simultaneously substituted
, from a particular service provider in the absence of a compensation deal. Service providers would likewise not be required to carry stations that had sought, but failed to reach, a compensation agreement with that provider. This system would be similar to the American
FCC
system of retransmission consent
.
The CBC supports the right to negotiate for compensation, but is not willing to waive its mandatory carriage rights due to its status as a public broadcaster. Instead, it would ask for binding arbitration in the event negotiations with service providers failed. CBC focuses primarily on requiring providers to offer a "skinny basic" package containing a small number of basic services (including local stations).
was an early and vocal opponent of fee-for-carriage. Shaw's efforts were later joined by a "Stop the TV Tax" coalition consisting of Rogers Communications
(which owns both Rogers Cable
and the conventional Citytv
and Omni
systems), Bell Canada
, Bell Aliant, Cogeco
, EastLink
, and Telus
; Shaw's campaign remains separate of this coalition for reasons that are unclear.
as well as Quebec's largest cable company Videotron
, also supports the principle of signal compensation but believes these funds should instead be deducted from the existing fees for specialty channel
s, rather than being either passed on to consumers or absorbed by service providers.
, Newcap, and Corus Entertainment
(an affiliate of Shaw), do not explicitly support or oppose signal compensation, saying that this would have limited impact on their revenues given the small markets in which they operate. Their primary concern is instead maintaining carriage on satellite providers, which have now overtaken cable in many rural markets.
Canada
Canada is a North American country consisting of ten provinces and three territories. Located in the northern part of the continent, it extends from the Atlantic Ocean in the east to the Pacific Ocean in the west, and northward into the Arctic Ocean...
television
Television
Television is a telecommunication medium for transmitting and receiving moving images that can be monochrome or colored, with accompanying sound...
regulatory policy which would require cable
Cable television
Cable television is a system of providing television programs to consumers via radio frequency signals transmitted to televisions through coaxial cables or digital light pulses through fixed optical fibers located on the subscriber's property, much like the over-the-air method used in traditional...
and satellite
Direct broadcast satellite
Direct broadcast satellite is a term used to refer to satellite television broadcasts intended for home reception.A designation broader than DBS would be direct-to-home signals, or DTH. This has initially distinguished the transmissions directly intended for home viewers from cable television...
television companies to compensate conventional, over-the-air television
Terrestrial television
Terrestrial television is a mode of television broadcasting which does not involve satellite transmission or cables — typically using radio waves through transmitting and receiving antennas or television antenna aerials...
station
Television station
A television station is a business, organisation or other such as an amateur television operator that transmits content over terrestrial television. A television transmission can be by analog television signals or, more recently, by digital television. Broadcast television systems standards are...
s for the right to carry their local signals. Such a system has long existed in the United States
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
, under the name of retransmission consent
Retransmission consent
Retransmission consent is an option granted to US television stations as part of the law that granted such stations the option to elect must-carry rights. Under retransmission consent, a full-power US television station may elect to negotiate with a cable system operator for carriage of its...
.
Various versions of the scheme are supported by most major conventional broadcasters, and all are opposed by virtually all cable
Cable television
Cable television is a system of providing television programs to consumers via radio frequency signals transmitted to televisions through coaxial cables or digital light pulses through fixed optical fibers located on the subscriber's property, much like the over-the-air method used in traditional...
, satellite
Direct broadcast satellite
Direct broadcast satellite is a term used to refer to satellite television broadcasts intended for home reception.A designation broader than DBS would be direct-to-home signals, or DTH. This has initially distinguished the transmissions directly intended for home viewers from cable television...
, and IPTV
IPTV
Internet Protocol television is a system through which television services are delivered using the Internet protocol suite over a packet-switched network such as the Internet, instead of being delivered through traditional terrestrial, satellite signal, and cable television formats.IPTV services...
(telephone company) service providers. These efforts have been promoted through a variety of means, including supporting ads on many conventional TV stations and their affiliated specialty channels, and opposing ads on local stations and during the local ad avails of U.S. cable channels (which are inserted by individual service providers).
History
Various fee-for-carriage proposals have been put before the Canadian Radio-television and Telecommunications Commission (CRTC) a number of times over the years, and rejected each time until 2009. In the past, broadcasters sought to receive a fixed per-subscriber fee to be set by the CRTC; in 2007, broadcasters suggested a rate between 10 cents and $1.00 per subscriber each month. In some major markets there are nearly a dozen local over-the-air stations, which theoretically could have meant a monthly per-subscriber charge of $10 or more, assuming the CRTC had accepted the high end of the suggested range.In July 2009, the CRTC indicated it was "now of the view that a negotiated solution for compensation for the free market value of local conventional television signals is also appropriate", and would begin setting a process to determine appropriate value for signal at hearings in the fall. However, following a court challenge by Bell Canada
Bell Canada
Bell Canada is a major Canadian telecommunications company. Including its subsidiaries such as Bell Aliant, Northwestel, Télébec, and NorthernTel, it is the incumbent local exchange carrier for telephone and DSL Internet services in most of Canada east of Manitoba and in the northern territories,...
arguing it had endorsed fee-for-carriage without giving carriers a chance to provide input, the CRTC said it would look at the concept de novo
De novo
In general usage, de novo is a Latin expression meaning "from the beginning," "afresh," "anew," "beginning again." It is used in:* De novo transcriptome assembly, the method of creating a transcriptome without a reference genome...
at those same hearings.
At the same time as the original announcement, as an interim measure, the commission also announced a temporary one-year increase, from 1% to 1.5%, of the fee levied on cable and satellite companies to fund the Local Programming Improvement Fund (LPIF), which supports local programming at stations in smaller markets. The LPIF has been in place since 2008 and is a separate matter from the various signal compensation proposals; however, many cable companies used the increase as an opportunity to introduce the fee as a separate line item on customers' bills.
The CRTC later announced that it had received an order-in-council
Order-in-Council
An Order in Council is a type of legislation in many countries, typically those in the Commonwealth of Nations. In the United Kingdom this legislation is formally made in the name of the Queen by the Privy Council , but in other countries the terminology may vary.-Assent:Although the Orders are...
from the Harper cabinet requesting a separate set of hearings in early December 2009 to specifically consider the views of consumers on the matter, and will submit a report containing recommendations to cabinet shortly thereafter. This means that cabinet will ultimately decide whether or not to allow such fees.
Local TV Matters coalition
The Local TV Matters coalition consists of the CBCCanadian Broadcasting Corporation
The Canadian Broadcasting Corporation, commonly known as CBC and officially as CBC/Radio-Canada, is a Canadian crown corporation that serves as the national public radio and television broadcaster...
(owner of the CBC Television
CBC Television
CBC Television is a Canadian television network owned by the Canadian Broadcasting Corporation, the national public broadcaster.Although the CBC is supported by public funding, the television network supplements this funding with commercial advertising revenue, in contrast to CBC Radio which are...
and Radio-Canada
Télévision de Radio-Canada
Télévision de Radio-Canada is a Canadian French language television network. It is owned by the Canadian Broadcasting Corporation, known in French as Société Radio-Canada. Headquarters are at Maison Radio-Canada in Montreal, which is also home to the network's flagship station, CBFT-DT...
networks), CTVglobemedia
CTVglobemedia
CTVglobemedia , was one of Canada's largest private media companies. Its operations include newspaper publishing , television broadcasting and production , radio broadcasting , and their respective Internet properties.Originally established by BCE and the Thomson family in 2001 combining CTV Inc.,...
(owner of CTV
CTV television network
CTV Television Network is a Canadian English language television network and is owned by Bell Media. It is Canada's largest privately-owned network, and has consistently placed as Canada's top-rated network in total viewers and in key demographics since 2002, after several years trailing the rival...
and A), Canwest (owner of Global
Global Television Network
Global Television Network is an English language privately owned television network in Canada, owned by Calgary-based Shaw Communications, as part of its Shaw Media division...
), Remstar (owner of V), and the independently-owned CHEK
CHEK-TV
CHEK-DT, channel 6.1, is a television station based in Victoria, British Columbia and broadcasting to all of southwestern BC...
and NTV
CJON-TV
CJON-DT is a Canadian English language television station broadcasting on channel 21 in St. John's, Newfoundland and Labrador, with additional transmitters and cable coverage throughout the province. It is known on-air as NTV, for Newfoundland Television...
. The current campaign, which started in mid-2009, is an outgrowth of CTVglobemedia's "Save Local TV" campaign which started earlier that year.
The private broadcasters within this coalition support a mechanism under which each station would receive the option of either:
- mandatory carriage on all cable systems in their service area without compensation, as is presently mandated for all over-the-air stations, or
- no mandatory carriage rights, but the right to negotiate with service providers for compensation.
In the latter case, stations would be able to withhold their signals, and potentially force blackouts of U.S. stations during programs that would otherwise be simultaneously substituted
Simultaneous substitution
Simultaneous substitution is a practice mandated by the Canadian Radio-television and Telecommunications Commission requiring Canadian cable, direct broadcast satellite and multichannel multipoint distribution service television distribution companies to substitute the signal of a foreign or...
, from a particular service provider in the absence of a compensation deal. Service providers would likewise not be required to carry stations that had sought, but failed to reach, a compensation agreement with that provider. This system would be similar to the American
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
FCC
Federal Communications Commission
The Federal Communications Commission is an independent agency of the United States government, created, Congressional statute , and with the majority of its commissioners appointed by the current President. The FCC works towards six goals in the areas of broadband, competition, the spectrum, the...
system of retransmission consent
Retransmission consent
Retransmission consent is an option granted to US television stations as part of the law that granted such stations the option to elect must-carry rights. Under retransmission consent, a full-power US television station may elect to negotiate with a cable system operator for carriage of its...
.
The CBC supports the right to negotiate for compensation, but is not willing to waive its mandatory carriage rights due to its status as a public broadcaster. Instead, it would ask for binding arbitration in the event negotiations with service providers failed. CBC focuses primarily on requiring providers to offer a "skinny basic" package containing a small number of basic services (including local stations).
Arguments
The broadcasters argue:- Such a rule is necessary in order for broadcast stations to gain parity with specialty channelSpecialty channelA specialty channel can be a commercial broadcasting or non-commercial television channel which consists of television programming focused on a single genre, subject or targeted television market at a specific demographic....
s, which receive revenues from both a share of cable/satellite subscription fees and advertising. - Customers are already paying for the ability to receive local stations through cable or satellite, and in many cases believe that some of their fee goes to directly fund local stations, when in fact they receive nothing (although providers do pay into funds that indirectly help broadcast stations, such as the aforementioned LPIF and the Canadian Television FundCanadian Television FundThe Canadian Television Fund supported the production and broadcast of Canadian television programs. On 1 April 2010, the Canadian Television Fund became the Canada Media Fund...
). - Cable and satellite companies make enough profitProfit (accounting)In accounting, profit can be considered to be the difference between the purchase price and the costs of bringing to market whatever it is that is accounted as an enterprise in terms of the component costs of delivered goods and/or services and any operating or other expenses.-Definition:There are...
to cover these increased costs without passing them on to their customers; broadcasters have suggested the CRTC reverse its decision to deregulate basic service rates in the early 2000s, in order to ensure customers aren't forced to pay more. - The model for conventional television – i.e. generating revenues purely through advertisingAdvertisingAdvertising is a form of communication used to persuade an audience to take some action with respect to products, ideas, or services. Most commonly, the desired result is to drive consumer behavior with respect to a commercial offering, although political and ideological advertising is also common...
– has been "broken" for several years, with many smaller stations operating at a loss since the 1990s, and the global financial crisis of 2008-2009 has merely exacerbated this existing problem. - Rejecting the proposal could mean the closure of more stations, particularly in small markets. Canwest closed CHCA-TVCHCA-TVCHCA-TV was a television station in Red Deer, Alberta, Canada. It was owned by Canwest, and was part of the E! television system. The station was seen on VHF channel 6 and cable channel 11 in Red Deer...
in August 2009, while CTV closed CKX-TVCKX-TVCKX-TV was a television station in Brandon, Manitoba, Canada, formerly affiliated with CBC Television. Owned and operated by CTVglobemedia, it was the first privately owned television station in Manitoba...
that October after a deal to sell the station for one dollar fell through. CTV further indicated it may close more stations in the near future if it is unable to receive compensation from service providers.
Stop the TV Tax coalition / Shaw
Shaw CommunicationsShaw Communications
Shaw Communications is Canada's largest telecommunications company that provides telephone, Canada's fastest Internet and television services as well as broadcasting and soon Wifi. Shaw is headquartered in Calgary, Alberta...
was an early and vocal opponent of fee-for-carriage. Shaw's efforts were later joined by a "Stop the TV Tax" coalition consisting of Rogers Communications
Rogers Communications
Rogers Communications Inc. is one of Canada's largest communications companies, particularly in the field of wireless communications, cable television, home phone and internet with additional telecommunications and mass media assets...
(which owns both Rogers Cable
Rogers Cable
Rogers Cable Inc., a subsidiary of Rogers Communications Inc., is Canada's largest cable television service provider with about 2.25 million television customers, and over 930,000 Internet subscribers, in Manitoba, Southern & Eastern Ontario, New Brunswick and Newfoundland and Labrador.The...
and the conventional Citytv
Citytv
Citytv is a Canadian English language television system owned and operated by Rogers Communications under its Rogers Broadcasting Ltd. division...
and Omni
OMNI Television
Omni Television, corporately styled as OMNI Television, is a Canadian television system owned and operated by Rogers Communications. It consists of the company's conventional television stations in Ontario, British Columbia and Alberta which are licensed as multicultural stations...
systems), Bell Canada
Bell Canada
Bell Canada is a major Canadian telecommunications company. Including its subsidiaries such as Bell Aliant, Northwestel, Télébec, and NorthernTel, it is the incumbent local exchange carrier for telephone and DSL Internet services in most of Canada east of Manitoba and in the northern territories,...
, Bell Aliant, Cogeco
Cogeco
Cogeco Inc. is a Canadian media and communications company. The name is an acronym for Compagnie Générale de Communication .-History:...
, EastLink
EastLink (company)
EastLink is a Canadian cable television and telecommunications company. In 1970, EastLink was established in Amherst, Nova Scotia, when it was issued one of the first cable licences granted by the CRTC...
, and Telus
TELUS
Telus is a national telecommunications company in Canada that provides a wide range of telecommunications products and services including internet access, voice, entertainment, video, and satellite television. The company is based in Burnaby, British Columbia, part of Greater Vancouver...
; Shaw's campaign remains separate of this coalition for reasons that are unclear.
Arguments
Service providers argue:- Fee-for-carriage would be a taxTaxTo tax is to impose a financial charge or other levy upon a taxpayer by a state or the functional equivalent of a state such that failure to pay is punishable by law. Taxes are also imposed by many subnational entities...
on their subscription fees, forcing subscribers to pay a monthly charge for stations that would continue to be freely available via the public airwaves, i.e. antennaAntenna (radio)An antenna is an electrical device which converts electric currents into radio waves, and vice versa. It is usually used with a radio transmitter or radio receiver...
reception. (Broadcasters dispute the characterization as a "tax" on the grounds that it would not be set or collected by, or for, any government; service providers note that the decision on whether to allow the fees would be made by either the federal government itself or by the CRTC, a federal agency.) - There is no guarantee that these funds would improve local programming or prevent station closures.
- The implementation of this policy would lead directly to increased basic cable rates for consumers, with most providers promising to list any broadcast-station carriage fees as a separate line item. Some providers suggest that fee increases of up to $10 per month remain a possibility (the broadcasters simply say that such fees would be subject to negotiation, but insist that they do not want consumers to pay more).
- Such fees would be little more than a bailout for these broadcasters' allegedly poor financial management, i.e. buying expensive American programming or purchasing other media outlets, as opposed to producing more distinctive local or Canadian programming (the broadcasters have not directly responded to these claims, but historically, buying American programming has in fact been less expensive than producing Canadian programming).
- CTV's and Canwest's costs of running local stations can be offset by their more profitable specialty channel assets (broadcasters respond that specialty channels often have multiple partners and hence cannot be easily used to subsidize other properties).
- The fact that broadcast stations are carried by cable and satellite providers at all, not to mention simultaneous substitutionSimultaneous substitutionSimultaneous substitution is a practice mandated by the Canadian Radio-television and Telecommunications Commission requiring Canadian cable, direct broadcast satellite and multichannel multipoint distribution service television distribution companies to substitute the signal of a foreign or...
privileges over U.S. stations, already provide a significant benefit to broadcasters (broadcasters argue that Canada is the only major English-speaking country to allow such wide distribution of the "big four" U.S. networks and hence that simsubs are necessary to protect their own broadcast rights).
Quebecor
Quebecor Media, owner of French-language network TVATVA (TV network)
TVA is a privately owned French language television network in Canada. The network is currently owned by Groupe TVA Inc. , a publicly traded subsidiary of Quebecor Media...
as well as Quebec's largest cable company Videotron
Vidéotron
Vidéotron GP is a Canadian integrated telecommunications company active in cable television, interactive multimedia development, video on demand, cable telephony, wireless communication and Internet access services. Currently, the company primarily serves Quebec, as well as the francophone...
, also supports the principle of signal compensation but believes these funds should instead be deducted from the existing fees for specialty channel
Specialty channel
A specialty channel can be a commercial broadcasting or non-commercial television channel which consists of television programming focused on a single genre, subject or targeted television market at a specific demographic....
s, rather than being either passed on to consumers or absorbed by service providers.
Other independent small-market broadcasters
Other companies that own small-market TV stations affiliated with other networks, such as Jim Pattison GroupJim Pattison Group
The Jim Pattison Group is Canada’s third largest privately held company and, in a recent survey by the Financial Post, The Jim Pattison Group was ranked as Canada’s 62nd largest company. Jim Pattison, a Vancouver-based entrepreneur is the Chairman, President, CEO, and sole owner of the Jim Pattison...
, Newcap, and Corus Entertainment
Corus Entertainment
Corus Entertainment Inc. is a publicly traded Canadian media and entertainment conglomerate.Corus is a leading Canadian specialty television and radio producer, with additional assets in pay television, advertising services, television broadcasting, children's book publishing and children's...
(an affiliate of Shaw), do not explicitly support or oppose signal compensation, saying that this would have limited impact on their revenues given the small markets in which they operate. Their primary concern is instead maintaining carriage on satellite providers, which have now overtaken cable in many rural markets.