Fee-for-carriage opposed

Canada’s cable operators promise they’ll put up a fight for their customers as a new local television funding plan from the CRTC threatens to send monthly cable bills higher for TV watchers.

TORONTO — Canada’s cable operators promise they’ll put up a fight for their customers as a new local television funding plan from the CRTC threatens to send monthly cable bills higher for TV watchers.

Objections from cable operators and consumer groups grew stronger on Tuesday as more criticized the regulators’ plan to support fee-for-carriage, a concept that allows local TV broadcasters to charge cable companies for carrying their signals.

In turn, the cable operators could pass on those charges to consumers, although they also have the option of absorbing part or all of the additional costs.

“In the current economic climate it is indecent to increase the burden on consumers,” said Videotron chief executive Robert Depatie. “In the name of our customers, we strongly oppose this situation and we intend to fight.”

The response comes after the CRTC announced it has increased the size of a fund for local television stations to more than $100 million for 2009-10.

The plan will support over-the-air local TV stations, the kind that can be picked up on old-fashioned rabbit ears, but are also available free of charge for cable companies to carry.

Rogers predicts the new fees could send subscribers’ bills up $50 to $100 a year depending on their cable package. The calculations are based on estimates made by broadcasters to regulators in the past.

Other factors, such as whether cable operators would siphon down all of the charges, and the number of local TV stations offered by the cable operator would play into the final amount.

The concept is leaving a sour taste in the mouths of consumer groups.

“It just makes no sense at all that we would have to pay extra as consumers to pick up signals that we could pick up free off-the-air,” said Mel Fruitman, vice-president of the Consumers’ Association of Canada.

Fruitman also said the cable companies are nickel-and-diming consumers.

“We are paying the cable companies, as consumers, for distributing a signal into our houses. We pay them for all of the extras we get from them as well — very handsomely, thank you,” he added.

Cogeco Cable Inc. (TSX:CCA) chief executive Louis Audet refuted suggestions that the cable companies should foot the bill for the fees themselves.

“Any business eventually passes on the cost of business to their customers — that’s just the way it is,” he said. “In effect, sooner or later consumers will pay for this.”

Paying more is exactly what has made some people cancel their cable subscriptions.

Jeanine Robinson, a Toronto-area resident, scrapped her Rogers service in February in favour of streaming video over the Internet. She said paying for cable just wasn’t worth it.

“I watch my shows free of commercials and I can pick what I want to see when I want to see it,” she said.

That attitude — and the migration of more people away from their television sets and towards their computers — has left cable companies searching for ways to keep customers interested.

Most cable services now offer on-demand TV programming, though the selection of shows varies across the country.

Broadcasters CTV Inc. and Canwest Global Communications Corp. (TSX:CGS), have been asking the CRTC to let them charge cable companies for the right to carry their signals, something called fee-for-carriage.

They’ve told the regulator that their conventional television business has been hurt by the recession and the popularity of speciality cable channels, and that a carriage fee would provide up to $300 million to the broadcast industry.

But the cable companies counter that the big broadcasters also own many specialty TV channels that receive carriage fees and their conventional TV business has been subsidized by the Canadian Television Fund.

Negotiations between both sides are supposed to determine how the fee for cable companies will be distributed to broadcasters, though none of the specifics are expected to be worked out until a broad review of conventional broadcasting takes place starting Sept. 29.

If talks between the broadcasters and cable companies are unable to reach a conclusion on the details of the fee, the issue would go to arbitration.

Rogers Communications Inc. (TSX:RCI.B) spokeswoman Jan Innes said the cable operators are at a disadvantage because regulators require them to carry local TV stations, no matter what.

“You can’t have a negotiation when everything is stacked against you,” she said.

Halina Pashkievich, also from Toronto, said she’d be willing to pay more for her cable bill if it guaranteed the money would support local programming, like documentaries and news content, and not go towards buying American hits.

“If it’s going towards local Canadian stations, then I’d rather be paying for that than NBC,” she said.

Broadcasters claim they need to pad their prime-time schedule with popular U.S. shows because it’s the only sure thing keeping eyeballs glued to the screens.

However, as part of the CRTC negotiations, requirements for local TV stations could actually be loosened so that broadcasters have to offer even less local content in smaller regions.

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