CBC/Radio-Canada president Hubert Lacroix led the public broadcaster's presentation before the CRTC at Tuesday's hearing in Gatineau, Que. (Sean Kilpatrick/The Canadian Press)The conventional TV business has changed dramatically in the past 30 years, and without access to new streams of revenue, stations will continue to close and local programming vanish, Canada's public broadcaster argued in Gatineau, Que., on Tuesday morning.

"The conventional television financial model in Canada is collapsing," CBC/Radio-Canada president Hubert Lacroix told the Canadian Radio-television and Telecommunications Commission on the second day of the broadcast regulator's hearing to determine new policies for Canadian television.

"Without a major correction that will allow conventional broadcasters to get a fair price for their signals, Canadians will have to start getting used to seeing stations shut down and high-quality programming disappear."

CBC officials echoed some of the same arguments that their colleagues at private broadcaster CTV voiced on Monday, declaring that after 40 years of picking up their signals for free, it's now time for cable and satellite television providers to compensate the major networks in the same way they do for specialty channel offerings.

The CBC also advocates the creation of a low-cost "skinny basic" TV service that would include all local stations and a very limited set of other channels, with further channel expansions to be decided by the cable or satellite companies themselves.

'The conventional television financial model in Canada is collapsing.'— Hubert Lacroix, CBC/Radio-Canada president

Lacroix called it "the simplest and most consumer-friendly approach" to the current industry impasse.

CTV champions adopting a U.S.-style industry model that would allow broadcasters to pull their signal if the TV distributors — known as broadcast distribution undertakings, or BDUs — don't agree to negotiating for compensation. According to CTV, this model has operated smoothly for the Americans, with just eight or nine signal disruptions in the past 18 years.

However, the public broadcaster said it is not willing to pull its signal but if talks with BDUs fail, it would accept an arbitrator-decided price for its signal.

"The role that we play is so important that we're not going to play with threatening to pull our signal or have our signal not carried," Lacroix said.

Decline began in the 1980s

The downward slide for conventional TV broadcasters began in the 1980s with the introduction of specialty channels that fragmented the television audience as well as advertising revenue, CBC said.

Mirko Bibic, Bell Canada's chief of regulatory affairs, appeared as part of the satellite TV provider's team at the CRTC hearing in Gatineau, Que., on Tuesday. (Sean Kilpatrick/The Canadian Press)On the other hand, the BDUs have grown richer since 1998, when the CRTC deregulated the sector.

"The broadcasting system needs to recognize what conventional broadcasters bring to the services that cable and satellite companies offer their customers," Lacroix said. "The only way to do this is for BDUs to compensate conventional broadcasters fairly for the value of their signal."

As on Monday, Tuesday's later afternoon session featured testimony from the opposing viewpoint — in this case Bell TV, Canada's largest satellite television provider. Like its colleague, cable giant Rogers, Bell characterized the carriage fees/value-for-service proposal as simply a demand for a hand-out.

Though its satellite TV operations have lost money since 1997, Bell has not asked for regulatory changes to help it improve its finances, company executives said.

The broadcasters are clinging only to the compensation proposal while ignoring other options, according to Mirko Bibic, Bell Canada's chief of regulatory affairs. "They prefer to hold out for the big prize," he said.

After the bitter atmosphere on the first day of the hearing, Tuesday's session appeared less tense among the industry representatives as well as CRTC chairman Konrad von Fickenstein and his fellow commissioners.

Though the hearing — slated to last two weeks — has so far been dominated by the carriage fee/signal compensation debate, the CRTC is also exploring related issues such as support for the transition to digital over-the-air broadcasting, group licence renewals (which would allow it to consider a broadcaster's main channel together with its specialty offerings for licences) and funding support for Canadian production.

With files from The Canadian Press