Within 2½ years, Canadians could lose over-the-air TV signal reception in smaller communities such as Parry Sound, Ont., Flin Flon, Man., New Glasgow, N.S., and Invermere, B.C., if Canada's broadcasters and cable and satellite companies get their way.

'I don't see we can live with nine per cent being disconnected.'— Konrad von Finckenstein, CRTC

That's because the cost of replacing all analog transmitters with digital ones, as required by the government by August 2011, is estimated by the industry at more than $330 million — far too expensive for cash-strapped networks, the companies told Canada's broadcast regulator at broadcast licence renewal hearings in Gatineau, Que., on Monday.

The Canada Radio-television and Telecommunications Commission had previously estimated the cost of replacing the transmitters at $187 million to $425 million, depending on how the replacement is done.

To deal with the cost issue, the industry proposes not to replace all transmitters, but mainly just the ones in big cities, said a report produced by an industry working group of 14 companies as part of the hearing process.

CTVglobemedia has issued a list of 45 transmitters in smaller centres across the country that it doesn't plan to renew.

CTVglobemedia president Ivan Fecan told the CRTC on Monday that his company expects to lose nine per cent of its audience as a result.

"And we just don't see a way around it," he said.

CBC, which has more than 600 transmitters across the country, also plans to abandon some transmitters during the switch from analog to digital, confirmed Marco Dubé, director of media relations for the Crown corporation. However, he said he could not specify which communities would lose their over-the-air signals as it is too early in the plan to release that information.

Dubé noted that more than 90 per cent of Canadian television viewers already get their signals from cable or satellite. CBC estimates that by August 2011, just seven per cent of the population will rely on over-the-air TV signals.

For that minority, Canada's broadcasters and cable and satellite companies suggested that the federal government provide financial help that will allow people to make the switch to cable or satellite in areas that will lose their over-the-air signal.

Auction could support help fund: industry

They argued that the government could make $4 billion by auctioning off analog frequencies that will no longer be used to transmit TV signals.

"If it remains a public policy objective to convert from analog to digital over-the-air transmission, then the federal government must establish a funding mechanism [from the proceeds resulting from the spectrum auction] for the digital migration," said the working group report.

Fecan told the CRTC on Monday that he thinks universal access to TV signals is a matter of public policy.

"The question is who pays for it," he said.

He began to add more, but CRTC chair Konrad von Finckenstein interrupted before he could finish his sentence.

"Precisely — you see it as a business reality," von Finckenstein said. "I see it from public policy reality. I don't see we can live with nine per cent being disconnected."

Von Finckenstein said he is disappointed that the industry working group didn't come up with a solution for what do to with the viewers who will lose their service, other than recommend the government set up a fund to help them.

Heritage Minister James Moore would not comment on the matter as it is currently before the CRTC.

The hearings are scheduled to continue until May 11.

With files from Margo Kelly