sm-220-many-screens-vertical-integrations-9880104

The CRTC is looking into whether there should be more rules to prevent companies from taking advantage of owning both programming and distribution arms at a time when digital technology is changing the number of video platforms available to consumers. (Associated Press)

Deals that make mobile video of professional sports games or TV shows exclusively available with only certain wireless providers should be banned, Rogers Communications and several other companies told the CRTC Monday.

Rogers argued that if such exclusive deals become the norm for smartphones and tablets, Bell could end up owning NHL rights, Rogers could own Major League Baseball rights and Shaw could get NFL football content.

"Sports fans would be forced to buy three iPhones or three iPads and subscribe to three distributors to ensure they could catch all the action when and where they wanted," the company said in its opening remarks at a Canadian Radio-television and Telecommunications Commission hearing Monday in Gatineau, Que.

"This is obviously unacceptable. No Canadian consumer should have to subscribe to multiple distributors in order to access the content they want to watch."

Vertically integrated broadcasters

The CRTC lists the following vertically integrated companies:

  • Shaw Communications, which controls Canwest Global Communications Corp.
  • Quebecor Media Inc., which controls TVA.
  • Rogers Media Inc., which controls Citytv.
  • BCE Inc., which is trying to acquire sole control of CTVglobemedia.

The company was responding to the broadcast regulator's request for comments on whether there should be more rules to prevent companies from taking advantage of owning both programming and distribution arms at a time when digital technology is making new video platforms available to consumers.

That kind of position, known as vertical integration, is becoming more and more common as cable companies such as Shaw Communications merge with media companies such as Canwest Global Communications Corp. The Shaw-Canwest merger was recently approved by both the courts and by the CRTC.

Rogers, which gained control of five Citytv stations in 2007, proposed that new rules should require any television content broadcast in Canada to be available to competitors on mobile or broadband platforms on a non-exclusive and non-preferential basis under terms that are "commercially reasonable." The content might still be exclusively available with only one company if no other competitors buy the rights.

Rogers argued that the ban on exclusive deals should not apply to video that never aired on television, saying that would make the rule too broad. Nor did it think that the rules should apply only to companies like Shaw and Rogers, but also to companies such as Telus that are not considered vertically integrated.

Where is vertical integration line?

Exclusive mobile video deals

Many cable companies now own media arms and concerns have been raised that such companies may take advantage in a way that is unfair to companies that aren't similarly "vertically integrated."

The fact that some TV content distributors also own wireless businesses that provide access to new video platforms like smartphones and tablets have only heightened such concerns. For example, a company with a media branch that owns the rights to broadcast a certain TV show could make that show available as mobile video to subscribers with its wireless branch. It might refuse to sell similar rights to other wireless companies at a reasonable price.

In other cases, rights to certain content may be owned by companies such as professional sports leagues. They might choose to distribute the content online themselves. Or they might sell the online rights in exclusive or non-exclusive deals to wireless companies or internet services such as Netflix or Apple TV.

CRTC chair Konrad von Finckenstein said he hadn't heard of anyone else proposing that such rules should apply also to companies that are not vertically integrated. He said he expected that smaller players like Telus would be more than happy to sell rights for content to other companies if they get such rights.

Ken Engelhardt, senior vice-president of regulatory issues for Rogers Communications, told the hearing owners of sports broadcasting rights often sell mobile rights separately from broadcasting rights, and a company like Telus could well end up with an exclusive deal.

Later, he noted that one difficulty of having different rules for vertically integrated companies is that it's difficult to define when a company becomes vertically integrated.

"If Telus bought one specialty service, would they be vertically integrated? How about two? How about three?" he said. "I don't know how you would draw that line."

David Purdy, vice-president of video products for Rogers Communications added, "You don't need a huge media company in order to abuse content rights."

Pierre Karl Péladeau, president and CEO of Quebecor Media Inc., argued forcefully against restrictions on exclusive deals in his presentation to the CRTC.

He noted that U.S. companies such as Netflix that aren't regulated by the CRTC are able to negotiate such deals without any restrictions. Netflix streams TV episodes and movies over the internet to people's TVs through devices such as video game consoles for a monthly fee and claimed 800,000 subscribers in Canada in April, seven months after its Canadian launch. 

Péladeau cited a recent exclusive deal between Netflix and Paramount Pictures.

He said restricting similar deals in Canada would put Canadian players at a disadvantage and take away one of the means they have to distinguish their services from those of competitors.

However, two other companies appearing at the hearing agreed with Rogers that exclusive deals should be banned. Teksavvy Solutions Inc., a small Ontario internet service provider, said a ban on exclusive deals should apply across all distribution platforms. The company said it is planning to launch an IPTV service — a service that uses internet technology to carry television programming, but with its traffic separated from the rest of the internet.

Bob Boron, vice-president of legal and regulatory affairs for Public Mobile, a new Canadian wireless company that launched last May, echoed Teksavvy's position.

He said he didn't think it was necessary for the CRTC to regulate the distribution of content over wireless networks. However, he wants the CRTC to ensure competitors don't "use their broadcasting and content assets to create an unfair competitive advantage in wireless."