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Market forces being tuned out

By Peter Nowak, CBCNews.ca

It's been a tough week for telecommunications companies on both sides of the border, but a good one for class-action lawsuits. First, a Saskatchewan court gave the thumbs up to a class-action lawsuit by lawyer Tony Merchant against Canada's cellphone companies. Merchant is seeking the return of up to $20 billion that he says has been unfairly charged by the providers through their monthly system access fee. The providers have been falsely identifying the fee as a government-mandated charge, he says. The providers plan to appeal the ruling.

Down in the United States, antitrust lawyer Maxwell M. Blecher has filed a lawsuit against television providers for forcing customers to take packages of channels that include individual channels they neither watch or want. Blecher says forcing consumers to take channels they don't want inflates their monthly bill, so he wants television providers to offer them "a la carte." Consumers should be able to pick and choose they channels they want, he says.

The system access fee is endemic to Canada and has been a thorny issue in one form or another for at least the last 10 years. A lot of heat is starting to come down on Canada's wireless providers, so the system access fee issue may finally get some resolution this time around.

The television issue has also been around for a while, but unlike system access fees, IT could have relevance on both sides of the border despite the suit being filed in the United States. (By the way, the U.S. suit has not yet been classified as a class-action.)

U.S. television providers have yet to issue a response to the suit, but certainly a defence they will use is that forcing consumers to take channels they don't want is the only way to keep those channels afloat. After all, a less-popular channel would only get a fraction of the viewers and therefore ad revenue than a more popular one, such as HBO, might get. By not being packaged with other, more popular channels, the smaller ones may not be able to cut it.

The situation is more complex in Canada because of regulations from the Canadian Radio-television and Telecommunications Commission. To promote Canadian content, the CRTC requires television providers here to offer one local channel for every U.S. or foreign channel. However, under these CRTC regulations, Canadian providers have the option of offering single channels a la carte over digital as long as they also offer them as part of their channel packages.

Very few providers have chosen to do this, aside from certain overseas ethnic channels, which means they could theoretically be exposed to the same type of lawsuit.

The U.S. suit raises many questions on both sides of the border, but perhaps the biggest one is: Should popular channels be forced to subsidize less-popular ones, or should television be opened up to free market forces where only the best ones survive?

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Comments

Chris

winnipeg

I'm not sure that best is necessary defined by popular.

Posted September 22, 2007 11:18 PM

Bill

It is interesting how things have evolved. Not too long ago, stations themselves paid for delivery to consumers, who would use rabbit ears to receive the channels. It was up to the station to draw viewers through good programming, and viewers did not pay anything to receive the broadcast.
An individual station's "broadcast" has now become "narrowcast", where only paying viewers have the ability to pick up these channels. Based on this, what basis do these television stations have to complain?
The middleman seems to be part of the problem: the so-called "television providers". My answer is this: I put it back on the channels themselves. Suck it up, and start broadcasting again, whether over internet or another medium. Make your product attractive to viewers, and people will tune in.

Posted September 23, 2007 10:58 AM

geo mano

usa

Thanks for picking this fight for consumers as our goverments were bought off with political contributions. These rip offs must end!

Posted September 23, 2007 03:12 PM

Kate

Montreal

Are you sure it's solely an issue of keeping less-popular channels afloat? When I worked tech support for a major satellite TV provider (that will remain nameless), we told customers that it was a bandwidth issue. We could carry more channels if they were bundled, as the unlocking signals for carrying each channel would take bandwidth from that available to programming.

Now, as an employee, I could only take their word for it, and given some of the other thigns they told me, I could easily doubt this claim as well.

Posted September 24, 2007 11:27 AM

Rob

Kate, as an electronic engineer, I can verify for you that you were being fed a pile of dung and told it was paté by your employer. The unlocking or locking gets done in an update to the customer's satellite receiver that happens regularly, and has nothing to do with available bandwidth. A la carte is quite doable over a digital connection with an end-user terminal.

Now, with Analog cable there is a valid argument there as the "locking" used to be done with band-pass and band-stop filters for certain frequencies on the analog spectrum in local hubs of the cable system. That was then, this is now.

Posted September 25, 2007 10:35 AM

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