Via Intervention/comment/answer form

Transcription

1 Via Intervention/comment/answer form Mr. John Traversy Secretary General Canadian Radio-television and Telecommunications Commission Ottawa, Ontario K1A 0N2 Dear Mr. Traversy: Re: Broadcasting Notice of Consultation CRTC , Items 3, 5 and 6 Applications by Rogers Communications Partnership (Rogers), Videotron G.P. (Videotron) and Cogeco Cable Canada LP (Cogeco) to renew the broadcasting licences for their respective video-on-demand (VOD) programming undertakings 1. Astral Media Inc. (Astral) and Corus Entertainment Inc. (Corus) hereby submit this joint intervention with respect to the above-noted applications by Rogers, Videotron and Cogeco to renew the licences of their VOD undertakings. 2. Astral and Corus do not oppose the renewal of these VOD licences, provided that renewal is granted on terms consistent with the standard requirements for VOD undertakings set out in Broadcasting Regulatory Policy CRTC (BRP ). These standard requirements implement and in certain cases amend the new framework for VOD undertakings established in Broadcasting Regulatory Policy CRTC (BRP ). In the balance of this submission, we refer to the determinations in BRP and BRP collectively as the VOD policy. 3. Although we do not oppose the renewal of their VOD licences, we do have serious concerns about the associated proposals made by Rogers, Videotron and Cogeco for relief from key requirements set out in the standard conditions of licence (COLs) of the VOD policy.

2 Page 2 4. For example, Rogers, Videotron and Cogeco have all requested an exemption from the requirements of COL #7 respecting the programming content of subscription VOD (SVOD) services. Relief from the packaging restrictions in COL #7 would permit them to offer SVOD packages that are directly competitive with licensed specialty and pay services. 5. In addition, both Rogers and Videotron have also requested various forms of relief from the requirements of COL #8 respecting the insertion of advertising in SVOD packages. Rogers, for example, states in its submission that relief from the advertising restrictions in COL #8 would permit it to insert advertising in programming that is not obtained from licensed Canadian programming services, but is instead acquired directly from studios or producers. 6. Taken together, approval of the various exemptions proposed by Rogers, Videotron and Cogeco would allow the creation of new Canadian and non-canadian SVOD packages that are directly competitive with licensed pay and specialty services and the sale of advertising for insertion into those packages. This represents a major change to the VOD policy framework with significant implications for the licensees of Canadian specialty and pay television services. In effect, these amendments to the VOD policy would permit the launch of what is tantamount to new specialty and pay services on VOD platforms, without any obligation for the licensees to adhere to genre protection policies or other requirements normally applicable to such services. 7. Accordingly, Astral and Corus strongly oppose the specific amendments to the policy that have been proposed by Rogers, Videotron and Cogeco. We submit that these amendments should be denied for the following reasons: (i) the licensees have not justified the granting of any exemptions from the requirements of the VOD policy; (ii) approval of their proposals would give these licensees an unfair competitive head start with respect to packaging and advertising flexibility afforded to their VOD services, conferring an undue preference on themselves and an undue disadvantage on other VOD licensees; and (iii) approval of these proposals would amount to a significant revision of the VOD policy, opening the door to other VOD undertakings to apply for similar amendments. Such policy revisions should not be considered in the context of a licence renewal proceeding. 8. We elaborate on each of these issues in the balance of this submission.

3 Page 3 Rogers, Videotron and Cogeco have not justified the proposed exemptions from the requirements of the VOD policy 9. The primary rationale for the approval of significant revisions to the VOD policy is based on the availability in Canada of unregulated over-the-top (OTT) services such as Netflix and Apple TV. The applicants submit that these services pose a significant threat to the regulated broadcasting system because of their packaging flexibility and advantageous cost structure. They argue that their VOD services need to be exempt from limits on packaging and restrictions on advertising in order to better compete with OTT services and to retain customers who will otherwise seek out alternative sources of on-demand programming. 10. Notwithstanding the applicants assertions as to the potential impact of OTT services, Astral and Corus submit that the validity of such arguments must be assessed in light of the findings in the Commission s recently completed fact-finding exercise on OTT services. These findings were released only three weeks ago on October 5 th, 2011 following an extensive public consultation that involved all sectors of the Canadian broadcasting system. 11. In its October 5 th report the Commission acknowledged that OTT services represent significant change to the communications environment in Canada. Its key conclusion, however, was that:...the evidence does not demonstrate that the presence of OTT providers in Canada and greater consumption of OTT content is having a negative impact on the ability of the system to achieve the policy objectives of the Broadcasting Act or that there are structural impediments to a competitive response by licensed undertakings to the activities of OTT providers. 12. In light of this and other findings in its October 5 th report, the Commission concluded that it would not consider at this time a review of potential policy changes to increase the regulated players flexibility to respond to the activities of OTT providers. Instead, it stated that it would maintain a watching brief on OTT and conduct another fact-finding exercise in May 2012 to determine if the scenarios put forth by parties with respect to potential regulatory impacts and opportunities have materialized. 13. Finally, the Commission stated its expectation that in the context of the next fact-finding exercise:...stakeholders will be able to provide rigorously collected data, including public opinion research, internal customer surveys, historical revenues and expenses associated with OTT services, market intelligence, qualitative and quantitative evidence with respect to the state of closed captioning and described video for OTT programming and other such quantitative evidence, that will assist the Commission in better evaluating the impacts and opportunities offered by this environment. 14. Given the conclusions reached by the Commission only three weeks ago on the impact of OTT services, Astral and Corus submit that the rationale provided by the applicants in support of their requests for exemptions from the VOD policy requirements is

4 Page 4 unsupported by the available evidence. By the Commission s own findings, it will not at the present time consider policy changes to increase the flexibility provided to the licensees of regulated services. 15. Furthermore, in the context of the present application, the applicants have provided no rigorously collected data that would assist the Commission in assessing the potential impact of OTT services specifically on their VOD offerings, in order to justify the proposed exemptions from the VOD policy requirements. 16. In short, given the Commission s recent findings on OTT and the absence of any evidence by the applicants that would support increased flexibility, Astral and Corus submit that the applicants have failed to provide any justification for the proposed exemptions from the standard VOD policy requirements. For this reason, the proposed exemptions should be denied. Approval of the proposed exemptions would confer an undue preference on Rogers, Videotron and Cogeco by giving them a competitive head start re SVOD packaging and the sale of advertising 17. If the Commission were to grant the proposed exemptions from standard VOD policy requirements notwithstanding our view that the applicants have failed to provide justification for such approval, Astral and Corus submit that this would create an unfair competitive imbalance in relation to the licensees of other VOD services. 18. Only Rogers, Videotron and Cogeco have applied for exemptions from the standard VOD policy requirements. The other four VOD licensees applying for renewal of their licences have agreed to accept the standard conditions of the VOD policy. If their exemption proposals were approved, Rogers, Videoton and Cogeco would therefore gain a degree of flexibility not available to the other VOD licensees. Even if the other licensees should subsequently apply and ultimately be approved for similar exemptions from the VOD policy, Rogers, Videotron and Cogeco would have obtained a critical head start with respect to the packaging of SVOD and the insertion of advertising in SVOD packages. 19. These licensees operate in a competitive environment with other licensed distributors who provide VOD offerings to consumers. The granting of a head start in such an environment is inappropriate, as it would provide them with a competitive leg-up with respect to the acquisition of program rights and the sale of advertising content in new SVOD packages. It would effectively result in the conferral of an undue preference to Rogers, Videotron and Cogeco and, conversely, the granting of an undue disadvantage to the other VOD licensees. 20. Approval of an exception to VOD policy requirements for these three VOD licensees as part of their licence renewal applications, based on a rationale that is not unique to them but that affects the entire broadcasting system, would therefore be inappropriate from a competition policy point of view.

5 Page 5 Approval would constitute a change to the VOD policy 21. The current VOD policy was arrived at after a very extensive public process spanning more than three years. It started on October 31 st, 2008 with the issuance of Broadcasting Public Notice CRTC , Call for comments on a proposed regulatory framework for video-ondemand undertakings, and culminated on January 31 st of this year with the issuance of the standard COLs in BRP Now, only a few months after the apparent finalization of the VOD policy, Rogers, Videotron and Cogeco are proposing fundamental changes to certain key requirements of that policy in the context of their VOD licence renewal applications. 22. Their proposals represent fundamental changes to the current VOD policy and if approved would allow the introduction of significantly greater direct competition from VOD services to licensed Canadian broadcasters. This heightened competition would manifest in a number of ways: competition for programming content, competition for audience and competition for advertising revenues. 23. While Rogers, Videotron and Cogeco have presented their proposals as applications for relief from certain elements of the VOD policy, the fact is that the rationale they provide, to the extent that it has any validity, would be equally applicable to any and all other licensed VOD undertakings. 24. As discussed above, it is our position that the rationale provided by these applicants is not compelling and does not provide grounds for the requested exceptions. Nevertheless, if the Commission were inclined to accept the argument that relief is warranted, a decision approving their proposals would constitute a de facto amendment to the VOD policy that was finalized earlier this year. It would open the door to similar applications by all other licensed VOD services. The Commission would have no grounds to deny these applications as the rationale for approval and each case would be identical to that accepted in the case of Rogers, Videotron and Cogeco. 25. Astral and Corus submit that the present licence renewal proceeding for these three VOD licensees is an inappropriate venue to consider fundamental amendments to the VOD policy. This is especially true for a policy that is less than one year old and for which the applicants have demonstrated no evidence or compelling rationale for review. 26. For this reason, the proposals made by Rogers, Videotron and Cogeco for exemptions from key requirements of the VOD policy, which in reality would constitute amendments to the policy applicable to all VOD licensees without the benefit of a full public consultation, should be denied. 27. Astral and Corus appreciate the opportunity to provide these comments.

6 Page 6 Yours sincerely, Nathalie Dorval Vice President, Regulatory Affairs and Copyright Astral Media Inc. Sylvie Courtemanche Vice President, Government Relations Corus Entertainment Inc. c.c. Rogers Communications Partnership (cable.regulatory@rci.rogers.com) Videotron G.P. (reglementaires@quebecor.com) Cogeco Cable Canada LP (licence@cogeco.com) ***End of document***