CRTC Release on Fee For Carriage Issue (March 22, 2010)

[SensualPoet]

So, relax for a bit. The CRTC chose to do nothing about Fee for Carriage (ooops! Value For Service!).

A "reference" from the Federal Court goes something like this:
"Yo, Judge! Suppose I plan to murder some guy, will I get off if there are the following circumstances?"

It's like peeking under the hood. The court, in a "reference", is giving an opinion of how it might rule, in a hypothetical case, with the facts as presented -- without an opposing counsel. The answer will be couched in "could be" and "inclined to rule this way" language. A "reference", in short, is not a ruling.

The best "reference" question is one that is bald and blunt; the CRTC's is rambling by comparison. At its heart, the CRTC just wants to know if it has the jurisdiction to set such regulation. The court could say "seems so!" and that would NOT stop a subsequent court challenge by a BDU or broadcaster.

Neither is the court obligated to respond, ever, or in a timely or expedited manner. There are a lot of variables here!

FFC/VFS is not likely to be a drain your pocket or mine in the near future.

[JohnnyCanuck]

Lots of good points in this thread, but I have a problem with the notion that a Canadian entity cannot purchase exclusive distribution rights and control how that content is distributed. As everyone who has read any of my FFC posts know, I am vehemently in the corner of the BDU's on the issue, so I very reluctantly step in to defend the likes of CTVgm and Canwest Global.

Caveat out of the way, content is a product. Only a BMW dealer can sell a new BMW (yes he or she can choose to sell that car to another dealer who may not be a BMW dealer) but no Mazda dealership can acquire a BMW from BMW itself. Likewise, you can't see Alice in Wonderland on an Empire Theatre screen but you certainly can at a Cineplex Odeon. Half the physical products you buy have exclusive distributors that are the only authorized Canadian (and yes ... if can be more regional) wholesalers. Why should TV shows be any different? If I'm the production house, my content is worth more in an exclusive distributorship ... why should actual owner of the creative content be forced to pursue a less profitable avenue to distribute their content?

As far as whether the BDU's have all the leverage ... I don't think so. They may have a little more leverage, but if you recall the whole TSN2 thing, CTVgm took almost no heat for their outrageous carriage rate demands of Shaw and Rogers and the BDU's got blasted. Rogers dug in for quite a while, but there's no question that they took the brunt of consumer anger. While the networks need BDU distribution more than the BDU's need the stations, with the ability to insist on signal deletion ... if 24 goes dark because Global and Shaw or Rogers can't reach a deal, it will be Shaw and Rogers that the public directs their anger at. That levels the playing field.

As far as whether the CRTC is hiding behind the Courts. The question of legislative authority was raised by some of the BDU's before the Commission. If the legal argument is credible and has a reasonable possibility of success, the CRTC would be foolish to proceed with VFS implementation. Guaranteed one or more BDU would pursue this before the Federal Court. Could you imagine the mess if we had a half-implement massive change like VFS suddenly found to be outside the authority of the CRTC to implement? Much better the Federal Court does this on an advance referral. That's why that process to our highest courts exists ... and this is a good use of it.

[Doppelganger399]

I have a question my cable co has the 2 over the air channel ntv & cbnt & 4 Canadian west coast feeds which come free with my box as I understand it they must keep the 2 over the air channels per crtc rules but whats to stop them from dropping the 4 time shifted channels?

[JohnnyCanuck]

SensualPoet, I don't agree with your characterization of "reference" as it applies to the Federal Court. The ability of the CRTC to refer this is statutory. From the Federal Courts Act:

Reference by federal tribunal

18.3 (1) A federal board, commission or other tribunal may at any stage of its proceedings refer any question or issue of law, of jurisdiction or of practice and procedure to the Federal Court for hearing and determination.

From the Federal Courts Rules definitions (Section 2):

“party” means

(i) where a tribunal brings a reference under section 18.3 of the Act, a person who becomes a party in accordance with rule 323,

And, Section 323 of the Rules:

Notice of intention to become party

323. Any of the following persons may become a party to a reference by serving and filing a notice of intention to participate in Form 323:

(c) a person who participated in the proceeding before the tribunal in respect of which the reference is made.

In other words, any individual or corporate entity that appeared before the CRTC in its hearings on this can also appear before the Court. In other words, CTVgm, Canwest Global, CBC, Rogers, Shaw, etc are all entitled to make their own argument before the Federal Court. The reference serves the same purpose as an after-the-fact hearing and any Order of the Court arising from the reference is equally binding (in fact "order" is defined to include a ruling made on a reference in the Rules).

[billhome]

IMO if a broadcaster chooses option 1, then it should become exactly like a subscription service such as Superchannel. Among other things already mentioned, it should lose its spectrum and all rights to broadcast OTA. If it wants to continue OTA, it should pay for that right by competing for the spectrum, and paying for its use to the Canadian public.

[Edit] Does choosing option 1 also mean losing the LPIF?

[billhome]

"As far as whether the BDU's have all the leverage ... I don't think so."

Assuming that CTV opts for option 1, and all the BDUs decide not to carry it, then CTV is finished - they cannot survive on 20% of their current revenue (just OTA viewers). The BDUs on the other hand will continue operating, but of course with a lot of unhappy customers. But the BDUs have been operating with a lot of unhappy customers for a long time, and they seem to do OK.

What percentage of Canadian households can pick up the U.S. networks via an antenna? For them, they can just select the specialty channels they want, and dump the broadcast stations that selection option 1.

[JohnnyCanuck]

CTVgm's got deeper pockets than you imagine plus plenty of cash flow from specialty channels (eg. TSN) and other properties (eg. The Globe and Mail). Plus, you're imagining a scenario where all the BDU's band together and refuse to pay the asking price. Won't happen that way. Telus desperately needs TV market share ,,, they'll pay. Bell's best selling point has always been more channels. They've paid a premium in the past to get them (most recently TSN2) and will do so again. If there's a fight, the fight will be with Rogers and Shaw, not everyone and CTVgm has more than enough resources to wage that fight.

The more interesting scenario is Global. With the parent company's bankruptcy and carve-up ... they don't have the same level of resources and I can see Jim Shaw playing very real hardball with them.

[travisc]

SensualPoet, I believe you're right on the timeline of this. After the Federal Court rules, assuming they say the CRTC has the right to do this, Bell and Rogers will unleash a horde of legal challenges to hold this up as long as possible.

[Francois Caron]

But unless a judge issues an order that neither party can do anything until the case has been heard and a verdict reached, the cable companies will be pretty much free to dump the broadcasters if they wish. Imagine Rogers, Shaw, Bell or Vidéotron immediately cutting off select broadcasters. The ad rates (and ad revenue) will drop like a stone in water.

More likely, an injunction will be issued imposing the status quo.

[JohnnyCanuck]

It should take less than six months for the Federal Court to issue its reference decision. Should they rule that the CRTC has the jurisdiction, the Commission would then issue its Order and the broadcasting regime is changed.

There are only two levels of appeal from the Federal Court. The Federal Court of Appeal would hear any appeal of the reference first. A decision of the Federal Court of Appeal may be appealed to the Supreme Court of Canada, but the Supreme Court is not obligated to grant leave. I can't imagine they would see a reason to do so in this case. There's no issue of liberty. There's no divergence of legal application or practice across the province to reconcile. There's no Charter issue. There's no outdated Supreme Court precedent that needs updating. There's really no reason to expect them to grant leave. This will be settled with no more than one level of appeal.

Realistically speaking, we're talking about a year to sixteen months as the outside window for settling the legal question about the CRTC's authority. We're not talking years here.

[stampeder]

A government, or in this case a body charged by government with specific regulatory responsibilities, has a couple of constitutional safety valves to help it decide on appropriate measures or directions to take on vexing problems.

One is the establishment by cabinet of a Royal Commission, which can work at arms length to sound out appropriate policy towards a decision. Sadly it has been abused to the point where many Royal Commission Reports simply gather dust, although others have been extremely significant and effective. Implementation of Royal Commission findings and recommendations is purely at the leisure of cabinet.

Court references are a second safety valve. If a sitting government is aware that a decision facing them could result in "new law" or be constitutionally unsurvivable, references are a constitutional safety valve allowing an ultimate legal decision to be made on the validity of the proposed measure prior to its enactment. A reference to the Federal or Supreme Court of Canada is an extremely serious and rare matter that neither court gives leave to argue lightly or casually. References are not fishing expeditions; they are critical examinations of great legal and constitutional import. They are thus a cherished, powerful element of our democracy.

It is clear that leave to ask for the reference was already granted the CRTC prior to today's release.

[stampeder]

Originally Posted by JohnnyCanuck

Realistically speaking, we're talking about a year to sixteen months as the outside window for settling the legal question about the CRTC's authority. We're not talking years here.

I would add one other possible outcome: cabinet directs the CRTC to decide or behave in a certain direction while dropping the Federal Court reference. I don't see this as likely since no sitting government likes to be so heavy handed where a reference to the Federal or Supreme Court is concerned, but it is nevertheless within the realm of possibility.

[stampeder]

Originally Posted by Francois Caron

But unless a judge issues an order that neither party can do anything until the case has been heard and a verdict reached, the cable companies will be pretty much free to dump the broadcasters if they wish.

I would highly doubt that any major moves will happen given this giant policy vacuum. It would be hard to imagine a large Canadian corporation pushing its luck by acting in a fashion that is the subject of a Federal Court reference in progress. We're not talking about Spanish fishermen hauling turbot while Canadian courts decide whether authority exists to police them. Instead of industry actions we'll be seeing a huge amount of public posturing, and thankfully a breadth of new OTA DTV stations across the country regardless.

[JamesK]

Broadcasters and distributors have a symbiotic relationship. The time has come for them to put their differences aside and work together

So lets see the broadcasters kick in to help pay for fibre to every home and more satellite gear too.

[JamesK]

Except windows7, you won't be able to watch any ABC/NBC/CBS/Fox programing for which CTV owns the Canadian rights. CTV will be allowed to require the BDU's to delete that programming unless the BDU and CTV reach a specific agreement on that program.

Well, I don't watch anything that's on Global. I watch very little on CTV that's not available from elsewhere (including DVD/BR). I watch the news and occasional documentary on CBC. The one broadcaster that gets most of my non news viewing is PBS, which had shows that Canadian broadcasters don't carry. So my message to the broadcasters is: "Good bye. I don't need you and I don't want to pay for you."

BTW, I can receive the Toronto stations & Hamilton with a set top antenna, so no problem for me if they're completely removed from cable.