November 22, 2021
The week-long CRTC hearing on the proposed $26 billion Rogers-Shaw merger that kicked off today in Gatineau has nothing to do with issue that commands the most public attention: cheaper wireless and Internet services.
CRTC Chair Ian Scott has no say on the merger of wireless and ISP assets: he only has to decide if the merger of cable, satellite, and broadcasting assets is in the public interest. It’s up to the Competition Bureau and also the federal Minister of Innovation, Science and Economic Development to look out for consumer interests in wireless and ISP.
What’s at stake this week is Rogers’ application to assume control of broadcasting licenses for Shaw’s cable and satellite properties in the western provinces and northwest Ontario.
Even though 80% of this $26 Billion deal won’t be adjudicated by the CRTC, Rogers spokespersons couldn’t resist touting the importance of Rogers delivering on the national objective of faster broadband speeds and rural access over wireless and ISP. That’s technically irrelevant in this hearing as the many interveners in this hearing, like industry rivals BCE and Telus, are quick to point out.
Focussing on cable operations, the Rogers makes a great deal of the fact that a post-merger company with deeper pockets will accelerate the adoption of its Ignite IPTV service, the technology that delivers programming over broadband at much higher speeds with a customer-friendly control dashboard. Shaw cable subscribers will get better service and, the reasoning goes, be less likely to cut or shave the cord on their subscriptions. Since CRTC regulations require that five cents of every cable dollar be reinvested in the production of Canadian content and independent news stations, keeping cable customers happy is in the public interest contemplated by the Broadcasting Act.
Like any CRTC regulatory proceeding, the hearing draws industry competitors and content creators who raise a long list of issues.
The biggest objection is that a post merger Rogers will own a staggering 47% of the cable and satellite market in English Canada.
Rogers points out that it has no presence in western provinces and north-western Ontario: it is merely stepping into Shaw’s shoes as a distributor in those regions. Viewers in each region will still have the same variety of cable options (usually just two) as they do now.
But merely continuing the current level of local corporate concentration isn’t the point, say those contesting the merger.
If Bigger Rogers can boast 50% nationally of the English Canadian distribution market, it will be even better positioned to play hardball when selling a place on the dial to independent specialty channels and, as the owner of the Sportsnet channels, do the same to rival cable companies like Telus in British Columbia and Alberta when selling popular sports programming.
The Telus brief asks very bluntly: since media companies constantly play hardball with each other when making programming deals (they would know!), how can we trust Bigger Rogers not to screw over other cable companies when selling hockey broadcasts?
Rogers believes it has the answer: the CRTC’s 2015 Wholesale Code requires all cable companies and programming services to make distribution deals that allow customers to view content with any provider, bargain fairly with each other over price, and submit to binding arbitration if they can’t agree. Unimpressed, Telus wants a much tougher Wholesale Code so Rogers can’t find creative ways around the rules governing fair pricing.
Rogers may also have trouble parrying some of the other concerns about fair bargaining between distributors and programming services in the new era of Internet streaming.
As Telus points out, the Internet TV market is unregulated thanks to the CRTC decision over 20 years ago to exempt “new media.” With this gaping hole in the regulatory net, Rogers could skirt the CRTC rules requiring it to make its hockey broadcasts available to every regulated cable company by withholding hockey from all cable outlets including Rogers…and then broadcast them exclusively on their unregulated Sportsnet Now streaming platform. In the US, Comcast just did that with a handful of baseball playoff games. Would Rogers be tempted to do it with Canuck playoff games (hypothetically speaking for now)?
Or what if Rogers, sitting pretty with half of the English Canadian cable audience, convinced Netflix to make an exclusive deal with them to put its app only on Rogers, the biggest Canadian cable platform? In response, Rogers says Netflix and the other direct-to-customer apps want to find paying customers on every platform they can and have no interest in making exclusive deals with only one Canadian cable company.
These aren’t the only big issues at stake this week, we’ll come back to them next time.
MediaPolicy.ca 