Canadian Networks Consider End to Broadcast TV

Faced with the impending obsolescence of US-based analog television, Canada's broadcasters must decide how -- or whether -- to continue expensive transmitter upgrades to meet the requirements of the digital era.

Since before Canada was declared a sovereign nation, the country's telecommunications services were intended to be compatible with those of the United States and Mexico. Today, its AM and FM radio bands are the same, its telephone system of area codes is compatible with that of the original Bell System, and its VHF and UHF analog broadcast television channels basically use the same spectrum.

But with the US Congress having decided last February to shut down all analog TV transmission on February 17, 2009, and with American broadcasters making preparations for an exodus of the public TV airwaves to an all-digital spectrum, Canadian broadcasters are facing the challenge of how to keep up with their self-centered neighbors to the south.

Though VHF/UHF analog receivers will become obsolete in the US on that date, they'll still be needed in Canada, although few CE manufacturers worldwide have expressed interest in continuing to produce them.

Like Mexico, Canada will find itself supporting an orphaned technology in just a little over two years' time. What's more, terrestrial TV viewers in major southernmost cities such as Ottawa; Quebec City; London, Ontario; Montreal; Toronto; and Vancouver will find themselves with fewer channels being beamed their direction by their American neighbors. Quite possibly, they could also be bombarded with strange and incompatible signals, as the VHF and UHF spectrums in the US become repurposed for uses such as emergency communications for first responders.

Canada has some critical choices to make, and not much time in which to make them. "We believe the conventional television sector is heading into trouble financially, and needs help, if it is to meet the challenges of the future," Bell Globemedia CEO Ivan Fecan told Canadian regulators, according to The Globe and Mail.

Although Canada's technological model is based on the US system, the business model for Canadian television is based on the British system, whereby the government subsidizes a principal, non-commercial public broadcaster -- in this case, the CBC -- and licenses independent commercial broadcasters as a way to promote competition. Regulations for commercial television licenses for affiliates of the CTV and Global networks are much more strict than for US stations, limiting not only how much content can be acquired from foreign sources such as US producers, but how many commercials can be shown in a given hour.

It's those regulations which effectively limit how much a broadcaster there can earn, and in turn, are limiting the amount of working capital that independent stations have to upgrade their transmitters. Fortunately for them, most are now owned by nationwide media conglomerates such as Bell Globemedia (the parent company of CTV) and Canwest Global (parent of Global).

Still, these conglomerates find themselves without a business model allowing them to recoup the enormous expenditures involved not only in upgrading transmitters to DTV, but to HDTV as well. CTV has stated its costs for upgrading its 114 transmitters nationwide could top CA$200 million, CanWest Global predicts spending as much as CA$61 million, and CHUM Ltd. (another Bell Globemedia division, acquired just last month) expects to spend CA$50 for its upgrades "with little or no new revenue to provide a return on this significant capital investment," the company said in a written statement to regulators.

All parties have generally agreed that revenues from Canadian television broadcasting have to increase by at least 25%, and fast, in order for broadcasters to continue to do business while upgrading, at some point, to digital TV.

This week, the Canadian Radio-television and Communications Commission (CRTC, the counterpart to the US' FCC) is holding hearings where broadcasters are being given the first opportunity for an audience with federal regulators since 1999. There are three options on the table, none of which is supported by everyone in the room: One, proposed by the CBC, is an increase in the fees charged to cable services that carry broadcasters' signals. Two, in a counter-proposal from the commercial broadcasters, is an increase in the amount of commercial time they can sell.

Number three is the one typically headed "Or Else," but which ironically may actually have some support from both public and commercial broadcasters, if not yet the CRTC: simply doing away with terrestrial signals altogether, and moving to a cable-centric model that's even more compatible with the British business model.

Next: Either raise fees, or leave the airwaves

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