In his opening remarks for the BDU (Broadcast Distribution Undertaking: i.e. cable, satellite operators,etc.) hearings, CRTC (?) chair Konrad von Finckenstein (?) reiterated the five key issues for this review:
- What should be the size of the basic package?
- Should there be guaranteed access for certain Canadian specialty and pay services? Which ones and on what terms?
- Should there be any type of genre protection for guaranteed services? If so, should they be protected from other Canadian services, or only from foreign services?
- Should there be a fee-for-carriage for over-the-air broadcasters? If so, how much and on what terms?
- Should BDUs have access to advertising revenues from on-demand services or from local avails?
The first four issue all involve tweaking the existing (traditional) system and, while there's much I could say about these issues, they really have little to do with the changing face of television.
It's the last issue -- "Should BDUs have access to advertising revenues from on-demand services or from local avails?" -- that I'll discuss here.
First of all, there really are two issues here: the use of local avails, and advertising within on-demand services (specifically, cable/telco-IPTV VOD services and, perhaps, DTH pseudo-VOD services). The use of local avails is, like issues 1 through 4, a matter of tweaking the current system and, likewise, is not relevant to the new landscape of TV 3.0.
What is of interest from a TV 3.0 perspective is BDU VOD. The question framed by the commission, though, is, I think, too limiting. Whether the BDUs have access to ad revenue for VOD services isn't really the main issue. It's more fundamental than that -- the CRTC currently restricts advertising on VOD services in such a way that there's little incentive for BDUs or anyone else (networks, content producers or advertisers) to embrace (or invest in) this technology. And that's a big problem because VOD has the potential to revitalize a flagging technology (traditional TV). And it's only as an on-demand technology that traditional TV has a future in the world of TV 3.0.
The question shouldn't be targeted specifically at whether BDUs can monetize VOD offerings via advertising, the question should be whether the commission should relax the rules on VOD advertising that, today, are so restrictive that VOD is going nowhere.
In order to compete with the onslaught of alternative delivery channels for TV content, we need access to robust VOD offerings in Canada. To me, implementing well-conceived advertising policies that foster the growth of VOD in Canada is the single most important thing the CRTC can do as a result of these hearings -- and failure to do so would be the single most flawed decision they could make.
At the end of the day (or at the end of three weeks of hearings) the future of TV doesn't depend on tweaks here and there that slightly alter the status quo... the future depends on radically altering the TV model such that it can remain competitive with other content delivery options. ONLY conventional TV operates on a linear programming model. Every alternative delivery option is primarilly based on on-demand content.
A myopic focus on the status quo (modified or otherwise) that doesn't address the need for a sustainable on-demand element will have viewers changing channels indeed -- and increasingly not coming back.
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