File photo of CRTC chairman Jean Pierre Blais.Dave Chan/The Globe and Mail
This week, executives from some of the country's largest television companies, industry groups and private citizens will begin a process that could radically change how Canadians watch TV. They will all be appearing before a special hearing convened by the Canadian Radio-television and Telecommunications Commission, or CRTC, casually dubbed "Let's Talk TV."
And talk they will. They'll talk about BDUs, upstream suppliers and downstream buyers and they'll talk about OTA, OTT and SimSubs.
Huh? What?
Yes. If you really care why vertically integrated BDUs are concerned about offering skinny basic and having to rely on penetration-based rate cards, this is for you. Here's a glossary of terms that will help you decipher what's being discussed at the CRTC hearings:
Pick n' pay/à la carte: This one is simple. It's what most customers would love – to be able to choose, one by one, the channels they'd like to pay for. Surveys show that among the hundreds of channels, viewers, on average, watch 17 channels. That's a lot of extra weight. But wouldn't it be nice to order HBO without having to pay for 25 other channels you never watch? Of course, there's a consequence to that. Channels that rely on subscriptions, rather than advertising, such as Univision Canada, the Documentary channel or Filipino TV, might not be around after a change.
Over the air (OTA): Think rabbit ears and antennas on the roof. In Canada, local broadcasters such as CBC, CTV, Global and CityTV broadcast their channels over the air, which anyone with an antenna (and who's in range) can access for free. Over the past several years, many cord cutters – viewers who've cut off their cable or satellite service – put up an antenna and pull in HD channels, enjoying television without a monthly cable bill. (You can read more about over-the-air TV in this piece from The Globe archives).
Over the Top (OTT): An OTT service is an Internet-delivered library of movies and shows. In Canada, we have a couple familiar OTT services – Netflix and Apple TV. There are others – MLB.com and NHL.com offer streaming video over the Internet, but there can be restriction with those services such as blackouts of local games. And there are OTT services on the horizon, such as the recently announced Shomi, which will initially be available to Rogers and Shaw customers in November, but the companies are in discussions with other TV distributors to offer the service and say it could eventually be available to anyone who wishes to subscribe. In the United Stated, there are several, including Hulu Plus, Vudu and Amazon Prime, which are not available in Canada (sort of – there are ways to access those services but we're not getting into that here).
Set top box: When you subscribe to a digital cable, satellite or IPTV service from companies such as Shaw, Rogers or Telus, part of the package includes a box that you connect to your TV (and for which you normally pay a monthly rental fee). They're basically dumb computers with a tuner card. A Personal Video Recorder (PVR) is a set top box with a hard drive.
Simultaneous Substitution: Otherwise known as the "Why-can't-I-watch-the-American-commercials-during-the-Super-Bowl?" rule. When a network broadcasts a show, they've paid a production company (or a sports league) a fee for the rights. Say, for example, Fox pays the NFL $1-billion to show NFL games for 5 years. To profit from that purchase, Fox charges companies to advertise during the games. But a Canadian broadcaster like, say, CTV also buys rights to broadcast NFL games, because you still want to watch football in Bobcaygeon or Lethbridge. And they want in on the ad revenues, too. So simultaneous substitution allows them to substitute their own signal, which is carrying the Fox program but with Canadian ads, and you see the same Canadian Tire commercial 50 times.
Cord Cutter: Someone who, for myriad reasons, has decided to cut off their cable or satellite subscription. A Cord Never is someone who has never subscribed in the first place. Some cord cutters use an antenna and watch OTA TV, some subscribe to OTT services (see, you know what that means now) and some do both. Some just read books. And newspapers :-)
BDU: Now we get into the fun ones. If you search for the term BDU on Google, you'll find a raft of links to army surplus stores that sell camouflage pants (Battle Dress Uniform). But no, when someone at the CRTC hearings mentions BDUs, they're referring to Broadcast Distribution Undertakings, not unattractive clothing. A BDU is simply a cable or satellite company such as Rogers, Bell or Shaw. Why they don't say telco or cable co, who knows. They're the CRTC.
Skinny Basic: One of the proposals the CRTC is reviewing is a new type of bottom-dollar basic package that would be comprised primarily of local Canadian channels such as Global, CTV and CBC. A "skinny basic" would be the lowest common denominator, something all consumers would have, and on its own cost around $20 or $30 a month. Consumers who want more would then buy individual channels (or possibly bundles of similarly themed channels, such as a sports package) and add them to their already existing skinny basic package.
Netflix Tax: This is a contentious one. Netflix has coined the pejorative term, also known as an OTT tax, which refers to making streaming services contribute to the Canadian Media Fund that subsidizes the production of local Canadian content (CanCon) programming. Broadcasters such as CBC and even the Ontario government have recommended "new media" broadcasters should share in the requirement to support Canadian creators. Netflix argues no, that any tax (ahem, or fee) would likely force the company to raise prices in Canada and anyway, it wouldn't be fair because Netflix can't draw on the Canadian Media Fund to finance its own original programming.
Penetration-based rate card: Broadcasters like revenue predictability. In a Pick n' Pay system, a speciality channel might see a decline in subscribers but still need to generate adequate revenue to produce or buy content. In order to afford their production costs, they may have to charge a higher wholesale rate based on the number of subscribers. The more subscribers, the lower the wholesale price. One of the arguments against a Pick n' Pay system is that it may reduce penetration of individual channels all the while increasing costs, which would likely be passed onto the consumer.
Vertical integration: Companies that own or produce a product, market it and sell it are considered vertical. It's like owning a farm that grows potatoes, owning the factory that makes potato chips and owning the store that sells them. Rogers, Bell, Shaw and Quebecor all in some way or another produce content that's sold as programming and is marketed and distributed on television services that they own.
Fee-for-carriage: This is a long-standing dispute between broadcasters and cable companies. Right now, cable and satellite companies can grab conventional over-the-air broadcasts (just like you can with an antenna), package them into a basic cable service and then sell them to consumers. That's how the cable cos make their money. Broadcasters such as Global and CTV used to make buckets selling advertising back in the day when everyone watched Newhart on a specific day at a set time. Things have changed. Broadcasters are not making the kind of money they used to, and cable and satellite companies are making more. To complicate things, cable and telcos have been buying broadcasters – Shaw Communications owns Global and Bell Media owns CTV. CBC, which would like to charge cable and satellite companies a fee to broadcast their signal, but the CRTC has said no, CBC is a public entity and must be distributed free of charge.
With files from James Bradshaw and The Canadian Press