Rogers must let Telus broad­cast Sportsnet in full 4K, CRTC says

Tele­coms’ spat cen­tres around whether 4K qual­i­fies as new pro­gram­ming ser­vice

Regina Leader-Post - - FINANCIAL POST - Fi­nan­cial Post ejack­son@postmedia.com EMILY JACK­SON

Rogers Com­mu­ni­ca­tions Inc. wouldn’t let Telus Corp. broad­cast its high­est-def­i­ni­tion sports chan­nels un­til it was di­rected to do so by Canada’s broad­cast um­pire, just in time for the Toronto Blue Jays’ home opener last week.

Telus ac­cused Rogers Me­dia of un­fair play un­der a reg­u­la­tion known as the “no head start rule” when it came to ne­go­ti­a­tions to dis­trib­ute Rogers’ two 4K Sportsnet chan­nels, which launched last April and will broad­cast 100 live games this year to sports fans with 4K tele­vi­sion sets.

The par­ties had been try­ing to reach a deal over how much Telus would pay Rogers to broad­cast the 4K sig­nals to its cus­tomers, ac­cord­ing to letters filed with the Cana­dian Ra­dio-tele­vi­sion and Telecom­mu­ni­ca­tions Com­mis­sion.

But with ne­go­ti­a­tions look­ing set for ar­bi­tra­tion, Telus asked the CRTC to in­ter­vene quickly so its cus­tomers who had al­ready up­graded to 4K tele­vi­sion sets could watch the first home game of the sea­son for the Blue Jays — also owned by Rogers — in a res­o­lu­tion that’s twice as good as high def­i­ni­tion.

The spat cen­tred around whether 4K qual­i­fies as a new pro­gram­ming ser­vice.

The “no head start rule” re­quires new ser­vices be made avail­able to all li­censed broad­cast dis­trib­u­tors even if a com­mer­cial agree­ment isn’t in place.

Telus ar­gued 4K con­tent clearly qual­i­fies as a new pro­gram­ming ser­vice and that Rogers had noth­ing to lose from making Sportsnet 4K avail­able to more po­ten­tial sub­scribers. Plus, it said it took on all the risk of launch­ing the ser­vice with­out an agree­ment since it didn’t know how much it would cost and all fees would ap­ply retroac­tively.

“One might ar­gue that Rogers is in fact the one en­gag­ing in harm­ful reg­u­la­tory games­man­ship by at­tempt­ing to avoid the ap­pli­ca­tion of a very clear rule in­tended to en­sure ne­go­ti­a­tions are con­ducted on a com­mer­cially rea­son­able ba­sis,” Telus stated in a let­ter to the com­mis­sion in late March.

Rogers coun­tered that 4K is not a new pro­gram­ming ser­vice and stated that broad­cast­ers have been of­fer­ing it un­der ex­ist­ing li­cences rather than new au­tho­riza­tions. BCE Inc. of­fers the chan­nels on Bell Fibe TV. It also dis­puted Telus’ claim of ur­gency.

The week be­fore the Jays’ game, the CRTC ul­ti­mately sided with Telus. The CRTC de­ter­mined that 4K is in­deed a new pro­gram­ming ser­vice, since the def­i­ni­tion “ex­plic­itly in­cludes a high def­i­ni­tion ver­sion of an ex­ist­ing ser­vice,” the CRTC stated in an early April let­ter.

It di­rected Rogers to pro­vide its 4K con­tent to Telus im­me­di­ately and of­fered its for­mal dis­pute res­o­lu­tion process to re­solve the fi­nal rates, terms or con­di­tions for the distribution.

That process ex­ists as part of the ver­ti­cal in­te­gra­tion frame­work that helps gov­ern ten­sions be­tween com­pa­nies like Rogers, which owns con­tent along with the means of distribution, and Telus, which only acts as a distrib­u­tor.

In an emailed state­ment, Rogers claimed its 4K con­tent has been avail­able to all broad­cast distribution un­der­tak­ing since its launch. It said it re­spects the com­mis­sion’s de­ci­sion and ap­pre­ci­ates its clar­i­fi­ca­tion on the reg­u­la­tion.

Re­gard­less, Rogers is an­tic­i­pat­ing more 4K cus­tomers. Half of new TV pur­chases this year are ex­pected to be 4K mod­els, ac­cord­ing to Rogers’ lat­est quar­terly re­port.

Since 4K con­tent re­quires sig­nif­i­cantly higher band­width, Rogers be­lieves its abil­ity to of­fer high­speed In­ter­net across its en­tire foot­print gives it an ad­van­tage over its tele­com com­peti­tors that must up­grade their net­works to fi­bre to of­fer the same speeds.

CAR­LOS OSO­RIO/ POOL VIA GETTY IMAGES

The CRTC has or­dered Rogers to of­fer its 4K con­tent to Telus im­me­di­ately, af­ter Telus asked the reg­u­la­tor to in­ter­vene so its clients with 4K TV sets could watch the Toronto Blue Jays’ home opener.

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