The Canadian federal government could earn $4 billion by auctioning analog TV spectrum, once the country makes its transition to over-the-air DTV on August 31, 2011. But not a penny of government money is being given to Canada's recession-wracked broadcasters to pay for an estimated 175 DTV transmitters, let alone DTV production and ENG equipment.
"With this move, the government could earn up to $4 billion, and they were willing to fund the rollout of broadband to Canada's rural areas to the tune of $250 million," said Mike Woollatt, vice president of Government Relations for CTV, the country's largest private broadcast network. "We think the rollout of DTV is equivalent to rolling out digital broadband, yet Ottawa refuses to help out!"
According to the Canadian Radio-television and Telecommunications Commission, it will cost up to $77 million for Canadian broadcasters to comply with its DTV transition deadline. The cost of installing digital transmitters will not earn broadcasters any new income, but the Canadian government expects them to absorb the cost nonetheless.
"We haven't received any additional funding to finance the transition," said Angus McKinnon, CBC/Radio Canada TV's Senior Advisor, Media Relations and Issues Management. CTV shares CBC's pain: The cost of installing new transmitters "will eat up our entire capital budget," said Woollatt. "We have asked for assistance that we think is reasonable in the circumstances. But our pleas have fallen on deaf ears."
Actually, Canadian Heritage Minister James Moore—the man legally responsible for Canada's broadcasting system—has responded to the broadcasters' pleas. But his response is so unsympathetic and seemingly oblivious, Moore might as well have been deaf.
"Our government expects industry-led solutions that will ensure a smooth transition for consumers," said Moore, in a July 16, 2010 statement supplied to TV Technology, (Moore declined to be interviewed for this story). Repeating text from a speech he gave in 2008, Moore said, "The CRTC has set a deadline of August 31, 2011, for Canada to make the transition—which is two years after the US transition. This deadline gives Canadians fair notice and lots of time to react accordingly—and gives you [broadcasters] time to develop your plans.
"We need solutions that will encourage innovation and new approaches, rather than asking Canadian taxpayers to subsidize existing business models," Moore concluded. The fact that broadcasters will be 'subsidizing' the Canadian government's spectrum auction by moving to DTV seems to have escaped the Minister's notice.
"Building digital transmitters has no ROI for us," sighed Christine McGinley, CanWest Global's senior vice president of Operations. "We are required by the CRTC to build 20 transmitters across the country in 'mandatory markets' and will meet this requirement. We'll leave 32 more analog transmitters running in non-mandatory markets as long as we can, and then assess our options at that time. We also plan to close down 35 in smaller areas, so that we can use them for parts as the remaining 32 analog transmitters wear out."
NOT A TRANSITION?
McGinley did not mis-speak: Not all Canadian analog transmitters will shut down on August 31, 2011. In fact, the DTV transition will only apply to "mandatory markets," which, according to the CRTC, are national, provincial and territorial capital cities; areas with a population over 300,000, and any smaller areas with more than one local OTA TV station.
Christine McGinley, senior vice president, operations, CanWest Global "Analog transmitters in these areas, plus any channels broadcasting in the 52-69 range, will be shut down on August 31, 2011," said CRTC spokesperson Denis Carmel. "The status of the rest is not clear at this point. Under the rules, they can keep broadcasting in analog as long as they do not interfere with any DTV signals."
The result of this 'non-mandatory market non-exemption'—because its status remains legally undefined—is just one aspect of "a fascinating mess," said Kirk Nesbitt, vice president, Corporate and Radio Engineering for Rogers Broadcastings, which operates Citytv local stations across Canada. "Of our 20 transmitters, two are in non-mandatory markets, which means we will leave them in analog for the time being." He agreed that non-mandatory markets such as Red Deer, Alberta (population 85,656) could end up as "analog ghettos." "There will be no motivation to switch to DTV in these markets, as the broadcasters will all hang back until someone makes a move," Nesbitt noted.
This is not the only strange element of Canada's DTV transition policy. Under the rules, smaller stations can opt to give up OTA service entirely in favor of cable/satellite TV distribution only. But this decision comes with a cost; namely the loss of their preferred place on the dial and right to insert local ads on top of U.S. channels whenever the two are playing the same program at the same time. (Known as "Simultaneous Substitution," this practice reaps multi-millions in ad dollars for Canadian broadcasters, and is a financial cornerstone of the industry.)
"We decided that it could bankrupt smaller broadcasters if they were required to move to digital," Carmel explained. (The CRTC's research indicated that it could cost as much as $425 million to replicate all of Canada's current analog TV coverage with digital.) "So we came up with these options instead."
WHO'S IN CHARGE?
If there is anything to be said in the Canadian government's defense, it is that Canada's broadcasters were warned about the DTV transition as far back as 1997. That is when the Canadian government formed a "DTV Task Force," which included industry participation. In 2002, the CRTC released its policy on transitional OTA DTV licenses.
Subsequently, government and broadcasters established CDTV, aka "Canadian Digital Television." "CDTV was encouraged to be the vehicle for coordinating the transition and working with all the stakeholders, but when key broadcast stakeholders decided to go their own way there was no vehicle in place to manage the transition," said former CBC-TV executive Michael McEwen, who headed up CDTV until it died in 2006. "For the last four years there has been an operational and policy vacuum. The CRTC was right to set a deadline but in the absence of transition leadership it provides no framework for how to get there."
According to the CRTC's own estimates, approximately 826,000 to 857,500 Canadian households rely on OTA signals. But the actual number of Canadians affected could be more, warns respected broadcast consultant Wayne Stacey.
"These numbers do not take into account those cable and satellite who have only one digital set-top box and use OTA to feed their other TVs," he explained. "The actual number of people affected could be substantially more."
To keep watching TV after August 31, 2011, such households will need to buy set-top boxes at an average cost of $75. "The commission has determined that this is not a prohibitive cost," said Carmel. "So there are no plans to set up a coupon program to subsidize the cost, as happened in the United States."
"$75 is a very sensitive amount to my 92 year-old aunt, who lives on a fixed income," replied Ian Morrison, spokesman for the Friends of Canadian Broadcasting, which lobbies on broadcast issues for average Canadians. "This fact, plus the lack of any public education program explaining why this transition is even taken place, is going to be very confusing."
"The government has not taken any steps required to alert the public, despite years of warnings that the Canadian transition required increased government oversight," said Greg Taylor, who recently wrote his doctoral thesis on the Canadian DTV situation. "Canada's 'market-led' mantra has simply not worked.
"The CRTC has explicitly requested a public education campaign but details are very vague," he added. "Again, the government has offered no leadership."
As for what happens to Canadians who rely on OTA TV and lose it after August 31, 2011; especially during natural disasters when local media is a lifeline? "They can turn to radio for more information, like people with no TVs," Carmel replied. Informed of his statement, CanWest's Christine McGinley just laughed.
TRAIN WRECK IN THE MAKING?
Michael McEwen, former CBC-TV executive and former head of the now defunct "Canadian Digital Television" group When viewed by Canadian standards, the 2009 U.S. DTV transition looks pretty impressive. Broadcasters worked in concert with the NAB and FCC to make things happen, boosted by the $1 billion-plus "TV Converter Box Coupon Program," and, eventually, the hands-on backing of President Obama. Granted, the roll-out required the transition deadline to be extended by five months from February to June, but when this happened, the White House and Congress stepped in, and passed the "DTV Delay Act," an example of real government leadership.
"In every other country where a digital television transition has been planned, the national government has played the pivotal leading role," Stacey told TV Technology. "But in Canada, the government is 'Missing in Action.' No one is in charge, there's no money to aid the broadcasters and public, and no real plans to explain why this is all happening and when."
At press time, CBC-TV stated that it will not make the August 31, 2011 deadline.
"Right now, it looks like we may have up to 12 transmitters in mandatory markets to be done after the 2011 deadline," said McKinnon. Yet although he says that CBC is "working with the CRTC to explore solutions for those markets," the CRTC's official line is not encouraging. "As of August 31, 2011, all analog TV licenses in the mandatory markets expire," Carmel said.
Unless something changes, Canada's DTV transition is in serious trouble. The baffling hands-off approach of the Canadian government—something that not one of the many people interviewed for this article can explain—and the expectation that cash-poor broadcasters will take up slack—is a recipe for disaster.
McEwen believes that a train wreck could be averted, but only if the Canadian government takes charge immediately. "The CRTC, the ministries of Canadian Heritage and Industry Canada [which allocates spectrum], and the broadcast community need to be given a mandate to address all these transition issues, come up with a plan that addresses all markets, address education and public response—and most of all take ownership of something that all parties have been ducking for years," he said. "If they don't, I think there will be a backlash from those Canadian citizens that will not understand the transition and/or feel disenfranchised because of it. By my estimation, almost one million Canadian homes will be affected, which could be as many as three million people, or one in every 10 Canadians. Surely this begs the question: What are the broadcast and government stakeholders thinking?"
"Digital TV is not a vote getter," Stacey observed. "But deprive over a million Canadians of OTA TV with little warning? That's a big vote loser, and something that could cost the government seats should an election occur soon after August 31, 2011."