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 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 said its 4K content has been available to all broadcast distribution undertakings since its launch.
“We were looking for clarity on what constituted a new programming service. We respect the commission’s decision and appreciate their 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 high-speed 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.