Gloves off in Telus-Shaw battle

Long-time telecom foes face off over broadcast competition issues

By Paul Marck

Having long covered the telecom industry in Alberta, it has been a source of endless fascination and bloodsport to watch the escalating corporate buntoss between Western corporate titans Telus and Shaw.

(Let me say at the outset that I am a long-time customer of both companies and in the spirit of full disclosure, I hold a handful of Telus shares within a self-directed RRSP.)

It used to be phone company and cable company and no real crossover in terms of product and service offerings to consumers and businesses. But that has all changed over the last 15 years. It was in the mid-’90s that Shaw began offering high-speed Internet to compete with Telus’s dial-up version. Then Telus got into high-speed ‘net, Shaw got into home phones, Telus eventually offered TV service (a long time coming) and today the two Western giants compete head-to-head on many fronts: cable, Internet, home phone, satellite TV, and by next year wireless, as Shaw gets into the cellphone game as well.

The one true distinction between them for consumers is broadcast. With Shaw’s purchase of CanWest Global’s TV network and specialty channels, that company holds the true “quadruple-play” advantage over Telus, which does not have broadcast assets.

For Telus, that’s a problem, because it does not want to be left out in the cold over carrying Global signals. So it has appealed to the CRTC to take a close look at monopoly power and put in rules to protect competition before granting regulatory approval for Shaw’s Global deal.

Now here’s the interesting part: There are CRTC regulations that prevent “content exclusivity” and there is an “undue preference” rule. But that only covers traditional broadcast technology, which doesn’t include downloading content on Blackberries, iPads and computer desktops.

There is also a wild card: There is an impending ruling expected from the CRTC as well on “fee for carriage” for conventional broadcast signals, whereby cable companies would have to pay broadcasters for their signals in much the same way they already do for specialty channels. Telus does not want to be charged excessive carriage fees, while Shaw merely moves cash from one pocket to another, since it will own and control a lot more content from beginning to end.

It is all a regulatory grey area, hence Telus’s appeal to the CRTC for vigilance and setting new rules. It will be noteworthy to see where this all heads when the CRTC begins hearings on the Shaw-Global deal on Sept. 20, to determine whether the transaction is in the public interest.

The CRTC is looking to re-assert its place as a regulatory agency without the heavy-handedness it once wielded as the broadcast cop. We have seen how well Canadian content rules have applied in radio and TV land over the last 35 years, as broadcasters struggle with airing lame current affairs programsg and replaying the same shows and discs over ad infinitum in order to meet the standards.

But, let us not digress. CRTC head Konrad von Finckenstein, one-time head of the federal competition bureau, is a shrewd operator who hates monopolies and he has served notice the CRTC will not be a rubber stamp. So stay tuned. The show will get a lot more interesting starting with the Global hearings next month.

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