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CRTC chairman Konrad von Finckenstein

Sean Kilpatrick/Sean Kilpatrick 2008

The federal government is taking control of the fight between Canada's big television networks and the cable industry over whether CTV, CBC and Global should be allowed to charge for their signals.

In a move that will have a direct impact on Canadian cable and satellite TV subscribers, the government has taken the unusual step of instructing the Canadian Radio-television and Telecommunications Commission to hold a public hearing on the matter and report back to cabinet.

While this would mark the fourth time in three years that the networks' fight to be compensated for their signals by the cable industry is heard by the regulator, it is the first time the government has asked to participate directly in a process that has so far been steered by the CRTC.

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The process is expected to result in the government deciding the matter, rather than the regulator. Such examples of direct influence in the regulatory process are rare. However, the matter has dragged on for three years with no resolution, much to Ottawa's displeasure since the networks and the cable industry have started rallying the public for support, urging them to contact their MPs.

The hearings, scheduled for December, will look at the "implications of implementing a compensation regime for the value of local television signals," the CRTC said Thursday.

Canada's major TV networks argue that they deserve to be paid for their signals by the cable and satellite companies. Only specialty channels higher up the TV dial are currently allowed to charge monthly fees, while the large national networks are considered free of charge, since they also can be picked up by antenna.

The networks argue the revenue model for television has changed as nearly 90 per cent of homes now subscribe to some form of cable or satellite package. They want the money, which at a proposed 50 cents per subscriber each month is worth an estimated $50-million to $80-million to a network depending on its size, to fund local programming.

Cable and satellite companies, led by Rogers Communications Inc. , Bell Canada and Shaw Communications Inc. have banded together to oppose the issue, saying the networks are trying to charge for signals that are already free to consumers and that any fees would be passed on to customers if approved.

The CRTC has twice turned down the proposed fees, saying the funds weren't needed a few years ago. However, with TV networks arguing their financial fortunes are in decline amid an advertising downturn and competition from the Internet, the matter is being revisited.

This spring, the regulator opened the door for the fees by saying it supported a solution where the TV networks would negotiate compensation with cable and satellite carriers themselves. If an agreement couldn't be reached, the CRTC said it would allow the matter to go to an arbitrator.

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This decision, however, prompted a lawsuit from Bell Canada, which said the regulator couldn't make such a decision without first holding a hearing. Bell is a minority owner of CTVglobemedia Inc., the parent company of CTV and The Globe and Mail, and the fight between Bell and CTV is an example of how divided the industry has become over the issue.

The CRTC planned to discuss the concept at hearings in November until the request came Thursday from the government to hold a separate hearing.

Both sides have been preparing for the matter to go to the government, and potentially to the courts. The broadcasters and the cable and satellite carriers have been lobbying extensively in Ottawa this year, trying to sway federal politicians to their side of the debate.

It is not clear where the government stands on the issue. Each side said Thursday it supported the move.

Rogers issued a statement saying the decision by government to step in on the proposed charges, called fee-for-carriage in the regulatory vernacular, had the company's support.

"The government says the CRTC must take into account the impact on consumers of a fee-for-carriage regime which is something we have consistently advocated," said Phil Lind, vice-chairman of Rogers.

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Soon after, the three big networks - CTV, CBC and Global - issued a joint statement also supporting the decision.

"Having the government fully engaged is a positive step forward," said Paul Sparkes, CTV's executive vice-president of corporate affairs. "We welcome the government's support in implementing a solution that recognizes the value of local TV for consumers."

CBC's involvement in the debate has been a controversial one, since the public broadcaster also gets federal funding, and is not solely reliant on commercial dollars. However, the broadcaster said compensation would be used to support local programming.

"We have and continue to hear from Canadians across the country about the importance and value of local television," said Steven Guiton, CBC's chief regulatory officer.

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