Eastlink says it’s being pushed out of the market by Canada’s biggest telecom companies and wants new rules to protect smaller providers like itself.
Speaking at a CRTC public hearing today, the company warned that high content fees and unfair negotiations with vertically integrated media giants—such as Rogers and Bell—are making it harder for them to survive.
Eastlink is owned by Bragg Communications, a private company held by the Bragg family of Oxford, Nova Scotia. Led by founder John Bragg, he built Eastlink from a small Nova Scotia cable provider into the country’s largest privately owned telecom, offering internet, TV, mobile, and phone services across seven provinces. It’s now led by his son Lee, who is CEO and vice chair of Eastlink.
“Rogers and Bell account for almost three quarters of our content costs even though their services only drive about 40% of our customers’ TV viewing,” said Eastlink Vice President of Regulatory, Marielle Wilson, calling out the incumbents.
She explained that while fewer people are subscribing to traditional cable TV, many still bundle TV with internet and mobile. “Our ability to offer effective Internet and mobile competition depends on our ability to compete effectively in the [Broadcasting Distribution Undertaking] BDU market,” she said, referring to broadcast distribution.
Eastlink says the current structure allows bigger players to both raise costs for their rivals and control access to key content. They accused vertically integrated companies (those that own both content and delivery) of engaging in “anti-competitive behaviour,” noting that their own submission to the CRTC only captures “a mere fraction” of what they’ve experienced.
To level the playing field, Eastlink is asking the CRTC to introduce several changes. These include prohibiting large media companies from withholding channels from smaller TV providers, banning retroactive rate increases and volume-based pricing models, and requiring public benchmarks for content pricing to ensure fairer negotiations. Eastlink also wants rules that prevent wholesale TV rates from exceeding the prices consumers pay to stream the same content online.
Eastlink also criticized a pricing system called “penetration-based rate cards” (PBRCs), which charges more if fewer customers subscribe to a channel. They argue that this unfairly shifts business risks from programmers to providers.
“If consumer demand for a service decreases due to any of these decisions, the impacts should rest solely with the programmer,” said Wilson, pointing out that programmers—not distributors—control what’s on the channels and how it’s promoted.
She warned that under PBRCs, distributors are forced to either pay more or artificially increase subscriptions to avoid penalties—either way, “consumers will be harmed via decreased levels of affordability or consumer choice.”
Eastlink ended its presentation by asking for “clear and reasonable limits” on how much risk programmers can offload onto smaller companies.
The CRTC’s public hearings on broadcasting changes will continue this week in Gatineau, Quebec.
Want to see more of our stories on Google?
P.S. Want to keep this site truly independent? Support us by buying us a beer, treating us to a coffee, or shopping through Amazon here. Links in this post are affiliate links, so we earn a tiny commission at no charge to you. Thanks for supporting independent Canadian media!
The CRTC has made a lot of terrible decisions, but vertical integration is the single biggest mistake they ever allowed to happen in broadcast. It should have never been allowed to happen. It hurts competition, killed OTA especially in rural areas, and hurts consumers worst of all.