The question of whether interactive TV is broadcasting or not may be simple to ask, but it’s one of many that could have a huge impact on how ITV is regulated in Canada.

Late last month, the Canadian Radio-television and Telecommunications Commission (CRTC) gave the industry a good starting point for shaping the ITV universe with the release of its 60-page report on the state of interactive television.

But the CRTC says that further discussion is needed – discussion that will likely delay the roll-out of ITV – because only 18 interested parties responded to the CRTC’s initial request for submissions to its interactive fact-finding inquiry late last year.

Ian MacLean is VP of iTV Lab, a division of Montreal-based media management company The Media Experts, which was the only agency to make a submission on interactivity. He says he will continue to take part in the CRTC process and, despite the low participation, is encouraged that this initial first step has taken place.

‘We can now begin a more granular discussion on what constitutes broadcasting or is exempt from the act under the new media exemption order – and everyone should be involved in that process.

‘That is just what the CRTC is suggesting, that the industry comes together on definitions, on standards, on accessibility for hearing or visually impaired people, for protecting intellectual property and on digital rights managements. They got the issues out there. It’s time to sit down and get it right.’

In particular, the initial submissions did not provide enough information for the Commission to adequately define what ITV services would constitute broadcasting under the Broadcast Act and which would be considered New Media Broadcast Undertakings (NMBUs), and thus subject to the new media exemption order issued in December 1999. (NMBUs provide broadcasting services delivered and accessed over the Internet and are not subject to CRTC licensing.)

More submissions requested

As a result, the CRTC has issued another request for comments. Submissions are to be received by the commission on or before Dec. 20, 2002. Anyone wishing to respond to these submissions should do so by Jan. 31, 2003.

What still needs to be resolved is whether customized ITV services that reach only individuals or small groups would fall under the new media exemption order and whether program-related interactivity should be considered broadcasting.

The CRTC wants this next round of submissions to clarify whether ITV extras need be integral to a particular program to be deemed program-related, and how this integral nature should be determined.

Angling for the new media

exemption

In its initial submission, Rogers put forth its belief that enhanced programming services were sufficiently customized to fall under the new media exemption. In the case of TV-based Web access and TV portals, the CBC stated that while these are programming services, they should be exempt as NMBUs. The Canadian Association of Broadcasters (CAB) submitted that programming-related Web sites should be exempt whether they are accessed via a computer or TV.

Pelmorex took a harder line with its view that when TV portals are a virtual channel or stand-alone service (such as a channel to access games), they should be considered telecommunications, but when such virtual channels relate to programming services, they should be considered broadcasting.

Privacy in an interactive world

With the two-way communication inherent in ITV, privacy is another important issue being debated by the Commission. Several suggestions were made about how to ensure privacy, including a couple of ideas from Media Experts.

The media management firm pointed to the Personal Information Protection and Electronic Documents Act (PIPEDA) as a means to ensure the protection of customer information. Media Experts also recommended anonymous ‘digital silhouettes,’ a proprietary model developed by U.S.-based Predictive Networks where viewers are segmented into categories based on demographics and interests but identified only by ID numbers, rather than information that could identify individuals.

To date the Commission’s finding on privacy is: ‘Protecting the privacy interests of Canadians is an issue of significance with respect to ITV services. Where these services are provided by a federally regulated organization, privacy interests are currently serviced through the Personal Information Protection and Electronic Documents Act, which would also apply equally in the context of ITV services.’

Gatekeeping and accessibility

The CRTC also wants to deal with the issue of gatekeeping: that is, if certain types of ITV are determined to be program-related, should a distributor (cable or satellite company) be prohibited from altering or deleting a subsidiary signal containing such ITV activity?

Gatekeeping is a major concern to content providers and broadcasters such as CBC and CanWest Global who are not affiliated with a BDU (Broadcast Distribution Undertaking, a cable or satellite company). The CRTC wants to ensure that some media outlets are not given undue preference by broadcast distributors in the same ownership family. What they want to prevent is a situation where, for example, ExpressVu could show preference to CTV properties because they’re all owned by BCE.

The ultimate goal is accessibility – for viewers to have access to ITV content while broadcasters and content providers have a fair and equitable playing field for developing and distributing their programming. This will not only keep the industry strong but also ensure that Canadian content and culture are well-served.

MacLean believes that BDUs should be compensated for their investments but that all broadcasters should continue to have access to viewers.

‘If these ITV services are considered integral to the program, they’re programming related, and it’s logical that such material should passed through the pipe. It also creates opportunities for both of them [BDUs and broadcasters] to share in the revenue stream from this possible interaction.

‘That may also involve advertisers who want to get involved in more interactive relationships with interested viewers beyond the 30-second ad. It might be sponsorship; maybe the actual exercise of interacting will be made possible by a sponsor.’

Paying for the infrastructure

That leads into another issue: How are companies going to recoup their massive investments in interactive technology and infrastructure? BCE estimated that by 2006, ExpressVu would have invested a minimum of $4.5 million in infrastructure costs. Canadian cable companies alone have invested $6 billion upgrading their infrastructures into 750 MHz two-way hybrid fiber optic cable to make interactivity possible.

Advertisers and subscribers will be major sources of revenue according to one submission. It used statistics from Forrester Research stating that U.S. advertisers would spend $3.7 billion in the ITV market by 2006, and estimated that Canadian ITV ad expenditures may be over $4 million by 2004.

‘I don’t think that is an overly exuberant number at all,’ MacLean says. ‘As video-on-demand and PVRs increase in penetration, there will be other advertising opportunities that will flow from that. In order for those advertising applications to be successful, they’re going to have to do at least $4 million or more for them to be viable businesses.

‘I think $4 million is conservative. If we look at the aggressive response by Canadians to these new services and project out a couple of years, the opportunity will be there for forward-looking marketers to invest in that space.’