A recent decision from the Canadian Radio-television and Telecommunications Commission (CRTC) puts cable and satellite television providers in a better position to compete in some categories of commercial and institutional buildings where owners and managers still typically have bulk service contracts with one company.
Released last December, CRTC regulation 2011-774 clarifies that the owners of inside wire in properties such as hotels, restaurants, hospitals, seniors’ facilities and student residences cannot deny access to the infrastructure of other licensed service providers.
This mirrors rules that have already applied in residential condominiums and rental housing for several years, which have largely changed the business model for service provision. Contracts are now typically forged directly with end-users rather than the building owner or manager.
Industry observers foresee a similar shift ahead in seniors’ and students’ buildings that accommodate longer-term residents.
“There are few bulk billing arrangements left because cable companies simply will not offer the bulk service in MDUs (multiple dwelling units),” says Joe Hoffer, a partner with Cohen Highley LLP who specializes in residential tenancy law. “There was a business advantage in the past when cable services were simple, one-size-fits-all and landlords could negotiate great prices and concessions. But, administratively, it’s a relief for landlords to let tenants deal directly with the service provider, particularly now when they want choice rather than being limited to a one-size-fits-all option.”
Although hotel, restaurant and hospital operators are still going to be negotiating contracts on behalf of their short-stay patrons, the new regulation provides more practical flexibility to switch service providers. Until now, the incumbent service provider that installed and owned the wires within the building could prohibit competing companies from using it, meaning subsequent providers would have to re-cable to bring their service into the building. Few building owners and managers deemed that disruption worthwhile.
“A lot of these (service) agreements may have been renewed five or six times in the last 30 years just because there was little choice,” says Geoff Baker, national sales manager for Bell Satellite TV.
His company was the initial proponent to request a CRTC review and decision on the issue. Other service providers such as MTS Allstream and Saskatchewan Telecommunications, and hospitality industry interests, including Hilton Worldwide and the Hotel Association of Canada, offered support.
The CRTC decision stipulates competing service providers will pay a fee to the owner of the wire, which in many building configurations will be the same $0.52 per subscriber monthly fee specified in condominiums and rental housing. In other cases where the original service provider had to invest either more or fewer resources than is the norm to wire the building, the regulation calls on the parties to negotiate an appropriate fee.
“There are still some issues to sort out around the location of demarcation points but the importance of the decision is the CRTC made a clear determination that when a cable company owns this inside wire, it has to provide access to competitors wishing to use it,” says Baker. “Previously, companies were outright denying access and this was a thorn in a competitive environment.”
Bell’s status as a competitor challenging incumbent cable TV providers is a role reversal to its historical dominance in phone service. Likewise, CRTC 2011-774 is something of a flipside to the 2003 CRTC ruling that gave competitive local phone service carriers access to existing inside wire in buildings.
“It’s kind of going full circle,” sayss Jennifer Sicilia, vice-president, Telecom Property Management, with the IT services consulting firm, Rycom TPM. “Now it’s opening up for a level playing field on both sides – phone and TV.
Sicilia identifies advantages for building owners and managers, as well. The new regulation should ensure a smoother transition in switching to new service providers and possibly open up more competitive pricing since installation costs should be lower.
“It’s all about choice, price and turn-up times,” she notes.
Meanwhile, seniors’ and students’ housing operators may want to look at how condominium corporations and rental housing landlords have leveraged their position in a new kind of market.
Barbara Carss is editor-in-chief of Canadian Property Management magazine.