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Bell vs. VMedia: The David and Goliath battle over the future of TV

Bell Media’s fight with a small IPTV startup moved to the courtroom this week in a case that raises interesting questions about the future of technology and how Canadians watch TV.

“We are here because we were threatened with millions of dollars in damages under the copyright act,” VMedia lawyer Rocco DiPucchio told Judge Fred Myers of the Ontario Superior Court of Justice.

At issue is VMedia’s new service, which offers a so-called “skinny basic” cable package through a Roku app.

Roku, like AppleTV or Google’s Chromecast, is a digital media player that allows users to stream content from the internet on their television.

In September, VMedia started offering a skinny basic cable package through Roku for $17.95 a month. The offer does not require a specific VMedia internet subscription.

With VMedia’s package, anyone with a Roku player and their own internet subscription could have access to about 20 live television channels, including CTV, CBC, Global, as well as U.S. networks ABC, CBS, NBC, Fox and PBS.

A copyright question?

Shortly after it launched, Bell Media sent a cease and desist letter threatening legal action if VMedia did not remove Bell’s signals from the new service.

VMedia agreed to pull Bell’s channels from its new service while the argument played out in court. 

Among the questions the court must decide is whether an Internet Protocol Television (IPTV) provider’s CRTC  license allows it to retransmit over-the-air TV signals over the internet. Or does doing so without paying a fee violate Canadian copyright laws?

As an IPTV provider, VMedia is a licensed Broadcasting Distribution Undertaking (BDU).  BDUs, which include cable and satellite services, are generally allowed to retransmit over-the-air and other signals at no cost.

In court, VMedia’s lawyer argued there is nothing in its license that specifies the manner of that transmission.

“Once you grant the licence, the BDU should be allowed to retransmit using any technology available,” said DiPucchio.

But Bell contends that because VMedia’s skinny basic service on its Roku app is offered over the internet, not a private managed network, it falls outside of the scope of VMedia’s license.

Internet boundaries

“A private managed network is not the internet,” said Bell lawyer Steve Mason.

In effect, Bell is arguing VMedia’s IPTV transmission moves over a VMedia network from its server to its customers.

Whereas VMedia’s Roku app transmits signals over the public internet.

And yet VMedia’s IPTV requires an internet connection.

It’s a distinction the judge appeared to find puzzling.

“You can’t tell me whether if it’s on a private managed network it doesn’t touch any wire on the public internet,” said Myers.

It’s a crucial question.

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Bell contends that because VMedia’s skinny basic service on its Roku app is offered over the internet not a private managed network it falls outside of the scope of VMedia’s license. (iStock)

Internet television companies that are not licensed BDUs do not have the right to retransmit over-over-the-air TV signals without an agreement with rights holders.

VMedia argues that regulation was aimed at websites such as JumpTV and iCraveTV, which posted links allowing anyone on the internet to stream TV signals, and was enacted long before the advent of digital media players like Roku.

If one wanted a sense of the importance of this case, one need only look at the number of lawyers Bell Media brought for this single day of arguments.

Bell showed up with a team of eight.

Besides Mason, a partner at the well connected firm of McCarthy Tetrault and his two associates, in the gallery were five others, including Bell senior vice president Robert Malcolmson — a former partner at Goodmans, another top law firm — and Kevin Goldstein, late of Osler, Hoskin Harcourt LLP. 

It may have been a show of force or that Bell simply wasn’t taking any chances. Or perhaps both. 

‘This is about data’

“My guess is that this is about data,” said Alan Wolk, author of Over The Top: How the internet is (slowly but surely) changing the television industry.

“[Companies like Bell] collect a lot of data off their set top boxes. A lot of them have addressable advertising units that sell advertising based on data they’ve collected off a set top box.”

“If [the tv signal] goes through a set top box [Bell] has more control over it … [Bell] can actually track who’s watching when, where,” said Wolk.

“[Bell is] not exactly sure how this open internet thing is going to work, both in terms of ratings and just in terms of [Bell] knowing what is going on.”

“Their fear is losing control.”

Bell, along with other cable and satellite companies, once argued hard — and successfully — at the Supreme court against a system that could have seen cable companies required to pay TV stations for their signals.

That case reaffirmed that cable companies are allowed to pick up private channels’ broadcast signals and retransmit them on their networks without having to pay for them.

Now Bell is contending that VMedia doesn’t have the right to rebroadcast signals from its own stations over the internet. 

Judge Myers said he would likely have a decision in this case by the end of next week.