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(Reuters) - Canadian companies that own both television content and the means to distribute it will face tighter rules for selling programing rights to rivals, the country's broadcast and telecom regulator said on Wednesday
Telecom and cable companies in Canada have snatched up content providers as they move aggressively to offer their customers valuable content such as sports, films and business news on an growing array of devices including home computers, smartphones and tablet computers such as Apple's iPad.
Critics say such vertically integrated companies could use their control of content to unfairly disadvantage rivals.
The regulator, the Canadian Radio-television and Telecommunications Commission (CRTC), essentially closed off that possibility on Wednesday, blocking the owner of any television programs from offering it on an exclusive basis only to their own mobile or Internet subscribers.
Broadcasters remain free to offer exclusive content on television, but if they offer that content online or on mobile platforms it must be made available to competitors on fair and reasonable terms.
Telus, the only major wireless and Internet provider in the country that does not own a broadcasting unit, cheered the CRTC decision.
"From now on, vertically integrated companies like Bell Media and Shaw Media may no longer block access to content in order to drive-up costs all the while benefiting their own distribution services," the company said.
The CRTC opened the review into so-called vertical integration in October last year on the same day it approved cable company Shaw Communications' C$2 billion ($2 billion) acquisition of the television assets of distressed media company Canwest.
At that time it was also due to consider approval of Bell parent BCE Inc's C$1.3 billion purchase of CTV, Canada's largest private broadcaster. It later approved that deal, but barred Bell from offering exclusive content via the Internet or mobile devices pending the outcome of its review.
Quebecor Inc, which launched a wireless network last year, has owned the French-language TVA network since 2001, while cable giant and wireless industry leader Rogers Communications bought five Citytv stations in 2007.
In its ruling on Wednesday, the regulator said it would allow companies to offer some exclusive programing to Internet or mobile customers, provided it is produced specifically for an Internet portal or a mobile device.
That includes supplementary programing such as behind-the-scenes video clips of a TV program, as well as original content.
Rogers said the new CRTC rules should also apply to online video streaming from Netflix, which is exempt from the licensing regime covering established broadcast distributors, but that the CRTC had not spelled out its position on that issue.
"The way I read this thing, it is silent on that," the company's executive vice-president for regulatory affairs, Phil Lind, said in a telephone interview. "It isn't specifically addressed."
The CRTC also encouraged distribution companies to give consumers more flexibility in choosing the individual services they want.
"Canadians enjoy watching programs online as it gives them the freedom to effectively pick and pay for what they want," CRTC Chairman Konrad von Finckenstein said in a statement.
"They find it difficult to accept that their cable and satellite television providers do not offer similar choice and flexibility."
It called on the biggest of those companies - BCE Inc's Bell Canada, Quebecor Media, Rogers, and Shaw - to submit a report by April detailing their response to such consumer demands.
The biggest U.S. cable company and top broadband provider Comcast completed the purchase of a majority stake in broadcaster and movie studio NBC Universal in January. To meet the approval of the U.S. Justice Department, Comcast had to cede control of popular video website Hulu.
Reporting by Alastair Sharp; editing by Rob Wilson and Peter Galloway