Politicians grappling with the future of local television have decided to let the federal regulator deal with the stickiest problems, after being cajoled, wooed and even a bit bullied on the issue.

The Canadian Press has learned that a unanimous report by the House of Commons heritage committee, to be tabled Friday, makes no recommendation about whether broadcasters should be able to charge cable companies for carrying their signals, referred to as "fee for carriage."

That key request by the TV networks will instead be handled by the Canadian Radio-television and Telecommunications Commission, which has turned down the networks twice before.

"Round one is over," declared one industry insider, who is preparing for the next fight before the regulator.

Sources said committee members felt they should not wade into the sticky area of legislating a market value for signals. The Conservative government has apparently come to the same conclusion.

The networks had mounted an aggressive campaign to persuade politicians this new revenue source is needed to keep local stations afloat. Advertising revenues are in sharp decline with the recession and the continuing fragmentation of audiences.

The cable and satellite companies responded with a vigorous counterattack, arguing that new fees charged to them would be passed onto consumers.

But the committee did throw a few bones to the broadcasters.

It will recommend a beefed-up local programming improvement fund, administered by the CRTC and paid for by the cable and satellite companies.

Currently, those companies pay one per cent of their gross revenues into the fund, roughly $60 million annually. Sources said the committee would like that raised to 2.5 per cent, with a specific amount set aside for the English and French services of CBC.

The committee is also set to acknowledge the enormous challenge that the digital television transition poses to broadcasters.

By 2011, all broadcasters must convert their analog transmission towers to digital, at an estimated cost of about $1 million per transmitter. The corporations have said flatly they cannot afford to convert them all unless they receive some government assistance.

MPs were sensitive to those complaints, and would like to see the government take more action to help ease the transition.

In the United States, the government helped with a massive public-awareness campaign and provided vouchers to help consumers who rely on antennas to buy a digital set-top box.

The politicians have been heavily lobbied by the broadcasters and the cable companies.

CTV held a rally on Parliament Hill, offered open houses at their stations across the country, and ran ads warning local TV was threatened with extinction. Global and the TVA network did more conventional lobbying of key players in the federal government.

MPs with local stations at risk in their ridings have been anxious to find a solution to what ails the industry.

The cable companies pushed back hard. Rogers recently hosted some MPs at their exclusive box at the Rogers Centre in Toronto to watch a Blue Jays game. Some veteran players from World Series wins dropped by for good measure.

Within the committee, the Conservatives and Liberals seemed more sympathetic to the broadcasters, and the NDP and Bloc Quebecois more skeptical. Ultimately, they decided not to take sides on fee-for-carriage and look for common ground in the other areas.

That came as a huge disappointment to some MPs who could see their local stations disappear.

"I think there's a crisis in local television, and any report that doesn't recognize fee for carriage is inadequate," said one parliamentarian.