Canadian regulator moves to help broadcasters

* Temporary fee hike could help smaller stations

* Cable firms say the new policy hurts consumers

By Allan Dowd

VANCOUVER, British Columbia, July 6 (Reuters) - Canada's broadcast regulator signaled support on Monday for having the country's cable and satellite providers pay local broadcasters for programming they now get for free.

The federal regulator said cable and satellite firms will temporarily pay more into a fund to promote local production and said broadcasters can use the money for news and other programming in smaller markets.

Two cable and satellite firms blasted the decision by the Canadian Radio-television and Telecommunications Commission, calling it a "stunning reversal" of earlier decisions and saying it would raise consumer bills.

The head of the CRTC had said as recently as May that the agency was cool to the idea of "fee-for-carriage", under which cable and satellite companies would pay over-the-air broadcasters for their signals. However, the CRTC said at the time it was willing to look at helping conventional broadcasters who said they needed the money to stay afloat.

The CRTC said on Monday the cable and satellite firms must contribute up to 1.5 percent of their gross broadcasting revenues into the fund, an increase of 0.5 percentage points, boosting it to C$100 million ($86 million) from C$68 million.

"We have taken steps to ensure that broadcasters, and particularly those in smaller markets, continue to provide Canadians with programming that reflects their needs and interests," CRTC Chairman Konrad von Finckenstien.