Let’s Talk TV with the CRTC
The CRTC is in the midst of an important series of hearings. These hearings are on the future of the regulation of Canadian TV, the wholesale access to wireless services, and the policies that should govern wholesale access to wire line services. We will discuss in future postings the issues of greatest concern in the latter hearings.
The first of the series, Let’s Talk TV, concluded two weeks of hearings on September 19th. The subject was the future of regulation of television broadcasting in Canada. Essentially those hearings were about how to give consumers greater choice while preserving the business model of broadcasting in Canada. Essentially, the Faustian bargain has been that licensed broadcasters would be sheltered from competition so long as they provided Canadian content (as defined by the CRTC).
The protections from competition include format protection (limiting channels to certain types of programming formats), protection from US border broadcasters (authorising deletion of US signals on cable for simulcast programs – thus deleting ads from US signal providers). This tightly interwoven regime, with support from government funds, income tax measures, and immigration measures supports a stable of Canadian writers, actors, production workers, producers and other creative personnel. This system has proven remarkably robust, surviving the arrival of new technologies of delivery (cable and satellite) and policy challenges such as free trade.
In the nearly 50 years the CRTC has enforced Canadian ownership and Canadian content rules, there have been (apart from the Quebec francophone market) few successes that won significant audience share in English Canada, and the whole game has largely been one of dutifully fulfilling the mandatory Canadian content requirements in the lowest cost way possible (game and reality shows), while buying and airing as much US drama and sports and possible to draw advertisers to the respective networks. (Income tax rules make it prohibitively expensive for Canadian businesses to advertise on US border broadcasters, forcing them to buy time on Canadian TV.) The biggest profits go to those who can buy US programs at the lowest price and attract the largest audiences and thus advertising dollars to their stations. This system ripples back from over-the-air broadcasting to cable (again, Canadians pay for cable in order to access US programming, which drives market penetration to support Canadian specialty channels that must carry Canadian content).
The big question from the perspective of the CRTC was how to make Canadian TV more responsive to consumers. What is interesting is not that the suggestions that emerged from public consultations were so peripheral to the existing regulatory model (pick and pay options, unbundling of cable packages, adjustments to tiering, “cable light”), but that it was the first time the CRTC had actually seriously addressed what consumers want. This should be shocking – even shaming, but most of the industry stalwarts who appeared were unconcerned with that: they were concerned with how to save their businesses from Internet predators.
Finding, to its chagrin, that Google and Netflix (as representatives of Internet as Internet foxes) were unwilling to accede to the CRTC’s pretentions to authority to regulate the Internet, the CRTC has decided to expunge the briefs, evidence, and testimony of those agents of Satan so as to pretend that its regulatory fences can still protect licensed broadcasting (broadcasters being its regulatory hens).
While one can appreciate the effort and indeed genius that has gone into creating the closed loop world of Canadian broadcasting, the near ubiquity of high speed broadband services, the increasing quality of programming available over the Internet, the width of choice of programming available all suggest that consumers are unlikely to respond with their accustomed enthusiasm to any tinkering the CRTC is likely to do around the edges of its regulatory model. The retreat by the CRTC from a confrontation with Netflix and Google is a sure signal that the Canadian broadcasting system as a sustainable business and regulatory model is entering into its death throes.
For those of us who laboured over the Broadcasting Act in 1987-91, that it has survived for nearly 25 years is surprise – we expected that the 100 channel universe would spell the end of the Broadcasting Act. Instead, the CRTC insinuated itself into pay-per-view and video-on-demand, which prolonged the life of the regulatory system beyond its envisaged sell-by date. The current emphasis by the CRTC on the consumer is welcome in the extreme, but nothing the CRTC can do will reverse the drift of paying customers away from the regulated system and toward the virtually unregulatable world of the Internet.
The CRTC, to its credit, is attempting to realise the objectives of the Broadcasting Act at a time when the value of the licences it issues are being undermined by phenomena outside its control. I don’t subscribe to the scope of jurisdiction claimed by the CRTC, but within its generous interpretation of its mandate, it is attempting to bring consumer interests more fully into the balance. Virtually any regulatory result will prove too little and too late. It is up to Parliament to decide what, if any, laws will apply to broadcasting in the future. Will there continue to be network TV? Will over-the-air broadcasting be reduced to purely local and syndicated programming, much as radio operates today? Or will all programming migrate to the Internet, leaving the valuable radio spectrum for more economically and socially important services?