The CRTC kicked off its two week broadcast hearing on mandatory distribution yesterday with a steady stream of proposals hoping to hit the jackpot by winning mandatory distribution (and guaranteed millions) from cable and satellite distributors. I’ve written (here and here) about why mandatory distribution should be dropped altogether, but yesterday’s hearing provided the best evidence yet. CRTC Chair Jean-Pierre Blais started the hearing by making it clear that the Commission would establish a very high threshold – consistent with the Act – before forcing any Canadians to pay for channels they may not want. Over the course of the day, no one came close to meeting even a low threshold.
As the hearing veered from proposals backed by studies suggesting consumers weren’t interested in their product to claims that broadcaster costs were “totally retarded”, it became apparent that the mandatory distribution process is a last gasp for many failed, failing or never started broadcast proposals. The Commission heard from channels that broadcast distributors won’t carry, that advertisers won’t support, that few subscribers pay for, and that don’t have any content (user generated content was the answer for two such proposals leading one Commissioner to ask why people wouldn’t just watch YouTube). Even the Sun News Network, the headliner of the day, acknowledged that its complaints about undue preference by other distributors would not meet the legal standard, that it is already available to 70% of cable subscribers, and that Videotron, which shares the same parent company, has not placed the channel on basic service, even though it is seeking an order from the CRTC requiring everyone else to do so.
No one wanted to acknowledge they could try competing in the marketplace for subscribers or could launch an unregulated over-the-top Internet-based service. Instead, the preferred model is to have the CRTC require millions of Canadians to pay for their service through mandatory distribution. All of this leads to a broadcast catch-22. If consumers want your service, there is seemingly no need for mandatory distribution since there is the prospect for marketplace success. If consumers don’t want your service, forcing them to pay for it is rightly viewed as unfair (no matter what the Broadcasting Act might say about encouraging Canadian content).
The CRTC should use this hearing to put an end to this bad version of Regulatory Dragon’s Den (with consumers’ money at stake). For the new proposals, it should affirm that broadcasters need to convince consumers, not commissioners, that they have something worth buying. For broadcasters seeking renewal of mandatory carriage, it should send a message that the gravy train is over by rejecting price increases and limiting any renewal to three more years with notice that no further extensions will be granted. If the service is a necessary public service, the government should support it. If not, the market should decide. Either way, by the time Blais’ term concludes in 2017, the CRTC should be out of the business of being the last hope for uncompetitive broadcast business models.