This week’s CRTC mandatory distribution hearing has placed the spotlight on a fascinating disconnect between the Commission and the Canadian broadcast community. Despite months of telegraphing its intent to promote consumer choice over broadcaster revenues, the first two days of the hearing have featured repeated presentations from groups who have not gotten the message. CRTC Chair Jean-Pierre Blais could not have been clearer in a speech last October:
In our decision, we noted that consumers increasingly expect to be in control of what they watch. It makes sense that consumers and the distributors who serve them should have more flexibility in packaging choices. While we acknowledged the value of predictable revenues to the programming services, we decided that the days of guaranteed wholesale rates are over. Programming services cannot expect to remain completely insulated from the growing demand for greater choice by Canadians.
He followed that up in March by telling the production community that it “will need to compete, just like any other sector.”
Despite the messaging, many of the groups seeking mandatory distribution evidently don’t get it.
I wrote yesterday about the parade of failed broadcaster business models hoping to hit the jackpot with mandatory carriage, but it was an exchange between Commissioner Molnar and Sun News that best illustrates the disconnect:
Molnar: I just want you to tell me right now why you think it is fair and equitable that every Canadian cable subscriber should pay for you today.
Teneycke: Well, I think the simplest answer is I think it’s the law in the sense that the Broadcast Act itself which is why we’re here, it’s why the CRTC exists, it’s why the CBC exists and sort of the foundational core of all the rules around broadcasting and to have the privilege to have access to Canadians’ homes and who is going to be distributing and who isn’t.
Wrong answer. Despite some suggestions that the Broadcasting Act obligates the CRTC to order mandatory distribution for some channels, the provision in the law is very general. It merely states that the Commission may “require any licensee who is authorized to carry on a distribution undertaking to carry, on such terms and conditions as the Commission deems appropriate, programming services specified by the Commission.”
It is therefore the CRTC that interprets the law and it falls to the applicants to demonstrate why their proposals fall within that interpretation. As Blais emphasized at the start of the hearing, the CRTC has set a very high threshold, providing yet another signal that broadcasters should not be relying on regulatory mandates:
Given its exceptional nature, the CRTC has set the bar very high for obtaining a mandatory distribution order on digital basic service pursuant to section 9(1)h). The CRTC’s policy requires that a service seeking such an order must clearly demonstrate its exceptional nature and that it achieves important public policy objectives under the Act.
Each applicant must therefore demonstrate, with supporting evidence, that its service:
- meets a real and exceptional need within the broadcasting system
- contributes in an exceptional manner to Canadian expression
- contributes in an exceptional manner to all the objectives of the digital basic service and specifically contributes to one or more objectives of the Act, and
- makes exceptional commitments to original, first-run Canadian programming in terms of exhibition and expenditures.
All four of these requirements must be met. Broadcasters have largely emphasized the fourth criteria, citing their commitment to Canadian content. Yet the CRTC requires far more. In a world of almost unlimited choice available through the broadcasting system and from unregulated Internet-distributed voices, it is worth asking whether any service can meet the standard of contributing in an exceptional manner to Canadian expression. The very definition of exceptional is to be the exception, uncommon or extraordinary. Given the ready availability of programming alternatives, few broadcasters will ever meet this standard.
The Sun News response was reminiscent of Bell’s attitude in the Bell-Astral hearing, where the Commission was focused on the public interest and Bell paid scant attention to the issue. The Commission rejected the Bell deal and I suspect it will similarly reject the new proposals it has heard thus far (the big question will be about Starlight, the proposed Canadian movie channel that is better suited as an Internet-based Netflix competitor).
Indeed, the entire process feels dated as if a decade of disruptive technologies from YouTube to Netflix never happened. As I noted yesterday, the CRTC can and should use the high standard it has set within the law to put an end to the steady procession of poorly developed broadcast proposals that depend upon regulatory mandates for their very survival.