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Why Rejecting Mandatory Distribution Fits With the CRTC’s Interpretation of the Broadcasting Act

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.

10 Comments

  1. Tori Klassen says:

    Canadian ISPs and broadcasters are dinosaurs and they just won’t listen to their customers. Each time Shaw calls me to try to sell me cable TV, I tell them I will consider it when they allow me to pick my channels one at a time. Otherwise, I already pay too much to them for my bandwidth, thankyouverymuch, and I’ll stick with Netflix/iTunes/Streaming video for movies, shows and live events. I’m glad the CRTC seems to have decided it’s time to cut the umbilical cord.

  2. Dorkmaster Flek says:

    Cable? What is this “cable” you speak of?
    Oh ho ho! A package of dozens of different shows, when there’s only one of which I’m actually interested in watching? What a quaint notion! Fixed times which I must be present in order to view said show? Hilarious! Darling, you simply must come and see this demonstration of how ancient civilizations consumed their “television”. Fascinating!

    Seriously, I feel like I’m in the frickin’ Natural History Museum with these jackoffs. It’s 2013! Here’s an idea: How about we discuss how to improve our Internet infrastructure so we can get on with the future of streaming content.

  3. It’s about time that the CRTC stopped padding the pockets of the carriers and content providers and force them into the 21st century. Asynchronous access to good quality content, not provide crappy content when the carriers want to provide it.

  4. This is why…
    This is why downloading the shows you want via usenet/bittorrent/ADC/XDCC is the only practical solution. The only downside to this is that the people deserving (actors, writers, etc…) aren’t getting paid.

  5. The ONLY downside?!
    @Jordan — You seem to suggest the fact that the people deserving aren’t getting paid is minor, or insignificant. Taking something without paying for it is the definition of theft … at least, I’m pretty sure what my parents told me. : )

  6. The ONLY downside!
    @Helen S. — The upside is that all of us can consume as much media as we want. Once upon a time I used to hear of one new band a week, when my local radio station decided to let me hear it, and I used to get three new magazines a month. I was limited in my book budget, and in the number of movies I could afford. Now, I consume media all day long, the equivalent of hundreds of new authors, musicians, and dozens of films a week. All of us are richer for the millions of us whose lives are richer, just like mine is. There are some artists who might have lost some sales as a result of this, but the cost to society is negligible, trivial compared to the benefit for all. You can call it theft until you’re blue in the face; that doesn’t make it so. The courts agree with me.

  7. Economics
    i’m not sure where Annie O proposes that the funds to pay for programming comes from. Producers sell rights to projects to broadcasters, international buyers etc to raise the money to pay for the television productions. Those broadcasters and international buyers expect to make money otherwise why would they pay the producers. if they don’t make any money, they won’t pre-buy the rights, and then the producer doesn’t have the money to make the production. Duh it’s far from a perfect system, and we need new models as no question, asynchronous access to good quality content is the only possible future, but it ain’t here yet. Ripping stuff off helps stiff the whole system.

  8. The ONLY downside…
    @Alex R — The only downside is that I don’t know how else to pay for content, other than a levy, or tax, or ads, or live concerts, or by voluntary donations. But I oppose surveillance as means of enforcement. Perhaps you should read The Dangers of Surveillance by Neil Richards to see why. (It’s free!)

    Encryption and personal awareness will make this a moot point anyway. People can’t help but feel the loss of their privacy and will pay cash for disposable Internet access if they have to in order to stay clear of it. So just don’t force any changes to the status quo at all, artists are still creating now, crime is being solved, too!

  9. Half the voice! says:

    Live in 1 channel antenna backwoods town 45 mins from Saskatoon.
    Ctv is our only over the air channel, but they split their programming with Ctv2 so we get to see half of The Voice, half of Dancing with the Stars, etc… ad nauseum. The service/tax dollar investment to Bell/CTV is astounding here! Not to mention that that CAB, CTV and CRTC pretty much told us our only option was to boycott this channel because they listened to viewers. Really? Really? Internet $90/8Gb/Mnth means no streaming and satellite is a rip-off. Phone $45/mth pay-go no long distance. Welcome to the 1950′s all over again. Telecom industry in Canada is a Joke, plain and simple.

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