Columns

The Case For Cancelling Canada’s Simultaneous Substitution Rules

The government’s promise to implement a “pick-and-pay” television model that would allow consumers to subscribe to individual channels from cable and satellite providers garnered significant attention this fall. The approach was promoted as a pro-consumer reform that better reflects expectations that the public controls when, where, and on what device they watch broadcast programming.

Consistent with the government’s policy commitment, the Canadian Radio-television and Telecommunications Commission will soon report on the regulatory implications of such a reform. Changing cable packages may only be the beginning, however, as CRTC Chair Jean-Pierre Blais has stated that the regulator needs to “develop a regulatory framework that will be flexible enough to be adapted to the new technological reality.”

My weekly technology law column (homepage version, Toronto Star version) notes the unbundling of television packages represents the broadcast distribution side of the changing environment, but the flip side of the coin involves the need for changes to Canadian broadcast policy. If Industry Minister James Moore and the CRTC are prepared to shake up the way Canadians access television, they should also consider changing longstanding and increasingly outdated broadcast rules, starting with the gradual elimination of “simultaneous substitution” policies.

Simultaneous substitution dates back to 1971, when the CRTC published a detailed policy statement for the nascent cable industry that allowed for the substitution of local commercials for U.S. advertisements where the same program ran on Canadian and U.S. channels at the same time. The effect was to simultaneously impose the Canadian feed on both the Canadian and U.S. channels. The Supreme Court of Canada upheld the validity of the policy in 1977, leading to decades of frustrated Super Bowl viewers who are unable to see the U.S. commercials during the game.

Canadian broadcasters have been big boosters of the simultaneous substitution policy, claiming that it generates significant revenues that can be used to support more expensive and less profitable Canadian programming. The U.S. programs can be licensed for a fraction of the cost of original Canadian programming and simultaneous substitution increases the visibility of Canadian advertising by placing it on multiple channels.

Yet despite the purported advantages, simultaneous substitution has come at a heavy price to the independence of Canadian broadcasters. Given their reliance on the policy, U.S. broadcasters effectively control the Canadian prime time broadcast schedule since the Canadian priority will be to match whatever the U.S. counterpart is broadcasting. If the U.S. broadcaster moves the time or date of a program, the Canadian broadcaster typically matches the change in order to retain simultaneous broadcast.

Moreover, Canadian programming invariably suffers as a result since Canadian broadcasters often limit their promotion of domestic programs and can rarely guarantee a steady placement in the programming schedule. U.S. programming also becomes more expensive, since simultaneous substitution increases its economic value.

The new technological reality suggests that simultaneous substitution should become less and less important over time. Given consumer ability to watch programs through a myriad of non-broadcast avenues such as cable on-demand features, Internet streaming, personal video recorders, or online subscriptions, viewing a program in its designated time slot is increasingly part of a bygone era.

There is little doubt, however, that broadcasters will fight to retain the policy. Bell Media said earlier this fall that it would support a policy that would block Canadian access to U.S. channels altogether if simultaneous substitution were removed. Alternatively, it favours a non-simultaneous substitution policy that replaces U.S. commercials whenever the program airs.

Canadian broadcasters may have been content to compete largely on picking U.S. winners in the past, but future success will depend on developing their own original content to sell to a global audience. Simultaneous substitution creates a protected market that delays the inevitable. The policy may have made sense in the 1970s to support the development of the Canadian broadcast distribution system, but if the government is serious about bringing broadcast into the 21st century, it is simultaneous substitution that should face cancellation.

6 Comments

  1. WannaBeACableCutter says:

    Not One Mention of Over The Air HD
    Why is there not a concurrent emphasis on mandating Over The Air (OTA) HD Signals being available to/accessible by more Canadians without the need for expensive and ugly galvanized TV towers? Is it because sooner than later the only truly independent broadcasters in Canada will be the likes of CBC and TVO? What interest would the owners of CTV (Bell) and Global (Shaw) have in a strong OTA accessible signal when they can sell advertising for simultaneous substitution and access to their product via cable and satellite?

    I certainly hope that as part of the “pick and play” model there will be emphasis on improving OTA Signals in fringe and rural reception areas, if only for CBC and TVO both of whom are supported in part by taxpayers who vote in elections.

  2. I wonder what is the percentage of canadian content that is produced and broadcasted in Canada (excluding the province of Quebec) by canadian TV excluding sports and news compared to purchased american content.

  3. The idea for Simultaneous Substitution was offered to the CRTC by the cable industry in order to be allowed to distribute foreign signals in Canada. In short Canadian stations had bought and paid for the exclusive rights to distribute certain programs in Canada and the importation of foreign signals with the same programming infringed upon their “copyrights”.

    Canadian stations have always preferred that foreign signals not be distributed in Canada,( I think we are the only jurisdiction in the world that allows this). Dropping the foreign stations from Cable a DTH would negate the need for SS and give the Canadian stations the ability to run the US content where they choose; the freedom to schedule their station as they see fit without having to worry about losing revenue due to loss of program rights.

    I am a supporter of pick and pay but I am also a supporter of honouring the program rights bought and paid for by Canadian stations…I am hard pressed to think of a major US program that is not scheduled on a Canadian station so why do we need distribute the US stations in this country?

    As you say the future may resolve this issue but make no mistake this was a solution forced on the Canadian OTA stations so that the distribution companies could make more money, (gain subscribers)…the OTA broadcasters needed it to compensate for the revenue loss that decision resulted in and they accepted it but never liked it.

  4. Death2simsubs says:

    CTV Global City should be required to air 100 % Canadian programming in prime time. No reason to simsub then. The US Networks should have been an optional package all along. That way I can drop them during the summer months when their programming is almost all repeats.

    I suggest the CRTC (and Bell) be careful about disallowing carriage of the US networks altogether. Many people subscribe to cable for the US Networks. I and many others would drop cable altogether if the American stations are not available. This would hurt the cable industry in that less people would watch the specialty channels (which are really the bread and butter for the Canadian TV industry). Gov’ts would feel the pinch in less GST/HST/PST revenue.

  5. Cloud Hosting India says:

    Cloud Server
    HostingrajaCloud will ensure your peace of mind by migrating your website from your current provider to their reliable servers free of cost.

  6. LOL
    “frustrated [...] viewers who are unable to see the [...] commercials”

    Bwahahaha.