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Is the CRTC Ready to Hit the Reset Button on Television Regulation in Canada?

The Broadcasting Act is a complex statute that lists more than twenty broadcasting policy goals. Yet for decades, Canadian policy has largely boiled down to a single objective: Maximizing the benefits from the broadcasting system for creators, broadcasters, and broadcast distributors such as cable and satellite companies.  

Consumers were nowhere to be found in that objective and it showed. Creators benefited from Canadian content requirements and financial contributions that guaranteed the creation of Canadian broadcast content. Broadcasters flourished in a market that permitted simultaneous substitution (thereby enabling big profits from licensing U.S. content) and that kept U.S. giants such as HBO, ESPN, and MTV out of the market for years in favour of Canadian alternatives. Cable and satellite companies became dominant media companies by requiring consumers to purchase large packages filled with channels they did not want in order to access the few they did.

Canadians may have been frustrated with the broadcast system, but there were no obvious alternatives and their views hardly mattered in a regulatory system dominated by the established players.  My weekly technology law column (Toronto Star version, homepage version) notes that last week, the Canadian Radio-television and Telecommunications Commission sent an unmistakable signal that these longstanding rules are about to change.

The Commission launched the third phase of its Let’s Talk TV consultation by opening the door to hitting the reset button on broadcasting regulation in Canada. It posed 80 questions on reforming virtually all aspects of the current system as part of a hearing scheduled for September.

The Commission’s starting point is that the “distribution and packaging of television services should be reviewed to maximize consumer choice and flexibility.” That alone is a dramatic shift since consumer choice and flexibility have never been major policy priorities.

The headline change will be mandating the unbundling of television channel packages offered by cable and satellite companies. The CRTC envisions requiring a “skinny basic” service that primarily features local Canadian conventional stations. For almost everything else, consumers will be able to pick individual channels or customize their own television packages.

Broadcasting executives have dismissed consumer demands for greater flexibility, but the CRTC notes that Canadians have jumped at the chance for greater flexibility when it is offered. For example, 70 per cent of Quebecor’s new customers choose an option to build their own television packages.

The established broadcasters will warn ominously about increased prices or the loss of some of their less popular channels, but with the government committing to consumer choice for television in the Speech from the Throne, unbundled television is a done deal.

In fact, the bigger question is how far the CRTC is willing to go in its overhaul of Canadian broadcasting regulation since the initial policy document places just about everything up for grabs. This includes dropping the preponderance rule that requires consumers to receive a majority of Canadian channels in their television packages, allowing virtually all non-Canadian services into the market (except where the foreign channel would have an “undue negative impact on the Canadian television system”), eliminating genre exclusivity, and discontinuing the requirement for over-the-air broadcasts.

Moreover, the CRTC has raised the prospect of putting an end to simultaneous substitution, acknowledging that it is an irritant to consumers and that its economic value may be relatively small.

The Commission admits that many of these changes would cause a major upheaval in the market and it is looking to explore funding options for local television stations and financing and promotion for new Canadian content.

The CRTC consultation is likely to spark a huge outcry from the creator, broadcaster, and broadcast distributor communities with public relations and lobbying campaigns that will make last summer’s wireless battle against Verizon seem tame by comparison. Yet with consumers increasingly “cutting the cord” by dropping conventional broadcasting choices and broadcasting revenues in free fall as advertisers shift to the Internet, change seems inevitable. The CRTC’s consultation feels revolutionary, but it many ways it is merely catching up to market shifts that have been underway for several years.

6 Comments

  1. OTA
    The CRTC has also raised the prospect of no longer requiring over the air broadcasts of local stations. This is an interesting suggestion given two facts: first, an overwhelming number of Canadians live near the US border. I don’t understand why stations would want to throw the increasing number of OTA viewers into the arms of US broadcasters. And second, with more people cutting the cord, local stations can cut out the middle-man and address viewers directly.

    It’s an odd choice given how the local stations said local stations were to the community just a few years ago.

    As for myself, I’m past caring about the BDUs after the abuse I’ve suffered from them. If all the local stations shut down their transmitters, I’m sure the transmitters in Buffalo will be happy to have me.

  2. Rambin' Rose says:

    What Over The Air Services will be left to cord cutters?
    Note how CTV (Bell) and Global (Shaw) free steaming is now reduced to a short time after the original airplay and the Apps don’t work on older wireless media streaming devices, just the more recent Apple and Android Operating Systems. If I miss The Good Wife, The Blacklist or The Big Bang Theory I have to feed my big screen via HDMI cable from my laptop or watch it on the laptop!

    Is it unreasonable to ask if too many cords are cut in favour of Over The Air (OTA) and streaming services like Netflix that other than TVO, PBS and CBC in a couple of years will be the only OTA broadcasts available if the Harper Government doesn’t kill the latter in the meantime?

    There has already been suggestion that NBC, ABC and CBS may not be available going forward for free.

    Free was always my favourite consumer choice since the inception of radio and TV :)

  3. Outcry
    We should expect huge outcry from the creator, broadcaster, and broadcast distributor communities, so nothing will ever happen because the consumer never wins in this game.

  4. It would be better for the consumer if you had a choice of providers in any part of any city or town.

  5. TV In Its Current Form Is Doomed Anyway
    The National had a segment highlighting the patheticness of locally created content and the need for Canadian movie makers to beg. Other than Murdoch Mysteries, CanCon could fall off a cliff and I wouldn’t notice and I don’t think many others would either. Our brilliant writers and producers head to where the money is anyway, wheather that be Hollywood, Bollywood or the BBC. By their own admission, local producers put in $10 where they should spend $10,000 and go full budget on crap that couldn’t even make it at the TIFF.
    Want to hit the reset button? Fire incompetent management. The CRTC reshuffling the board will just be re-arranged garbage.
    /end rant

  6. Let’s Talk TV Survey Heavily Biased
    I completed the Let’s Talk TV survey and I was absolutely astonsihed how blantantly biased the survey was.

    It basically boiled down to three central ideas:

    1. How much more are you willing to pay for content that is largely FREE in the US?
    2. How much more are you willing to pay to help major incumbents maintain their profit margins?
    3. How much more are you willing to pay for Internet access to offset move away from traditional distribution?

    The entire survey focused on “how much more would you pay”. It used completely biased examples that basically lead to the same answer and didn’t even come close to addressing the major concerns Canadians have long held about the real costs of their television and Internet.

    I addressed my serious concerns about the bias in hte survey in my final comments.

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