Appeared in the Toronto Star on May 11, 2013 as Bell and Astral Merger: Netflix Isn't the Enemy
The examination of the proposed Bell acquisition of Astral
Communications took place last week in Montreal with the Canadian
Radio-television and Telecommunications Commission hearing from a wide
range of supporters and opponents of a deal that only last year was
rejected as contrary to the public interest.
As Bell and Astral sought to defend their plan, a familiar enemy emerged
- Netflix. What does a U.S.-based Internet video service with roughly
two million Canadian subscribers have to do with a mega-merger of Bell
For the past few years, it has become standard operating procedure at
CRTC hearings to ominously point to the Netflix threat. When Internet
providers tried to defend usage based billing practices that led to
expensive bills and some of the world's most restrictive data caps, they
pointed to the bandwidth threat posed by Netflix. When cultural groups
sought to overturn years of CRTC policy that takes a hands-off approach
to Internet regulation, they argued that Netflix was a threat that
needed to be addressed. So when Bell and Astral seek to merge, they
naturally raise the need to respond to Netflix.
This is an age-old strategy that seems to resurface every decade. In the
1980s, it was the effort to keep large U.S. specialty channels such as
ESPN and MTV out of the market that led to the creation of TSN and
MuchMusic. In the 1990s, the U.S. satellite television providers were
branded the "death stars" and kept out of the market to allow for
Canadian entries. In the 2000s, it was U.S. satellite radio services
that were denied entry until acquiescing to minimum Canadian content
In this decade, it is the Internet's turn as over-the-top video services
such as Netflix are viewed as threats to established Canadian
broadcasters, broadcast distributors, and content creators.
To date, the CRTC has largely skirted the issue by pointing to studies
that suggest that Netflix and other over-the-top video providers have
only had a minimal impact on the consumer market. But that won't last.
Whether Netflix or the myriad of other online video services - from
YouTube's forthcoming subscription services to the National Film Board's
documentary film Netflix competitor (scheduled to launch in 2014) to
sports leagues offering season packages for Internet distribution to
film studios launching their own services - the online distribution
model is only going to increase in popularity.
Rather than claiming limited impact, the CRTC should embrace the trend
by concluding that the services are a boon to both consumers and content
creators consistent with its policy mandate that does not require
regulatory change or protection for established Canadian broadcasters.
For consumers, the benefits are obvious with more choice, greater convenience, and lower prices.
Creators also benefit from the proliferation of these services by virtue
of the heightened competition for their content. In years past, the
competitive landscape in Canada was limited to a handful of broadcasting
organizations. The entry of new competitors means there will be a
larger ecosystem of distributors, intermediaries, and original producers
all vying for enough content to make a compelling offering to
The established players unsurprisingly view the new entrants as a threat
since they offer competitive content at a fraction of the price of a
typical cable or satellite bill, increase acquisition costs, and free
consumers from being locked into a small number of service providers.
Broadcasters and some content creator groups may be comfortable with a
highly regulated system that provides a steady stream of revenue, but
the new environment creates a more competitive landscape and the promise
of increased demand for new creative works. Viewed in that light, the
shift toward a robust online video market should be welcomed by the CRTC
with open arms, not viewed warily as a threat in need of regulatory
intervention.TagsShareWednesday May 15, 2013